There may be something seriously wrong with our understanding of who the uninsured are, and what they are willing and able to buy in the way of insurance. I don’t know exactly what the fault may be in our understanding. But if the numbers [of previously uninsured signing up for Obamacare] stay this low, I’d say we need to reassess the state of our knowledge about the uninsured — and the vast program we created to cover them.
This reminds me of an essay that I wrote over 10 years ago, called Health insurance do-nots.
In America is Crazy, I wrote that our health care policy reflects mental illness. The fundamental problem is that we believe that health insurance is something that only should be received as a gift — never obtained for oneself. Thus, we immediately assume that when a family does not have health insurance, they are to be pitied for not having received the gift, rather than being blamed for not having taken responsibility.
After the Census report was announced, the evening News Hour on PBS featured a young man (he appeared to be about 30) without health insurance who had been diagnosed with melanoma. The focus of the feature was the financial hardship that the man was going to have to undergo, including putting his family deeply into debt.
While I truly feel sorry for this man, I have so say that the worst of the financial burden of his illness was avoidable. When he was healthy, he could have obtained health insurance. Instead, he chose to spend his income on other things. He was a health insurance “do-not.”
However, the thrust of the story was not, “Let this be a lesson to you. Buy health insurance, because you never know when you may need it.” Instead, as in the Times editorial, the PBS story treated the man as a victim because he did not have employer-provided or government-provided health insurance.
To deal with the problem of health insurance do-nots, I wrote that
some form of catastrophic health care coverage ought to be mandatory
I was naive at that time, thinking that the government could mandate basic catastrophic coverage. The political process instead works in the direction of mandating gold-plated coverage. It works in the direction of rewarding politicians who make the most outlandish promises (“it will lower cost, you can keep your doctor,” etc.), rather than in the direction of rewarding politicians who tell people the truth about the cost of health care or who dare to raise the issue of individual responsibility.
It may not be saying much but I’d back off the mandatory part. Do there even exist extremely expensive and yet magic bullet treatments such that “oh, if he only had insurance it’d be a quick fix.” That’s not how medicine really works in my estimation.
Taking the melanoma example, I’d guess that a particular treatment that bankrupts a person also has a high probability of being a total waste of money- money that probably shouldn’t come from either his family or his insurance pool. There are up-stream distortions that would not be fixed even if the political process did not militate to political rationing. The pooling of resources ensures that these treatments exist and that you can get at them, but that doesn’t make them work. Don’t take my word for it, wait for the quality of life year panels to dictate this to you. So, the actual pool of people we are discussing gets even smaller.
You don’t necessarily need catastrophic medical service payment insurance. Why isn’t there simply medically bankrupted insurance? What’s the difference? I don’t know, this isn’t my pay job.
Why isn’t there simply medically bankrupted insurance?
Bingo. It’s also known as Medicaid.
Society desperately needs to recognize that health insurance does not insure health: it insures finances.
What are you risking if you are a healthy thirty year old without catastrophic insurance? All you are risking is going bankrupt on medical expenses and then falling back onto Medicaid. That is frankly not an insane risk: if you are capable of becoming well off after age 30, you are probably capable of becoming well off after age 30 after going through a health-caused bankruptcy.
Medicare is an even clearer case of the fact that health insurance insures finances rather than health. Medicare insures the richest age cohort. Why can’t these folks self-insure? Why can’t they drain down their savings with health insurance annuities? These both make perfect sense. So whose finances are actually being insured?
By and large Medicare insures the finances of the holder’s heirs. Medicare is nothing but a plan to insure an inheritance that goes to the second richest age cohort.
Let’s review. Medicare taxes the first dollar earned by poor 18 year olds and gives it to 70 year old millionaires to protect an inheritance for their 50 year old children. And people wonder why income mobility stagnates.
Frankly I do not know many young 18 year olds who are working full time. Many of these in Washington State are working only part time, and applying for Obamacare, which is Washington State Department State of Health and Human Services, Medicaid, where health care services are provided in community health clinics; the coverage pays for physician visits, prescriptions, surgery, contraceptives, pregnancy care.
