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Pick your poison

by Carl

Like most people I’ve been glued to the health care debate, which has predictably turned into yet another of our great national Rorschach tests. I have no great competence in this area so what follows count only as stray thoughts for further discussion.

The number that gets thrown around for the cost of a government health care package is $1 trillion, which is obviously a lot of money; and the question is, where’s that money going to come from. With government, the answer is either taxes or debt. The funny thing to me is that the side of the debate opposed to this often talk as if this would be brand new money to spend on health care. All of a sudden health care is going to cost a trillion bucks more than before.

In reality, as I understand it, we’re already spending that trillion. And the question is not whether we’re going to spend it or not going forward (it should be, but there are wicked wiggly worms and real live ‘death panels’ in that can). The question is whether we’re going to spend it out of incomes and private debt in the form of insurance premiums and direct payments for care, or whether we’re going to spend it in taxes and public debt which then go to pay for the same services. So at this basic level the debate is not about what health care costs but about who’s going to have their hands in our pockets for it, the government or the health care industry.

In principle it ought to be possible to work out with some precision whether the inefficiencies of government or the profit-taking of big business divert more of our money from the basic purpose of keeping us healthy, and whether private or public payments and debts are more cost effective. The idea to run a government option side-by-side with private insurance would actually be a great lab to test this. But here’s where the Rorschach test comes in, because the U.S.American psyche is pretty evenly divided among those for whom Government = Big Scary and those for whom Business = Big Scary. As long as those buttons are available to push, anything like productive national debate of health care policy is unlikely, and what we’ll end up with is the usual kludgy product of interest-group horse trading.

UPDATE: Great survey and analysis of the difference between individual and social insurance here.

Posted on August 13, 2009 at 3:35 pm in chaos, default theories, discipline, entitlement, how stuff works, waste   |  RSS feed |   Respond   |   Trackback URL

22 Responses to “Pick your poison”

    
  1. undine
    August 13, 2009 at 4:37 pm

    “the U.S.American psyche is pretty evenly divided among those for whom Government = Big Scary and those for whom Business = Big Scary.”

    That, right there, is the whole debate in a nutshell.

  2. undine
    August 13, 2009 at 4:38 pm

    (although I find it more than a little ironic that the Medicare contingent of town meetings disrupters never see any contradiction between Government = Big Scary and “don’t touch my Medicare!”)

  3. John McCreery
    August 13, 2009 at 5:28 pm

    Let me put it this way. I live in Japan and, given my income bracket, pay the highest rate for the national health plan. A prostate exam set me back the equivalent of $30. An MRI to check for brain tumor when I was having severe headaches after my father died was $100. Now that I’m over 60, a routine yearly health exam is free.

    The way the system works here is that health insurance is required. Big companies provide it for their employees. Everybody else is on the national plan, whose premiums depend on income level up to a fixed maximum (like social security taxes in the U.S.) Private insurance is available for those who want options not covered by regular insurance, e.g. private rooms or income protection if diagnosed with cancer.

    Don’t have to worry about losing coverage. Plus, our small business doesn’t have to worry about paying premiums for our two Japanese associates. Makes it a lot easier to stay in business and not go into debt when business is slow. And it’s just plain comforting, living in the country with the longest average life spans on the planet.

    If somebody asks me, why does the U.S. pay twice per capita what every other OECD country pays for health insurance, leaves 50 million people uninsured, and has basic health statistics that currently rank 40th in the world, behind, for example, Costa Rica,the only thing I can think of is that the U.S. system is rigged to insure that top insurance executives get paid like top bankers, out of profits ensured by refusing coverage to people who need it. That sucks.

  4. Carl
    August 13, 2009 at 5:44 pm

    John, I think what the insurance companies would say is that executive compensation is a drop in the bucket (which is true, despite the gaudy numbers) and that they could offer the insurance privately for a lot cheaper (and still carry the sickies) if everyone was required to have insurance. Instead we have those 50 million people not paying into the pool and everyone else has to take up the slack, including for them when they go for emergency room care. I’m not saying I agree with this argument, mind you, I’m just moving this side of the conversation along.

    Undine, I know, that looks nuts. I think there’s a certain fraction of the older population for whom Everything = Big Scary, but nothing moreso than Change. In fact, I’d say that’s a subtext of the debate for a lot of people, even among those who presumably stand to benefit the most from a rationalized public system. It’s not that they like what they’ve got so much, but the stakes are high and they’re afraid that the alternative could be worse. It’s like that joke about the room in Hell with the people standing up to their chins in raw sewage yelling at the new guy “Don’t make waves!”

