August 12, 2003

Socialism Without the Socialism

James Becker emails and points me to an article by Ronald Bailey in Reason about a universal health insurance plan from the New America Foundation.

It looks good to me. In fact, I think itís the best one Iíve seen.

Every American would be required to buy their own insurance. Those who canít afford it would get assistance from state-funded vouchers.

According to their theory, premiums would be less expensive if everyone had insurance. The risk pool would be larger, and no one would have to make up the costs of treating the uninsured. Since every single American would choose their own company, increased competition would drive down the price. Itís hard to say if theyíre right about this, but the price wouldnít likely go up.

Those with health insurance benefits from their employer could select their own company and policy. Employers would still make the payment, but they would no longer dictate the terms.

New regulation would protect people with pre-existing conditions.

New America Foundation CEO Ted Halstead says the idea is politically independent and centrist.

A policy of mandatory health insurance defies the usual political spectrum. Its universalist dimension should appeal to the left, while its market-based orientation should appeal to the right. The interesting question is who will be first to lay claim to this idea: President Bush or one of the Democratic presidential candidates.
It seems to me that Democrats should like this more than Republicans. Ronald Bailey in Reason calls the foundation a liberal policy shop. And universal health insurance is clearly a job for the left, especially if government assistance is part of the bargain.

But if Reason likes it there must be some centrist appeal. Maybe some in the GOP might go for it, too. It isnít ďwelfare,Ē and it certainly isnít socialist.


UPDATE: Adam Sullivan has more.

Posted by Michael J. Totten at August 12, 2003 12:50 AM
Comments

Maybe it's ... Libertarian Paternalist?

The paternalism part refers to requiring people to take care of themselves (be responsible), while the Lib part is an attempt to maximize freedom.

I heard this phrase somewhere, but not the above definition. This particular policy, as well as the above idea, sounds good to me, too.

Posted by: Tom Grey at August 12, 2003 01:34 AM

It's not a new idea,but it's certainly worth considering.The problem with a completely free market is that insurance companies evaluate their rates on an individual basis - making the cost prohibitive for those who most need it,such as the elderly and people with chronic conditions.

The usual solution to this dilemma,other than a completely government-run system,is to have public health services for left-behind groups.This is pretty much the current system in the US.
It is interesting to note that public health-care expenditures as percentage of GDP are higher in the US than here in Finland,despite the fact that we're the ones with a "socialist" health care system.(You may not want to ask about quality of service,though.)

A mandatory health insurance might thus actually decrease the role of government in health care and be less "socialistic" than the system you currently have.

Posted by: JH at August 12, 2003 02:33 AM

There is a problem, though. If everyone has to have health insurance by law, insurance companies can up their charges without fear of losing custom. Yes, they're supposed to be competing with each other, but, even without forming a cartel, chances are they'd start to behave like one.

Here's an example. In South Africa, carjackings are pretty commonplace these days. The incidences of theft and vandalism of cars are far higher than in the UK. Added to that, the UK has one of the lowest rates of road traffic accidents in the world, certainly far lower than South Africa's. Yet car insurance in the UK is far more expensive than in South Africa. I'm sure there are all sorts of possible explanations for this, but it would be naive to overlook the fact that, while, in South Africa, car insurance is optional, in the UK, it's compulsory.

There's also the libertarian point of view that people should be allowed to make choices about their own lives. Why should a rich man, who can afford any treatment he needs, be forced to take out health insurance? If a prudent couple decide to save money and put it to one side their whole life in case of medical emergencies, why should the government force them to take out insurance instead?

Posted by: Squander Two at August 12, 2003 02:45 AM

"Before rejecting the proposal out of hand, stop and consider that it may be a second-best
alternative for relieving the growing political pressure to create some sort of nationalized
single-payer
health care system modeled on the nearly bankrupt and increasingly shabby health
care schemes in Canada and Western Europe."

Is this so? Is the health care "scheme" in Germany or Finland or Luxemburg really shabby? We hear of the Anglo-medical troubles in the UK and Canada. But, is the service of the like in the rest of the EU? The UK is sending patients to Germany, much as Canadians come to the U.S. for treatment. How do German Lander provide care? Can "old Europe" provide any sort of example?

