Health Care Versus Health Insurance

Interesting post from Dana Goldstein:

An interesting question raised at the Ed in '08 conference: The idea of universal pre-school (in other words, affordable for everyone) isn't very controversial, unlike the idea of universal health care. But should pre-school be mandated? In other words, should we be requiring that all three and four-year-olds be enrolled in some kind of education program, even if it's "home schooling?"

On requiring, probably not. What I think this analogy does is highlight the distortions on our thinking forced by the health policy community's determination to find a way of reforming the health care system that involves appeasing the insurance companies rather than destroying them. In a rational and humane universe, health insurance wouldn't be universal. It'd be kinda rare. Something very rich people or the idiosyncratically risk averse paid for out of pocket. What would be universal would be health care. And as with universal preschool, the existence of universal health care wouldn't imply that at any given time every single person was actually receiving health care. Nor would it quite guarantee that everyone was actually receiving all the health care they need -- ornery people might just not go to the doctor.

Rather, the promise of universal health care would be that, as with the promise of universal preschool, the care would be provided to anyone who wanted it at a price that everyone could afford.

But if you want to keep the insurance companies in business, then you're looking at a different picture. Barack Obama has a plan to make health insurance affordable for every American. But many analysts think that a program like that is fundamentally unworkable unless you require that everybody buy health insurance. The problem is that there's a difference between only showing up to get your health care when you find yourself in need of care (that's normal!) and only showing up to get your health insurance when you find yourself in need of care (that's against the whole concept of insurance). Then, of course, once you decide on a mandate your problem because enforcement. But this mostly serves to underscore the fact that the compromises being made in terms of trying to create a realistic legislative package for 2009 are very real compromises, major steps away from ideal circumstances that introduce unnecessary complications into the system.

Photo by Flickr user Ninjapoodles used under a Creative Commons license

Comments

There is a different kind of health insurance that wouldn't be destructive -- essentially a highly regulated form of health insurance, the point of which would be to create a market for users to be able to meaningfully shop for care. It's been tried overseas and having some kind of marketplace mechanism in place to essentially regulate the care industry would be desirable.

But it's a whole lot less profitable than the kind of insurance business that exists today. To me, the key factor is to allow anyone to "buy" medicare, because that will in short order set the ceiling on the market. Insurers will have to provide something more attractive than what the government does, which I think has appeal.

Posted by Jim Pharo | May 16, 2008 2:09 PM

There is a different kind of health insurance that wouldn't be destructive -- essentially a highly regulated form of health insurance, the point of which would be to create a market for users to be able to meaningfully shop for care. It's been tried overseas and having some kind of marketplace mechanism in place to essentially regulate the care industry would be desirable.

But it's a whole lot less profitable than the kind of insurance business that exists today. To me, the key factor is to allow anyone to "buy" medicare, because that will in short order set the ceiling on the market. Insurers will have to provide something more attractive than what the government does, which I think has appeal.

Posted by Jim Pharo | May 16, 2008 2:20 PM

I actually disagree -- I think the better goal is universal insurance.

My reasoning is thus:

Health care is so inherently expensive that it can only be made affordable via spreading the cost out over a great many people. Two ways of doing this are a)government-run health care, which artificially controls the cost by the provider (govt) taking a loss, or b) insurance.

I think one of the strengths of the US health sector is the skill of our providers (doctors, etc). I don't think making all doctors government employees is the way to go. So, I'm not down with government operated health care.

That leaves insurance. There are various models out there, but, given the cultural and structural parameters of the US, I think the most successful is a government-insurance available alongside traditional insurance. Basically a souped-up, universal medicare. People can opt in, everyone is guaranteed affordable health care, and if people really want to they're still free to spend needless extra dollars on more expensive, private insurance.

Posted by Peter Bautista | May 16, 2008 2:24 PM

find a way of reforming the health care system that involves appeasing the insurance companies rather than destroying them.

Are you aware of the role played in Medicare by Medicare contractors like Blue Cross? No one needs to be destroyed.

Posted by Gary Sugar | May 16, 2008 2:39 PM

I'm curious to hear what Matt thinks of the French healthcare system. My understanding it is that it has insurance-company-like institutions that people are required to buy healthcare plans from.

Is this totally wrong?

