As noted in these earlier posts, Arnold Kling continues to provide an enormous amount of lucid analysis on what ails America’s health care finance system. In this TCS Daily op-ed, Kling makes two excellent points, the first regarding tax treatment of health insurance premiums:
I would like to see the abolition of the tax break for company-provided health benefits as well as the tax break for Medical Savings Accounts. Company-provided health benefits ought to be included with personal income and taxed at the personal income rate. There should be no special benefits for savings accounts labeled “medical.” (I think that all saving ought to be tax-free, but that’s another topic.)
. . . Although I prefer real health insurance to insulation, I do not want to impose my preferences on others. All I ask is that we reform our tax code so that it is neutral.
Second, Kling makes an important point regarding the freedom to buy health insurance and the health care limits that society needs to accept if a person chooses not to do so:
[M]ost of the people who are uninsured today are reasonably healthy. They just do not want to pay for their own health insurance. In my view, they ought to be allowed to make that choice, but they should face the consequences. If they require health care, the cost should not be shifted onto other people who have insurance.
That second point is hotly contested. I am aware that libertarian thinkers like Kling or Cowen argue this, but many, including myself, are not remotely convinced that “most” of the 45 million uninsured are able but unwilling to pay for their own private health insurance.
It seems that there are at least three classes of people who are uninsured.
1. Those who are changing jobs and in the 3 month window.
2. Younger people who choose not to buy insurance.
3. Those for whom insurance is unaffordable for whatever reason including pre-existing conditions.
Daniel is right in that some advocates try to put everyone in the third category and others emphasize the the first two. We really need some definitive breakdown of the categories before we can talk realistically about the size of the problem rather than just make up numbers to fit the argument.
On the other hand, Kling also argues that government micro manages the policies to make sure they include some favored coverage. I really don’t like paying for pregnancy insurance as a male in my 60’s. All these seemingly small increments do add up.
Kiling also argues that pure catastrophic, high deductable insurance is not available in many states because of government mandates.
In essence, the only thing we really need from government is some kind of guarantee the company offering the insurance is solvent, able to honor its contract, and, maybe, defines clearly what its obligation is.
Health insurance via populist government does get to be quite expensive.
Rick
Daniel, an interesting point. I suspect that you are right. However, I wonder whether Kling’s statement assumes that there is currently no real health insurance market in America, what with the vast majority of existing policies being “health insulation” that distorts the true cost of health insurance. If a market for real health insurance existed and, as Kling believes, such insurance would become more available, then his statement might just be correct.
To me, arguing over health insurance (who has it, who doesn’t, how much, what it covers, etc.) is putting the cart before the horse.
Society first needs to resolve the issues of (1) how much health care is someone entitled to have, (2) the financial responsibility each person would have for paying (through one means or another) for their own health care, and (3) how to handle – and pay for – those who refuse or are otherwise unable to pay for their own health care.
Because society hasn’t done so (and never will, because doing so inevitably means saying NO to someone and society just isn’t good at doing that), there never can be any sort of consensus about the proper role of health insurance, as health insurance is merely a component in the world of health care, and until one knows what one is trying to build, fiddling with the components is a big waste of time.
To provide a counterpoint to Daniel’s position, I would offer that there is, in fact, a good portion of the population for whom health care insurance may be affordable, but is perceived not to be all that important. Usually in these instances, people have chosen to place such a low priority on paying for their medical care that their money is gone long before dropping down that far on the list. I see these folks every day in my practice. At the risk of sounding like the old crusty curmudgeon I am becoming, here are a few examples.
I saw a man last week who returned to the hospital with recurrent chest pain 2 months after his recent heart bypass surgery. Although he has been granted both Medicare and Medicaid (and can obtain up to 3 medications per month for $3 each [with the remainder of the cost being underwritten by you and me]), he told me that he could not afford his meds once he got home. He was, unfortunately, able to afford the 2 packs of cigarettes and 12 beers per day that he resumed following release from the hospital. No amount of “free” health care will help correct his problem with life priorities.
Then there was the methamphetamine addict who gave himself a skin abscess through less-than-sterile technique during a drug injection. The infection was drained and packed, and he was given a prescription for an antibiotic that can be bought at Wal-Mart for $4. He returned a few days later with progression of the infection. The culture taken at the time of the drainage showed that the bacteria causing the infection was sensitive to the prescibed antibiotic. In another poor life choice, the young man had chosen not to pay the $4 for the med. He was, however, sporting a fresh tattoo on the side of his neck. He ended up requiring hospital admission for IV antibiotics and surgical debridement of the infected site in the OR. And the bill for the treatment of this uninsured person was underwritten by those of us who do have health insurance.