Posted by: Virgil K. Saari at August 12, 2003 04:44 AM

Mr. Totten, "According to their theory, premiums would be less expensive if everyone had insurance. The risk pool would be larger, and no one would have to make up the costs of treating the uninsured. Since every single American would choose their own company, increased competition would drive down the price. It’s hard to say if they’re right about this, but the price wouldn’t likely go up."

Demographics are pushing the costs higher and the aging population in the West means fewer are paying even in universalist schemes. I think this is just a method of getting all the Gen Xers and Millennials to start footing the bills of the aging Baby Boomers. The Mpls. Star-Tribune just today (12 August 2003) points to a need for hearing aids among the Boomers after all that rock 'n' roll; now, we need someone (other than ourselves) to pay up for our misspent (and already too long) youth.

Posted by: Virgil K. Saari at August 12, 2003 05:04 AM

BTW, it appears that Virgil Saari is talking in the language of the generational theories of William Strauss and Neil Howe. In case anyone has no clue what Virgil means by "Millenials", he probably means the generation born after "Generation X", from roughly 1982 through roughly 2002.

=== (subject change)

The financial vehicles known as "insurance" has always been a big part of capitalism's answer to socialism. In effect, everyone pitches in to help the people who need help, but it is done in a capitalist way, with competition and all that good stuff.

I think this post of yours is reasonable, except for the point where you think prices wouldn't likely go up.

Prices might not go up, and the competition would be a factor preventing them from going up, yes.

However, medical insurance is a special case, because new, more expensive treatments are always being developed, and people are disinclined to allow cost to be a factor in who gets treated and who doesn't. Therefore, prices could continue to rise under even the optimum system (which I think would require competition).

Inevitably, the issue of medical insurance is complicated, but I insist that private sector insurance is the best way to go. The system we have inherited is probably far from ideal, however, and the idea you write about here could work better than our current system.

Posted by: Mike Smith at August 12, 2003 06:06 AM

I'm starting to like this idea because of the impact it could have on the difference between part-time and full-time work, and for the freedom it might give to people who can get by on less than full-time pay.

As it stands now, if you want health insurance, you have to get your full-time employer to provide it, and you still pay through the nose. If the coverage market were to be re-oriented away from group plans and towards individual customers, more options might be available.

Many families that send one parent to work full-time for the sake of getting health insurance might instead choose to share two part-time jobs for the same total pay.

As someone mentioned above, if it's compulsory, there's a prime opportunity to gouge customers. Regulation and government micromanagement would follow, as the day the night (carriers would be forced to have a certain percent of their customer base in certain ages and demographics, etc.). But would that be any worse than the current system? Ask your insurance provider how much you are already paying to cover legislative mandates. It's not pretty.

Posted by: matt at August 12, 2003 06:16 AM

In many states there is mandatory auto insurance, which means that the states have the political will to basically manage everything the insurance companies can do. Pols run on what they're going to do with auto insurance. Sometimes the insurance commissioner becomes as powerful as the highest state pols. The whole thing becomes a bureaucratic nightmare and the problems are not really solved.

Also, IMO universalizing health payment (note, it's universal health PAYMENT not universal health CARE -- the payments are mandated, the care is not) without doing tort reform is a nightmare waiting to happen. This thing needs more thinking out.

Posted by: Undertoad at August 12, 2003 07:22 AM

Well, obviously, undertoad, this thing needs more "thinking out," as you say, but at least somebody's trying to do some original thinking on the matter. That's to be encouraged. There a gazillion ramifications to this, but it is worth studying. It's an approach that breaks the logjam we've been in and for that I applaud it.

Posted by: Roger L. Simon at August 12, 2003 07:38 AM

Thanks for putting this on your site. It's an important issue, and mandatory health insurance seems the least bad way of dealing with it.

The current U.S. system, which is based on a tax-break for employers plus socialized care for the poor and the elderly, combines the worst of all worlds. It keeps poor people from taking jobs, keeps workers from switching jobs or starting new businesses, subsidizes people with good jobs, distracts companies from their real business, fails to limit costs of the rapidly increasing elderly, etc.

What interests me is how some people want to pigeon-hole mandatory health insurance into an ideology. Is it liberal? Is it conservative? Is radically centrist (to use Halstead's term)? Why are people discussing what ideology it fits into?