Posted by WillieStyle | May 16, 2008 2:47 PM

I got lost in Maine once and asked for directions and the guy I asked said "Do you want the shortest way or the best way for YOU?". I said I wanted the best way for me. When I got to where I needed to be I looked on a map and saw I was very close to where I needed to be but the helpful Mainer knew I was interested in getting where I needed to go as easily as possible, not saving a few minutes by taking a complicated back route to my destination. Obama understands his path to universal healthcare is subobtimal. He just doesn't want to get anyone lost along the way.

As soon as Obama gets 20% buy-in for his national insurance pool it will crush the insurance industry as we know it through word of mouth. 20% buy-in is equivalent to the population of France, so that level of buy-in will create a parallel healthcare system of unprecedented efficiency, accessibility and quality. Ezra Klein can write about healthcare until he's blue in the face and it won't be worth the word of mouth of people who voluntarily sign up for a national health care plan, like it, and tell their friends.

Posted by joejoejoe | May 16, 2008 2:47 PM

Medical care is not at all comparable with preschooling. All children are (roughly) equally in need of a similar sort of education. At most, a person might need extra tutoring or a caseworker, if they're a special needs student (like my brother was). This could theoretically be made affordable. But not all diseases are created equal.

" ... the care would be provided to anyone who wanted it at a price that everyone could afford."

The idea is all well and good, but what happens when the specific kind of care needed is pricier than anyone can afford individually? Yes, it's probably within the realm of possibilities for everyone who needs to have a checkup, or a gash stitched, or an immunization given, to be able to afford their own treatment. But long-term care for someone paralyzed in an accident? A brain surgeon to remove a cancerous tumor? That sort of care has to be paid for collectively somehow.

I honestly don't know what the best way of collective payment would be. Insurance is one option. National health care is another. Another idea I've had - haven't thought it out completely yet - would be to require national insurance, but the insurance would only cover those big-ticket items like brain surgery and the like. Checkups and minor urgent care would be up to the individual.

Posted by Tel | May 16, 2008 2:48 PM

Your insurance vs care thing seems like a distinction without a difference. The point in any reform is that everyone needs to pay into the system, whether through taxes or a premium. A mandate is essentially a back door tax, personally I'm fine with that as long as there are adequate affordability provisions.

Posted by AJ | May 16, 2008 2:52 PM

I think Matt has a point. Another comparison I like to make is with car insurance. In some states buying auto insurance is required of every car on the road. So everyone has it, and the market for it is fairly robust. But it functions as a last resort deal. If you go the mechanic, you don't pick him out of a book from your auto insurance. You don't have co-pay for a tune up, and there isn't any coverage for an oil change. Car insurance is there for when there is an accident.

So on one hand it is absurd to ask that health care insurance provide payments to defer the cost of what is normal health care - going to the doctor for blood pressure and cholestoral checks. It would be like asking car insurance to pay for oil changes. On the other hand oil changes are cheap - 20 bucks at the most. Going to the doctor for something simple and routine is expensive, 150 bucks at the very least. So the problem is really making health care more affordable. I think there are many different ways to achieve this, and insuring is only one of many avenues.

Posted by freddiemac | May 16, 2008 2:54 PM

"the care would be provided to anyone who wanted it at a price that everyone could afford."

Do you really think can this ever exist in the real world for any demand item?

Change "care" to anything else that has a price: gold, food, clothing, oil, cars, shelter, I-pods. It doesn't work.

"Air" is about the only thing that does, but only because it does not have a price.

Posted by Wile E. Coyote | May 16, 2008 3:24 PM

"the care would be provided to anyone who wanted it at a price that everyone could afford."

Do you really think can this ever exist in the real world for any demand item?

Of course it can. The government can subsidize anything to the point where it is affordable, so long as there is some political will to do so. In Britain, all health care is essentially free. Even in this country, if you have insurance, the idea is that the care you get is provided at a price you can afford, thanks to the assistance of your insurer.

Those saying that insurance/care is a distinction without a difference have an interesting point. In a system like the one in Britain, basically the government is the insurer for the entire country and premiums are paid in the form of taxes. But really this is more of a metaphor. You don't have selection issues, for example, or coverage caps or the other kinds of things we associate with insurance, so I think there is clearly a distinction.

However, I think a Medicare-style system that covers everyone would certainly qualify as both universal health insurance and universal health care.

And joejoejoe, I sincerely hope you're right about Obama's master plan.

Posted by Rob Mac | May 16, 2008 3:36 PM

Yeah, trips to the doctor are expensive. But your insurance company doesn't pay $150 for that 15 min face-face.

But really, this is a terrible post. Lots of people screw themselves over with stupid decisions, but there is a substantial class of people who are getting screwed in the current.