  5. noen
    August 14, 2009 at 1:53 pm

    I don’t believe that this is really about healthcare. Ok, let me qualify that. I think that all the sturm und drang (See? I’m all philosophical ‘n shit now) is not really about healthcare or fears of too much government. It’s about white privilege. I believe that the people who are protesting this see their privilege declining and they don’t like it one bit. That’s why they say things like “I want my country back”. They want their privileged status back because they see it slipping away.

  6. Carl
    August 14, 2009 at 2:11 pm

    Yeah, I think that’s a great point. It’s a ‘relative immiseration’ thing coming from the same place as poor white trash’s racism in the Jim Crow South – we may not have much but at least we’re not niggers (yet). And therefore I suspect the same people getting hysterical about health care reform are the ones who continue to insist in the face of completely dispositive evidence that Obama is a foreigner. They took er jobs!

    But I wouldn’t say fear of big government isn’t a factor. There’s an elective affinity between the folk-libertarian ideology of rugged individualism, visceral rejection of any kind of institutional leveling of the playing field, and the kind of defensive group identity that doesn’t recognize itself as such.

  7. John McCreery
    August 14, 2009 at 6:04 pm

    Carl,

    I’ll grant that the executive compensation thing is only a small part of the problem. The central issue is that a profit-driven system includes, by definition, a perverse incentive to avoid paying claims, by refusing to insure those most at risk, limiting coverage and rationing care. Everything that the right accuses the government bogeyman of wanting to do is, in fact, WHAT THE INSURANCE COMPANIES DO ALREADY. As those of us who live outside the USA, whether in Japan or the EU know full well, there is no reason whatsoever that the U.S. has to pay twice the amount per capita for crummy health care results but big insurance and big pharma greed. None, whatsoever.

  8. John McCreery
    August 15, 2009 at 2:08 pm

    For those who want a different perspective, intelligently argued. See

    http://www.huffingtonpost.com/2009/08/14/how-american-health-care-_n_260101.html

    Doesn’t touch the core of the argument I am advancing: If every other OECD country can provide health care for all its citizens, at half the price, and with better results, why can’t the USA. What it does do is elaborate the perverse incentives arguments in several interesting ways, including hospitals and doctors in the maximize-my-profit crew and offer suggestions for separating routine care (pay for it yourself), predictable major expenses (health savings accounts) and catastrophic situations (fully funded public care).

  9. Carl
    August 15, 2009 at 3:49 pm

    John, I agree that the original perversion is letting health care be a for-profit business; or at least, letting that be the only delivery system. The secondary perversion is treating it as an insurable contingency rather than an ordinary expense, so I really like the idea of splitting up health care into routine, predictable and catastrophic, with the former out of pocket, the middle available for discretionary insurance/hsas, and the latter a covered public expense (perhaps with the option of private supplementation, AFLAC-style).

    Treating routine health care as an insurable contingency is like treating running out of fuel like an insurable contingency in your car. We don’t buy fuel insurance because we know that at regular intervals it’s just going to cost something to keep the vehicle running, and we budget for that. And while we do often insure our cars for minor contingencies, we also often decide not to involve the insurance company in coping with them (it may be more expensive to pay increased premiums than to just pay the body shop to pull out that ding). What we legitimately insure against is the sort of contingency that might well not come to pass at all, but if it did would wipe us out. The insurance company then legitimately makes its money off the people who escape the bad contingency, by calculating the rate of risk and charging everyone enough to cover the payout plus some. As my dad explained to me when I was but a pup, insurance is a bet you place against yourself. No one wants the best for you more than the insurance company.

    Insurance as a model only makes sense if there’s an actuarial dimension. If you know where the risk is going to roost obviously you don’t underwrite it. This is why I’m fully sympathetic to insurance companies that don’t want to write new policies for people with pre-existing conditions. That’s like getting insurance on your car after you wreck it and expecting the company to pay for a new one. They can’t stay in business that way. So again private insurance is quite obviously the wrong model if we’d like everyone’s hurts to be treated. A kludge, as I mentioned above, would be to require everyone to have insurance so the cost can be spread through a larger pool. But at that point the government can clearly levy and distribute the sickie subsidy more efficiently, so there’s no point but systems inertia to trying to get insurance companies to work against their natures.

    Ironically, in Europe the government provision of social safety nets like health care was quite explicitly a strategy by the Right (Bismarck was a key figure) and its liberal allies to head off socialism, by blunting the edge of its wedge issues. I couldn’t say why it didn’t work like that in the U.S.