One good point of Halstead's book, The Radical Center, is that that 1930s/New Deal liberalism and 1960s Goldwater conservatism don't solve problems in 2000s society. They formulate a new social contract between citizens and government, which tries to combine a limited gov't safety net (instead of gov't being the universal provider) with individual responsibility. Mandatory health insurance, if properly done, is the best example. A credit or subsidy can help the poor pay for it, and individuals would have various options based in part on market forces.

P.S. - I highly recommend Halstead's book, The Radical Center. Though the title is awful, and some of the proposals are highy dubious, the book made me rethink a lot of my own assumptions.

Posted by: Oberon at August 12, 2003 07:53 AM

I agree this is an interesting proposal. One question comes to mind right away, however. How would the legal rquirement of health insurance be enforced? In CA, many drivers take their chances on driving without insurance. If they are caught, the penalty is not life threatening. But with health insurance, I suspect that many of the very people who are not insured now would be most likely to slip through the cracks again. One can argue that it's their problem if one is talking about adults. But what about children? I fear that parents who were "illegally" without insurance would not take their kids to the doctor for fear of getting caught.

Posted by: SJ at August 12, 2003 08:45 AM

I don't know that it will work out as well as it sounds. A lot of states have mandatory auto insurance, but lost of people get into accidents with un-insured motorists. So the coverage probably ever won't be universal.

Posted by: Brandon at August 12, 2003 08:56 AM

SJ,

As for your question about enforceability:

According to the articles, insurance would be enforced on tax day. When you file your taxes you have to prove you have insurance. If you don't have it, the government will enroll you in a default plan, and will either deduct the cost from your refund or send you a bill.

Posted by: Michael J. Totten at August 12, 2003 09:14 AM

Oberon: I agree with your post, and your characterization of the potential synergy between Roosevelt's and Goldwater's ideologies, but I hope you would agree that it is deeply unfair to call the US health care system "the worst of both worlds."

I have every confidence that the flaws in the US system are much easier to recount than its myriad successes, and that the US system compares more than favorably to that of any other country. Our only flaws are two:

1. That health insurance is not guaranteed.
2. That malpractice insurance is burdensome.

Frankly, I find these minor flaws, ones which I'm sure will be solved soon. We Americans always solve our problems eventually. Given the state of our health care system today, which is not as bad as the hype, it will not take much to go from good to better.

BTW, it might surprise people to learn how much "indigent care" America's hospitals conduct on a routine basis, in every state. People don't die in this country. I'll remind people that the health care arguments in this country are not over life and death, but over quality of life. I think that's something to be proud of.

On the other hand, the British system can teach us what it means to guarantee coverage, and the difference between quality of life and quality of care. By sheer coincidence, the NY Times just published an article today describing the UK's disgraceful dental care system. I urge everyone to take a look, and see how not to do it.

So anwyay, I think the US health care system is pretty damn good, all things considered, and I have every confidence we can soon plug the holes of universal coverage and malpractice insurance. I'm also hopeful we can do it in a public-private partnership that does not maximize government intervention or market coercion.

The system Michael highlighted is a great idea, so let's hope it can be implemented but avoiding the pitfalls of the car insurance systems in the UK or New Jersey.

Perhaps there is a state in the union which will try it and see.

P.S. To Tom Grey - The word is "utilitarian."

Posted by: Hovig John Heghinian at August 12, 2003 09:34 AM

It is an interesting proposal, but....

do we continue to provide Medicare for everyone who reaches the "magical" age of 65, or do we destroy that bloated behemoth and place those people in this plan as well?

what if I can afford to pay for my own medical care and don't want to contribute to the insurance pool?

what if I am happy with my current coverage, which will never meet the governmental mandated criteria because it has an extremely high deductible?

Just a few of the many questions that should be considered.

Posted by: Jamie Jacoby at August 12, 2003 09:37 AM

As an insurance agent, I think there are a couple of facts worth noting here. One, over 50% of all jobs in this country are provided by employers with fewer than 100 employees. The tax break mentioned by Oberon is a vital incentive to those employers to provide group plans (specifically, by establishing a section 125 plan, the employer is able to deduct premiums from payroll tax). Also, group plans are typically significantly less expensive per insured than similar coverage plans, offered by the same insurers, to individuals.