I know that there are many people in this country who go to work every day, work hard for little money, and just cannot afford the cost of an individual health insurance policy. I have bought such policies myself – I know that they are expensive.
However, in the screwed up state that is Health Care in America, if you don’t want to bother with buying health insurance, that’s OK, because the rest of society will pay for your health care. It may be inconvenient (long wait times in the ER), it may be aesthetically displeasing (county hospitals rather than suburban private facilities), but you can get it for free. You just gotta ignore those calls from the bill collectors.
Somehow, in Texas, we have reached the conclusion that everyone has to have liability auto insurance – no proof of insurance, no car tag renewal.
If it is OK to require all drivers to purchase car insurance (and to prosecute them if they do not), how much of a further intrusion is it to require some form of catastrophic health insurance, unless, of course, like Big T, you can offer proof of independent wealth…..
jrb
Good points all.
Tom: you’re obviously right that we currently have health insulation rather than insurance, but that raises interesting questions about what constitutes social insurance. As Deborah Stone argues (persuasively), the entire point of social insurance mechanisms is to spread risk among a population regardless of any one subscriber’s need for the service provided.
Accordingly, to argue that social insurance is unjust because you pay for something you may never need is no argument at all; it simply restates the definition of social insurance mechanisms in the historical sense (i.e., Germany’s sickness funds under Bismarck, etc.)
Obviously, many disagree with this view, but it certainly presents an historically grounded conception of social insurance that posits that health is a social, rather than an individual good.
Steve: I generally agree, though I don’t think arguing over proper insurance is a waste of time, especially if you take Stone’s view on the expansive sense of health care as social insurance.
Jim Bob: I respect your experiences, but anecdotes are not evidence, IMO. What any one provider experiences does not tell us much in the aggregate about the characteristics of 45 million people, IMO. However, I’m totally on board with a mandate to buy catastrophic insurance; it isn’t all that expensive to begin with, all things considered, and expanding the pool would only make it more affordable.
(Note: my first post here and I cannot get the preview window to recognize my paragraph breaks–apologies if this appears to ramble even more than it should)–
A word from the uninsured…forgive this anecdotal and less than scholarly post, but this is a topic that makes my blood boil.
My wife and I are self-employed. She has MS, diagnosed in 1986 (Tom, you have met her). She keeps herself in great shape, youíd think she was completely healthy and much younger than her 54 years. Though she has the occasional flare-ups of MS oddities and a constant degree of numbness in her left side, she can otherwise pass a physical with flying colors, and she has fooled a doctor or two. She hasn’t received any treatment for MS in 20 years. A quick examination of her medical history would show that she has developed a fiscally responsible, minimalist approach to health care (I suspect Mr. Kling would approve), yet NO insurance company in America will write her any sort of policy. Not one. They donít exclude MS related issues, sheís just out, period. Instead, they pawn her off on the State of Illinois high risk pool, which offers minimal coverage at a maximum rate we canít afford. Iíd venture a guess she’d get cheaper and better protection from guys with names like Tony Soprano.
We are not jobless or lazy (she works fulltime), illegal immigrants, over-extended yuppies, or just plain stupid as many categorize the uninsured in America. She doesn’t want a free ride or a hand out. She doesn’t want you to pay for her health care. She wants a chance to play.
I hate to sound like a communist here, but for me, a for-profit health care system will always be a moral morass. You simply cannot maximize profits for your stockholders without somehow sacrificing the needs of the patient. In this case, itís people like my wife, who are seen as potentially getting in the way of a good return on an investment. Please donít tell me the market and competition keeps prices down. If that were true you could explain the following to me: In 1986, an MRI to confirm her diagnosis (at the time, brand new technology) cost $800. Two years ago, an ophthalmologist wanted her to get an MRI to make sure the loss of vision in her was MS related and not a brain tumor. The cost, now that you can find an MRI center on practically every street corner, was $4500 (She refused the test). I could go onÖ
Its bad enough my wife has to live with MS. Sheís also denied insurance and then charged up to 60% more than Blue Cross or other insurers pay for the same services (another lovely idea: charge the people who canít afford insurance more for health care). Every routine test becomes an adventure on the phone, with days spent tracking down and questioning every charge, or finding that rare individual who knows how much a procedure actually costs.
The insurance industryís exclusion of ìhigh-risksî like my wife, and the subsequent fleecing of those same people by health care concerns helps a whole bunch of people make a whole lot of money, yet all debate, centers around is how much Americaís uninsured are costing us. My wife hasnít cost you or anyone a dime. Perhaps instead of thinking of her and people like her as a liability, you should ask yourself how much money theyíve allowed you to makeÖtell me, whatís in your mutual fund?