What They Call The Problem Ain't Necessarily So Economists like Paul Krugman argue that the health care insurance system in California (and, by extension, everywhere) is in a "death spiral" that only the sweeping legislation proposed by Congress will solve.
In other words, the solution to the "health care crisis" facing the nation lies in restoring the bloated, anti-democratic, special-interest laden legislation attempted by the Democratic party earlier this winter.
I don't think so.
The latest round was provoked by a major insurer announcing large increases in the insurance premiums it will charge its customers in California.
Nobody likes large insurance premiums, and the amounts charged by the insurance companies may be "excessive.
" They are certainly unaffordable for many people attempting to insure themselves.
Assuming as Krugman does that the insurance company is not "profiteering" (although in my opinion this is always very questionable), the question still remains as to whether the insurance bill put forth by the democrats is in any sense the correct solution.
Stripping out interstate insurance subsidies and the outright bribery that made the bill such a public relations disaster, the premise of the recent health bill remains that the solution to the lack of affordable insurance "problem" is to require millions more people to become insured.
Why driving 30 million new customers to an arena already dominated by the "supply" side of the supply/demand equation would reduce overall insurance costs is not clear to me.
In fact the opposite seems transparently obvious.
According to Krugman, the California insurance system is in a "classic death spiral" because healthy people are opting against insurance and this causes the risk pool to "deteriorate.
" He says: "Bear in mind that private health insurance only works if insurers can sell policies to both sick and healthy customers.
If too many healthy people decide that they'd rather take their chances and remain uninsured, the risk pool deteriorates, forcing insurers to raise premiums.
This, in turn, leads more healthy people to drop coverage, worsening the risk pool even further, and so on.
" Paul Krugman, New York Times, 2-18-10 He goes on to say, "by all means let's ban discrimination against people on the basis of medical history - but we also have to keep healthy people in the risk pool, which means requiring that people purchase insurance.
This, in turn, requires substantial aid to lower-income Americans so that they can afford coverage.
" In straight language, the problem according to Krugman is that (1) insurance companies are not being allowed to base premiums on actual health needs and the likely costs of providing that insurance, so (2) they are requiring healthier people to subsidize the less healthy, and (3) this raises the premiums to the point where the healthy would rather do without insurance.
Actually, the "problem" is not a problem.
It is people attempting to make rational decisions based on their finances and health needs.
The actual problem is that poor, unhealthy people cannot currently afford health care.
The problem the recent legislation attempted to solve is different, and that problem is, how to maintain an illusion that someone (or everyone!) is getting a free lunch in a world where there is no such thing as a free lunch.
Again with the benefit of a little straight talk, the solution proposed shows what the problem addressed by congress really is.
Requiring that (healthy) people purchase insurance is simply requiring them to subsidize the medical needs of the unhealthy.
On an individual basis, people have decided they do not want to do that (that is why they are opting out of the insurance plans and increasing their own health risks).
Therefore the solution proposed is to force enough people to do what they do not want to do-- so that the price of the solution either becomes invisible or inevitable (and therefore politically invisible).
And this "requires [in order to make it less clear and more palatable], substantial aid to lower-income Americans so that they can afford coverage.
" If the problem is that poor, unhealthy people cannot afford health care, then the solution is to bring that health care within their means.
Why not simply subsidize the cost of high-risk insurance to the people who cannot afford it? Requiring 30 million new people to buy insurance, adding layers of subsidies and bureaucratic requirements is simply the window dressing.
Unless there are realistic economies of scale from providing so much more health care, or unless there is an actual increase in productivity of the afflicted, the net impact of the bill will dramatically increase health care insurance costs for everybody (on average).
In a nation of shrinking resources, this will mean, inevitably, a reduction in the amount and quality of health care.
It is as simple as that.
And then there is the troublingly anti-democratic nature of the whole proposition.
Minus all the legislatese designed to confuse people about costs and choices, what the plan proposes to do is federalize health care and require people to pay a very substantial amount of money to private insurers as a cost of breathing in the United States.
It is a very dishonest and hugely regressive form of taxation.
It would restrict the choices available to people needing healthcare, and it would swell the size, function and power of the federal government.
And it would, to repeat, inevitably reduce the available health care to the nation on average.
How About A New Question? I propose that an ethical question that is animating much of the health care debate be brought forward and made explicit.
That is, to what extent are differences in available health care acceptable? If the health care available to the richest Americans is the best health care in the world, can we likewise say that our health care system is the best? If the expansion of health care benefits to a broader segment of the society will be accomplished by a dulling of the "leading edge" of medical innovation, should it nevertheless be done? Or put somewhat differently, to what extent is health care a human right rather than a good to be purchased through the normal function of the free market? Of course the democratic version pretends that it will provide the best of both worlds, but beneath the rhetoric is, I think, an ideal that some healthcare for more people is better than more health care for some people.
The argument has some appeal, but when so much of health care involves sophisticated medical technology, I wonder how true the dichotomy is.
On the other hand, does expensive, leading-edge technology also bring benefits to the lower economic classes? I suggest that some of the debate be addressed to the question.
A Proposed Solution There is in my opinion one infallible way to lower health care costs: increase the health of the population.
That almost seems foolishly obvious, doesn't it? Increasing the health of the population reduces the overall drain of resources caused by medical care in general, and also it would specifically address the "demand" side of the supply/demand equation for health care and insurance (stimulating actual competition and innovation).
Presumably there would be advantages throughout society as people were healthier and more productive.
Again, it seems so obvious as to be almost pointless to say.
But if our nation were to take even a tiny fraction of the money that, realistically, the proposed health care insurance plan would cost, and devote it instead to increasing nutritional awareness, building exercise facilities, and promoting healthy lifestyle alternatives, the results would likely be far more conducive to improved health than the plan proposed.
If this were accompanied by an institutional preference for preventive measures like prenatal health-care rather than capital-intensive treatment facilities, the overall health of the nation would probably be much improved.
Focusing on the health, rather than the illness, of citizens would be a step in the right direction.
One could still be troubled by the federalization of the healthcare of individual citizens in the country or by the fact that the government would have to adopt and promote certain views on what constitutes "healthy living.
" I am troubled by that and believe that the real solution to health care costs lies in shrinking the size and scope of government generally, leaving more room, and far more resources, for private solutions.
But at least a program focusing on health care rather than sick care would cost far less money, interfere less with the provision of actual services, and increase the size and scope of government far less dramatically, than the alternatives proposed in congress.
It would also tend to increase the independence and self-reliance of individuals.