Second, I don't know if it's the fault of the article or the study itself (which I admit I haven't yet read), but there appears to be a significant inaccuracy. To wit:
"Employers would eventually devolve responsibility for health insurance to their employees by giving them the money the companies currently pay out to insurance agents. Employees would then have a strong incentive to shop around for the best health care deals, putting pressure on insurance companies to keep costs low."
The article seems to imply that individuals will have more purchasing power than groups, which I don't think is true. As I noted above, group insurance is cheaper than individual. One reason is that it's easier to assess the risk for a group than for an individual, since the larger the group the more certainty the actuaries have in estimating future claims. Insurers can therefore reduce marginal premium costs for groups in ways that they cannot afford to do for individuals.
Also, the quote above indicates that a significant part of premium expense is taken by the agent. Well, that's a matter of perspective, I suppose. All I'm going to say (I apologize that I must remain vague here for contractual reasons) is that in my experience, group pays about one-third the commission percentage as individual. I don't see that changing just because it's mandatory for individuals to purchase insurance.
Which leads me to the next point, on which I'm not so confident. I can't recall the source for it at this time, but I seem to remember that the percentage of uninsured motorists didn't change much with the advent of compulsory auto liability coverage. What did increase is the amount of fraud. Guess who gets the privilege of paying for the expense of increased fraud? That's right, the folks who lawfully purchase insurance. The company won't eat any more of that than it has to.

We're already paying for the uninsured in a number of ways, from increased taxation to higher healthcare costs, to the vastly more difficult to determine societal costs. But I'm always suspicious of any plan that adds a layer of bureaucracy, which inevitably leads to costs of its own. Unless I could be convinced that other costs would somehow be reduced, I don't see any government healthcare plan actually helping.

Posted by: Phil at August 12, 2003 09:50 AM

It is very difficult to argue against this without going hyperbolic in a number of different directions. It is hard to get attention for the many boring practical objections without going hyperbolic. The biggest problem with health care right now is not coverage but cost. Unchecked litigation and jackpot justice has driven the cost of health care beyond the reach of almost anyone. The problem I see is that this is like forcing everybody to play cards with people you know are cheating and staking the people without funds of their own. Raising the stakes and providing additional marks to be fleeced is not an incentive to stop the cheating.

The problem is the phrasing of the question. Do you want universal health care or universal health care coverage? They are not the same thing and pretending they are does not help make people well.

Oh yes, one more thing. Most people do not like working for bureaucracies. I would argue that almost everybody who wants to work in a vast bureaucratic machine is doing so already. I would further argue that giving people strong incentives to become mindless drones is counter-productive on a variety of levels.

Posted by: Patrick Lasswell at August 12, 2003 10:04 AM

The State of California currently imposes mandatory liability insurance on automobile owners, but the owners are free to buy that insurance from any provider they choose. So the theory that a larger risk pool and free-market competition will reduce the cost of mandatory insurance could be validated by studying the California liability insurance market.

But the "mandatory health insurance" part is kinda weird. It's one thing to say "cons will like the free-market part"--but it's a huge leap from there to "the free-market part will trump concerns about state paternalism".

I mean, liability insurance for the car makes some sense. It's heavy machinery, it's used out in public, there's a compelling community interest in insuring the thing.

But this? Now that I've made the car comparison, I can't shake the idea that suddenly I'm supposed to have a license to use my body. Even though there's good arguments for the case that there's a compelling community interest in keeping everybody healthy (and educated), it doesn't really feel right.

Plus, there's a lot of unsettling implications:

It's one thing to fine or incarcerate an uninsured motorist. What about an uninsured person?

The State doesn't undertake to ensure financially strapped motorists: either you can afford the entire cost of the car, or you take the bus. There's no market mechanism in place to limit the number of people who can't afford health insurance. This plan amounts to a potentially unlimited State health insurance budget. What happens when the money runs out? Do the insurance companies take a State-mandated loss? Do the poor just do without flu shots that year (which, admittedly, might be better than doing without flu shots every year)?

I think it's a good plan, and, icky totalitarian paternalistic nanny-state vibes aside, I'd probably go along with it--if there was some plan for limiting the number and/or taxpayer expense of destitute claimants.

Not because I'm some kind of (Ayn) Randian jerk, but because, well, seriously--where is the money supposed to come from?

Posted by: Peter at August 12, 2003 10:25 AM

HJH -- my post was poorly written, I think -- I didn't mean to imply that our quality of care is lacking. Mandatory health insurance is meant to address lack of coverage of 40 million Americans, and the distorting economic effects of our part-socialized, part-employer-based system. What effect it would have on quality of care, I won't even try to guess.