Even a part time 18 year old pays 3% of his earnings to pay for the richest age cohort’s medical care.
By and large Medicare insures democrats get a decent percent on the generally more conservative elderly vote.
I believe you may still be somewhat naive…for example, thinking housing policy will every move in the direction of making sense.
I can’t say whether he could have afforded such a policy or not, but it is also naive to expect everyone to do the wise thing in retrospect, people do the best they can with what information they have and experience plays a large role. The mandate is all about individual responsibility.
It is also an illusion this is gold plated coverage as one soon finds out when dealing with a condition. There are all manner of gaps between what insurance covers and what people need. The most promising melanoma treatment is an individualized one that is still experimental. Often only the most basic treatments are covered and there are a lot of uncovered options for a quality result.
Andrew’s analysis is worth thinking about. It’s worth thinking about what a reasonable “medical expense” is.
Most illnesses that are reliably curable are going to cost less than $10,000 for a cure. $10,000 is low enough that anyone with a job can pay it. The cheapest houses are $50k to $100k, and we don’t blink when working people buy a house for themself. We should therefore not blink at the prospect that someone borrows $10k against their home equity.
Medical treatments north of $10,000 tend to be painful and uncertain. We’re talking organ transplants and chemotherapy using brand-new drugs. North of $50,000, it gets even sillier. It’s not obvious that treatments like this should be part of a public safety net. It’s not obvious that many such treatments *are* going to be covered under Obamacare, because Obamacare includes the IPAB; in fact, many people seem to like Obamacare because it will put someone else in the position of saying “no” to these super-expensive treatments.
Thinking about it this way gives you a very different view from the way medical insurance is usually discussed. Usually it is discussed as if illnesses happen out of the blue, and when they happen, there is an obvious treatment that costs an obvious amount of money. It would be better if we paid for most things out of pocket. For the unemployed, we could have medicine stamps the same way we have food stamps.
Coming back to Obamacare, the individual mandate doesn’t help people with jobs, because we can already pay for any reasonable expenses anyway. The mandate also doesn’t help people without a job, because they have no income to pay for it.
Are you serious? My wife’s emergency appendectomy had a sticker price of $45000. This is an extremely common procedure with a very high success rate. Hospital services for the delivery of our son had a total sticker price of around $20000.
Of course it’s important to note that since we had insurance, those sticker prices were essentially fictional. The amount we were billed was around 1/3 sticker in each case, and then of course insurance paid for ~90% of that. But if we hadn’t had insurance, like the guy in the story, we would nominally have been on the hook for the full sticker price.
Point is, the costs for curing — with high probability of success — a great many acute health conditions are well into the plural tens of thousands of dollars for an uninsured individual. But that these “costs” aren’t really costs at all. They aren’t prices in the normal economics 101 sense of the word. They’re just made-up numbers next to a dollar sign that few people ever actually pay.
I wonder now if the de facto net positive of aca is to mandate interstate sales right after they were just illegal.
This is a good exchange on some painful subjects.
First, a note to Arnold:
In my writing, I advocate that anyone who does not carry health insurance would pay an income tax surcharge of about 3-4%.
These funds would go to Medicare, which would act as the insurer of last resort with very high deductibles.
Like all health insurance reforms, this is not perfect. People who are in the cash economy will duck the surcharges. Medicare may spend more on these younger people than is collected in revenue. (not unlike the fact that Medicare Part B spends far more on seniors than it collects in revenue for seniors.)
Anyways, this deals with the worst cases of uninsurance. Another way I like to phrase it is that the O’Care Mandate penalty should be kept around– but it should actually be used to buy Medicare!
Andrew and Daubin raise a fascinating issue, suggesting that large claims do not even work much of the time.
I think they are wrong, unfortunately. A lot of people with $300,000 transplants go on to live another 15 years. Also you can spend more than $10,000 jus testing for cancer and not have it.
Still I like the direction of their thinking. In their world view, if a person was uninsured and could not afford chemotherapy for a stage 4 cancer — well let them go, they will die in five years anyways.
I could defend that, but no presidential candidate will go near it for a long time!
Bob Hertz, The Health Care Crusade