  10. John McCreery
    August 15, 2009 at 7:23 pm

    That’s like getting insurance on your car after you wreck it and expecting the company to pay for a new one.

    Perhaps in some cases. Someone who smokes for thirty years, develops lung cancer, and only then wants to buy insurance; in that case the analogy may hold.
    But what about someone like my granddaughter, who was born with a minor heart defect? Her mother had a similar defect and still managed to graduate from Annapolis, excel in SERE school, and command successful search and rescue missions. Her mother, my daughter, now has to worry about her husband taking a job that would make them ineligible for Tricare (the military insurance they now have, since it is very likely that finding insurance for her daughter, my granddaughter will be (a) very difficult or (b) obscenely expensive. Is my granddaughter wanting insurance after she wrecked the car? I don’t think so.

  11. Carl
    August 15, 2009 at 7:34 pm

    Yes, I’m afraid she is and only love can make it not so. My point however is not that she shouldn’t get care, but that the insurance model is inappropriate in her case. Here’s where a business model of health care fails and the public must step in. I thought we agreed on this?

  12. Carl
    August 15, 2009 at 7:36 pm

    To specify: you accept the argument when the car wreck / health condition can be ‘blamed’ on the individual but not when it can’t. However, from an insurance standpoint if there’s liability blame is beside the point (‘no-fault’).

  13. John McCreery
    August 15, 2009 at 9:20 pm

    Therefore the insurance for insurance-industry-profit model be damned. Insurance should be a public utility. As Amartya Sen has argued, the critical choice in this and so many other debates is whether we shall measure value in human lives or in money. Those who choose the latter over the former and seek to increase their profits at the cost of human suffering should, come the revolution, be put up against the wall and shot.

  14. Carl
    August 15, 2009 at 9:29 pm

    Sure. Right after the critical intellectuals. ;-p

  15. John McCreery
    August 16, 2009 at 7:13 am

    No need to waste bullets. Toss ‘em in a pit, capture gas, recycle periodically. More ecological that way.

  16. duncan
    August 28, 2009 at 4:24 am

    Only just took my face from out of my despairing hands on this issue enough to pay attention, so sorry I’m late to comment.

    In principle it ought to be possible to work out with some precision whether the inefficiencies of government or the profit-taking of big business divert more of our money from the basic purpose of keeping us healthy, and whether private or public payments and debts are more cost effective. The idea to run a government option side-by-side with private insurance would actually be a great lab to test this.

    The thing is there’s already a great natural experiment on this – one can simply compare health care systems, expenses and outcomes across different countries. Obviously one needs to take into account non-health-care-related factors influencing health, but it’s fairly easy to get a good sense of the pros and cons of different systems, I think. One of the benefits of the nation state.

    Ironically, in Europe the government provision of social safety nets like health care was quite explicitly a strategy by the Right (Bismarck was a key figure) and its liberal allies to head off socialism, by blunting the edge of its wedge issues.

    In the UK at least this isn’t really true: the Nation Health Service was the greatest achievement of the post war Labour government.

  17. Carl
    August 28, 2009 at 10:01 am

    Oh, well if you want to count the UK as part of Europe I suppose. ;-)

  18. Carl
    August 28, 2009 at 10:07 am

    So anyway, one of the frustrations of U.S.American life (but I’ve found this true elsewhere) is that enough people to matter are convinced that we’re completely unique, usually in a good way, that makes comparisons with how others do things pointless. So for example despite the fact that all sorts of places with socialized medicine are not notably socialist overall, the hysteria about big government that is the peculiar legacy of our history of anti-communism swamps those discussions here. Therefore I agree with you completely (and I think the data are in, decisively) but to get any traction here the experiment will have to be done here.

  19. duncan
    August 28, 2009 at 4:23 pm

    Thanks Carl – I think that’s well said. We’re all special, after all. :-) (Which is why the UK isn’t part of Europe :-P) W/r/t the ‘natural’ experiment being run within national bounds, though, it seems like this is to an extent already going on in the US? Not properly socialised (state run) medicine, of course – but if I understand the current system, it’s already divided between private-insurance-funded and tax-revenue-funded sections? (With straightforward bills also in the mix in a big way.) Tax-revenue funded health care – medicare and medicaid – doesn’t seem particularly unpopular, from what I can tell? And yet the tolerance or even enthusiasm people have for medicare or medicaid often doesn’t seem to translate into a willingness to consider other publicly-funded healthcare options. So while personal experience is certainly more powerful than statistics, in terms of how people think about political possibilities, it doesn’t seem that personal experience of reasonably acceptable tax-funded healthcare programs translates into a willingness to consider other such programs as politically tenable or desirable. This seems to mean that other stuff is at work in the intense hostility to ‘socialised’ medicine. Reds under the bed, I guess. I wish I had a better understanding of what’s driving that side of the debate.