Phil -- it seems clear that mandatory health insurance could lead to some serious profits for insurance companies and insurance agencies. That doesn't particularly bother me.

Your point about fraud would apply in any system which extends coverage to 40 million people currently not covered. Also, I think private insurers would be better at stopping fraud than the mess we have in Medicare and Medicaid.

Mr. Laswell -- when you say "Unchecked litigation and jackpot justice has driven the cost of health care beyond the reach of almost anyone" it sounds like you're blaming the cost of health care entirely on trial lawyers. I believe that the rules should be tightened and awards should be capped, but let's not pretend that will solve everything.

Posted by: Oberon at August 12, 2003 10:29 AM

Oberon -
I just ran a rough, low-end estimate of the agency profits involved, and all I'll say is wow. I guess I should root for it. However, taking my personal self-interest out of the equation, I'll just reiterate that I don't think that the rest of the (tax-and premium-paying) public would be well served. At least in the short run, average premium costs would be more likely to go up than down. The marginal costs associated with insuring people one family at a time are simply higher than the marginal costs associated with insuring a group. I suppose that insurers might decide to forego current underwriting standards since, in effect, they'd be writing large enough numbers that it might as well be a group -- but I wouldn't bet on it.

Fraud's just like shoplifing -- you can take measures against it, but in the end, the paying consumer is the one who bears the majority of the cost.

We haven't even discussed problems like adverse selection, which means that people who know that they are running higher risks than average are more likely to want to insure against those risks. Sadly, in this instance that largely means those who cannot afford coverage. Lower income families have higher health risks -- in part because of not obtaining care earlier. But it's also due to poorer diet and poorer living conditions. I don't know how to compare the economic costs of the current system to mandatory systems, but I remain deeply skeptical of the efficacy of any plan that requires more bureaucracy. The uninsured are already covered, however badly, by a system that at least is not-for-profit. Requiring insurers to shoulder that burden just means that they'll find a way to increase their profits by charging the rest of us more. Perhaps that's cynical, but we'd be well served to determine in advance that other taxes -- specifically, medicaid -- will be eliminated before we decide to voluntarily raise our expenses in the private sector.

Posted by: Phil at August 12, 2003 11:16 AM

Oberon,

In many states of the Union, malpractice insurance for OB/GYNs is beyond their ability to pay and so they move to states where litigation is not out of control. This phenomena is entirely due to tort lawyers and easily distinguished when compared to neighboring states. My point is that tort litigation in much of the United States is a frenzied and insatiable vampire, draining the lifeblood of everything it can reach. Pushing everybody within reach of those vampires in the name of equal treatment is at best a flawed theory.

All economic theories fail in the face of unprincipled exploitation of the flaws in the theory. Without meaningful tort reform, any health care program is just a method of rewarding unscrupulous lawyers and their willing shills.

Posted by: Patrick Lasswell at August 12, 2003 12:00 PM

Patrick:

If I were a teacher, I'd give you get an A+ for the metaphor. (Or was that a simile? I mix them up.)

Posted by: Oberon at August 12, 2003 01:05 PM

what if I am happy with my current coverage, which will never meet the governmental mandated criteria because it has an extremely high deductible?

Any plan like the one in question ought to allow for such plans. I'm on one myself, as I'm self-employed, and I'd rather keep the extra couple of hundred dollars at this point in my life. So-called "catastrophic" health insurance makes a lot of sense for youngish, healthy people with no kids. In my opinion, this should be an option offered for everyone under, say, 40 or 45. Not that it's for everyone either, mind you. But if one is aware of the risks, one ought to be able to make this choice (after all, doesn't the healthcare market NEED every possible idea to help keep costs down?). Plenty of folks carry expensive, bells and whistles plans (partially paid for by their employers) who probably would be happy to opt for a cheaper plan and pocket the difference.

Posted by: P. B. Almeida at August 12, 2003 01:23 PM

what if I am happy with my current coverage, which will never meet the governmental mandated criteria because it has an extremely high deductible?