If you find out that you have some kind of long term, expensive illness, you are screwed. Crohn's disease is a great example. Annual medical expenditures in the 40K range. And you contract this illness typically as a teenager. And when you move off your parent's healthcare, your new provider won't cover the costs for 2 years b/c it's a pre-existing condition. Not to mention the constraints it puts on your job options.

If people can just get healthcare when they need it, nobody is going to sign up until they have something like this happen. And then who's paying? The gov, right? What that really means is that everyone is paying for your care. So to say you're providing health care at a price you can afford when you need it is exactly what it means to provide insurance against costs that you could not normally cover. So why differentiate between health care and insurance when this is what you're talking about?

Posted by mpowell | May 16, 2008 3:38 PM

The basic problem is one of, "who pays for health care?" The problem is that health care currently takes 15% of the U.S. GDP, but sick people do not make 15% of the U.S. GDP. So requiring sick people to pay the full costs of health care is impossible -- you cannot wring blood out of a turnip.

The current situation, where we have three different health care systems -- one for those who qualify for government insurance (Medicare, Medicaid, VA, etc.), one for those who qualify for private insurance, and one for those who are uninsured -- is not working either. The government insurance programs account for 50% of the U.S. health care spending but are being cut back to the point where doctors and hospitals are refusing to see those patients, and because only poor people (for the most part) qualify for those programs (other than Medicare), the people getting these services don't have sufficient political clout to assure sufficient funding.

The problem with the private insurance part of the equation is that private health insurance is becoming unavailable for increasing numbers of Americans, both because of cost and because insurance companies simply won't write insurance for large groups of people. Insurance companies today are in a death spiral of increasing costs and decreasing participation. To counter that, they keep kicking sick or potentially sick people out. If you forbid them from doing so, they must raise their rates even more, and even more people become uninsured.

Finally, there are the uninsured. Generally if someone who is uninsured becomes seriously ill, he or she is dead. Hospitals and doctors will not provide surgical care for those who require, e.g., a kidney transplant in order to live, and the uninsured have no way to pay for long term care such as kidney dialysis. Even insulin for diabetes, hardly the most high-tech or deadly of illnesses, is hard to come by for the uninsured, one lady of my acquaintance had to make the rounds of various charities every month to round up enough insulin to survive another month, which became even more difficult once she lost her eyesight due to the disease not being properly managed due to lack of consistent monitoring by a medical professional. The problem is that we still provide acute care in emergency rooms -- i.e., we keep them from dying -- but we don't provide long term care to keep the uninsured healthy. This has two problems. First one is social -- people do not accept a death penalty for something not under their control willingly, and the result is social unrest and disorder. The second is that, by providing a reservoir of disease carriers in the population and then providing just enough care to kick back a disease but not cure it, we're causing the creation of drug-resistant diseases that soon enough will start killing the insured as well as the uninsured.

In the end, the only way to fund health care in a way that guarantees that some level of health care will always be available as needed is if everybody pays. Everybody benefits from health care, after all, even those who are currently well will become sick at some point in the future and require it. We can call it a "health care tax", a "Medicare payroll deduction", or an "insurance fee" (if we adopt a Swiss-style mandate system), but whatever we call it, everybody benefits, so everybody should pay. Whether it is a Medicare For All scheme that guarantees that all Americans can participate in Medicare, or whether it is a "don't call it a health care tax" mandate that all Americans purchase health insurance (and regulation of said health insurers to make sure that they are paying for the care they're supposed to pay for), any insurance scheme that does not require all people to pay into the funding pool ends up with a lot of dead people, in the end. That's just how the economics works out -- as we're finding out, slowly but surely. This is simple math in the end, like 1+1. And 1+1 always equals 2 no matter how much we'd like it to be 3, or 5, or something else entirely. The answer always comes out the same -- unless everybody pays, a bunch of people end up dying.

Posted by Badtux | May 16, 2008 3:50 PM

Everybody has a fire department, right? Wasn't always true. They used to have mutual assurance companies that had them. Everybody has protection from invasion by the Department of Defense, right? Do I need invasion insurance? This is not a hard problem unless you try to understand why we have to keep insurance companies or why everyone doesn't need health protection. Once you engage opponents on their terms, as MY does in the post and Obama does in his plan, the debate is over and change fails. Its a social decision about how we want to live in the US of A.

Posted by Peter Driscoll | May 16, 2008 4:28 PM

Oh, dear.

I don't want to get all Petey (to make a very different point) but Matt went to the Dalton School (the Upper East Side's most elite prepschool) and then a private university by the name of Harvard.