  20. GaryDaGeek
    September 15, 2009 at 9:31 pm

    I watched my poor old mother die slowly while Humana ( Reimbursed by Medicare ) billed my Government ( On Average ) over $3,500.00 per month Over a five Year period. That is $210,000.00 over five years for a poor old woman who passed away at the age of 87 in her own home in her own bed.

    She was under Hospice for that entire time ( which basically means you are not going to get better and are expected to die at any time). They provided a Nurse who visited usually about once a month but sometimes twice a month for about an hour per visit.

    She had an Oxygen Generating Machine and several medications. She might have seen a doctor once a month but it was usually less. I am sure she never saw a doctor more than twice a month. The main thing which might have sustained her longevity was probably the inhalers. These were provided ( I do not recall the names off the top of my head ) as separate unmixed ampules ( as the cost of providing mixed medications was disproportionate ). She had COPD. I remember her asking me “What do they do to justify these charges”.

    She got bills that stated “any fradulent charges should be reported” but she never got a breakdown of any of the charges. All I ever saw was totals. Never; so much for this; or so much for that. There was no way to question such ambiguous rubbish.

    If your loved one is dying are you really going to question their only source of support; and if you do what are you going to do if they decide to “Suspend The Contract” while they investigate your concerns?

    My Mom actually thought her Health Care was quite good. Comparitively it actually might have been.

    There is no way I could be convinced that that “Oxygen generating machine” was not bought and paid for in the first two months ( though it was continuously “Rented” for five years ). This was nothing more than a “Rip Off” that was then, and is now, allowed to continue because a few “Greased Wheels” continue to control and enforce “Laws” that under a Civilized Democracy would have no right to exist.

    Our Congressional representatives are so bought out by Special Interests for Campaign fund donations that they have sold out lock stock and barrel.

    How can ordinary every day run of the mill people, all of whom have Mothers and Fathers and Sisters and Brothers, who have witnessed similar tragedies, turn their noses up and act like there is nothing wrong? That kind of personal ignorance is Mind Boggling. Can you not see how outrageous this is? We should be marching in the streets with Pitchforks and Torches.

    My greatest concern is that we will not change anything. The Politicians will sell us all out and we will adopt some watered down bill that makes the “Public Option” ( if we can even get one ) maintain these ridiculous rates and then pretend it is in the interest of fairness.

    Requiring the “Government Plan” to pay “Prevailing Rates” in the “interest of fairness” really means we do not fix what is already broken.

    Who would want That? United Health Care for one among many others; who if I should attempt to name them all would fill volumes and pages beyond the scope of this retort. The point being that the industry as a whole is happy with your suffering and appreciates your complacency.

    Why must United States Citizens be expected to pay over 2.5X more for everything Medically related than the rest of the civilized world?

    If you want to get outraged fine; but be outraged at the people who are and have been exploiting you. I listened to the same scare tactics you listened to. We let Harry and Louise convince us that Private Insurance was the best bet.

    They had their shot and they blew it. Private Industry and unmitigatigated corporate greed has put the lie to their own propaganda. Every year the cost goes up and the coverage goes down.

    Stop being a Sucker and Pay Some Attention. It really is time for a change. If we can not get Universal Health Care at least demand a meaningful competitive public option and a system that guarantees competitive reform.

    Isn’t it about time “We The People” demanded meaningful legislation that serves the Public Interest?

    Stop catering to Corporate parasites and start looking out for your own family. Don’t be Idiots. Start paying attention. When the Politician tells you the “Time isn’t Right” he is really saying “there is a lot more money in the pipe if I can put this off”.

    They have been telling us this for over fifty years. Stop being their sucker.

    All they care about is the Gravy Train they’ve been riding. It has worked so far so why not tomorrow?

    That’s Six Ponies Two Buffalo Hides and Twenty Seven daughters owed to this site. Sorry about the shortage of Ponies.

  21. Carl
    September 16, 2009 at 11:18 am

    Hey Gary, welcome. Since you’re new I’ll let you ride on the short ponies this time. I’m delighted to see the buffalo hides.

    Your comment really captures a lot of what’s perverse about the current system. I think it’s pretty clear we’re not going to get something dramatically better this time, but there may well be progress. In general, I don’t blame companies for trying to make money. That’s what they’re for. But as you say, this might be an area where making money is not the right model. Cheers!

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