He dreams of abolishing private insurance yet he couldn't even sully himself in a public school or university!

Guess what, kid? Many progressives -- a coalition of women and men over the age of 26, folks (who unlike Matt) have dealt with the Dept. of Motor Vehicles and hospitals in big depressed cities, people with serious medical issues, people who've had to seek care for their aged parents or sick children -- know that government can often be every bit as frustrating and bad as Matt and Spencer are finding trash collection in D.C. (Ah, youth!)

And, kid, believe me, it's going to really suck when it's something that matters a lot more than trash pickup and you're dealing with that kind of attitude, red tape and incompetence.

We need universal health care, but adults are probably right to be, at least, a little worried and Matt's down with private insurance rant is a bit offputting coming from someone who's gotten so much from an icredibly costly, staggeringly elite private education when, yeah, we do have universal education in America right now.

Why wasn't that (the schools offered by our universal education system) good enough for you, Matt?

And why will universal health care be?

As a progressive who is for universal health care I'd'feel a lot better if there was a good answer.

Right now the dreadful insurance companies are the only game in town (it'd'be like if there were only Daltons and Choates and Friendship Acadameys.). But if we had both UHI and insurance companies it'd'be analagous to what we have now with education. And faced with that choice Matt went private all the way.

Posted by 3333 | May 16, 2008 4:36 PM

"I'm curious to hear what Matt thinks of the French healthcare system. My understanding it is that it has insurance-company-like institutions that people are required to buy healthcare plans from."

Matt is in an honesty-free zone about healthcare.

He's an apologist for Obama, and is willing to lie about healthcare to help him make the case.

After all, if Matt has a healthcare problem, he can just have his rich daddy pay for his care. Don't look to him for an honest assessment of the French or German systems. This is all just a game to him.

Posted by Petey | May 16, 2008 4:45 PM

Do you have any thoughts on mandatory preschool beyond "probably not" requiring it? You used and abandoned those children in the picture. You are Matthew Plainview and you drank my milkshake.

Posted by Just Karl | May 16, 2008 10:04 PM

Re: Rather, the promise of universal health care would be that, as with the promise of universal preschool, the care would be provided to anyone who wanted it at a price that everyone could afford.

Um, the only way to do that is through some sort of insurance-- maybe private insurance, maybe public. But there has to be some sort of financial intermediary that makes sure the bills get paid.

Re: Then, of course, once you decide on a mandate your problem because enforcement.

Deduct the premium from people's wages like FICA is deducted.

Re: As soon as Obama gets 20% buy-in for his national insurance pool it will crush the insurance industry as we know it through word of mouth.

We have far more than 20% buying into public education, but somehow private schools manage to flourish.

Re: To counter that, they keep kicking sick or potentially sick people out.

They have very limited ability to do that, since they have to accept everyone in employee group plans, (and charge the same premium to the whole group), which is how most people get their insurance. And far from being in any kind of death spiral, the major insurers manage to turn a handsome proit.

Re: Generally if someone who is uninsured becomes seriously ill, he or she is dead.

Huh? No, his/her bills end up being left unpaid and the cost in then transferred by hidden means to everyone else. In the long run, if the disability continues, the uninsured person ends up on either Medicare or Medicaid (and bankrupt).

Posted by Jonf | May 17, 2008 12:08 AM

The escalating costs of American health care, which have doubled between 2000 and 2007 came from doctors and, especially, hospitals. Not insurance companies. Knocking out the insurance companies doesn't fix the problem of costs. And I have not seen a presidential proposal yet that addresses costs in a concrete way.

Posted by unagidon | May 17, 2008 7:52 AM

Of course it can. The government can subsidize anything to the point where it is affordable, so long as there is some political will to do so. In Britain, all health care is essentially free.

Until, of course, it runs out of resources. You seem to be suggesting that the government can subsidize scarcity away. Can't happen. The only way to subsidize something to the point where it is free without the government going bankrupt is for the government to start rationing services or to cut corners.

Posted by Glaivester | May 17, 2008 9:20 AM

Did you see the Bunk study stating 2/3 of doctors in America want National Health Care. The doctors who did this study also conducted one in 2002 and found that the majority of doctors did not want national health care, the problem with this is that the 2 question surveys drastically differ in there 2nd question. I found this article, 60% of Physicians Surveyed Oppose Switching to a National Health Care Plan, It's worth a read.

Posted by Matt | May 19, 2008 4:49 PM