Any plan like the one in question ought to allow for such plans. I'm on one myself, as I'm self-employed, and I'd rather keep the extra couple of hundred dollars at this point in my life. So-called "catastrophic" health insurance makes a lot of sense for youngish, healthy people with no kids. In my opinion, this should be an option offered for everyone under, say, 40 or 45. Not that it's for everyone either, mind you. But if one is aware of the risks, one ought to be able to make this choice (after all, doesn't the healthcare market NEED every possible idea to help keep costs down?). Plenty of folks carry expensive, bells and whistles plans (partially paid for by their employers) who probably would be happy to opt for a cheaper plan and pocket the difference.

Posted by: P. B. Almeida at August 12, 2003 01:25 PM

do we continue to provide Medicare for everyone who reaches the "magical" age of 65, or do we destroy that bloated behemoth and place those people in this plan as well?

Right. Another big hurdle for any type of mandatory universal coverage plan. Why indeed would society want to run multiple government systems for different segments of the population (old, poor, etc; what about the left-handed? how about city dwellers?)Medicare may very well be the true third rail of American politics. A lot of elderly people, after all, have accumulated substantial savings and income-producing investments. A lot of them own their own homes. But healthcare costs are just so damned unpredictable and truly stratoshperic.

This is not a vote for single-payer, by the way. In my view we ought to be careful before we throw away employer-sponsored health insurance for the bulk of the population (show me a healthcare system in the developed world that's perfect) but just "plug the gaps" for those who fall outside of it. There's many a non-covered 22-year old with a $400 car payment, by the way, who could throw half that amount into a no-frills health insurance plan (and here's another myth: that all the uninsured are poor or working poor; a lot of them are simply "uncovered" folks who have better things to do with their cash). I say, as long as we're going to treat you if you're hit by a car, we've got a right to make you buy health insurance. And, a side note: I'm no leftie but a free-market conservative. When even people like me are convinced something needs to be done to reform the system, you know the shit is starting to hit the fan.

Posted by: P. B. Almeida at August 12, 2003 01:41 PM

Patrick, you may like this article on how tort ligitation isn't to blame ... and this from the mouths of actual health care personnel.

And so, the Senate Judiciary Committee told witnesses to raise their right hands and swear to tell the "truth, the whole truth and nothing but the truth."

What happened after that "was pretty scary," said Sen. Ron Klein, D-Boca Raton, the Senate minority leader.

"People who had testified before us on previous occasions got up there and told us different things."

The president of the state's largest malpractice-insurance company said no, insurers didn't need a cap on jury awards to be profitable. A state regulator said no, there hasn't been an explosion of frivolous lawsuits.

A state insurance regulator surprised senators by saying he often depended on insurance companies' information when deciding whether to raise rates. "So you rely on the fox to guard the henhouse," grumbled Sen. Walter "Skip" Campbell, D-Fort Lauderdale.

And guess what? Contrary to stories of doctors quitting the business, the number of licensed doctors is increasing. A Health Department official said new applications for new medical licenses in Florida rose from 2,261 in fiscal 2000 to 2,658 in fiscal 2003.

Although, as the head of a governor's task force reasonably noted, those numbers don't tell what's happening in specialties, and some of those, such as OB-GYN and neurosurgery, are hurting.

All in all, it took just two days to show that the malpractice problem is too complicated to be solved simply by imposing a $250,000 cap on jury awards for non-economic damages for injured patients.

"There's a problem with insurance costs for doctors, that's a fact," Sen. Alex Villalabos, R-Miami, the committee chairman, told reporters after Monday's session. "But insurance companies seem to be more at fault than bad doctors or bad lawyers."

I agree this is an excellent idea for health care, but that they would definitely need to go trust busting to do it.

A friend who is a doctor thinks the entire industry, in exchange for caring for uninsured individuals, should just pay no taxes. I'd be interested to see how much money the government collects in taxes from the industry.

Posted by: albertacamus at August 12, 2003 02:11 PM

Making health insurance mandatory will work as well as making auto insurance mandatory has...we the insured supplement the uninsured. If one's in a wreck with someone who's uninsured and it's their fault, our insurance pays and pursues the uninsured in hopes of reimbursement. Since many of the uninsured can't afford the insurance, they can't afford to reimburse either. So, their costs are spread out amongst our insurance rates. If you're poor (and/or an illegal alien) and you're sick, you already go to the emergency room and get free treatment. So most of the people who supposedly need health insurance really don't, but at least it would keep them out of the emergency rooms when they only need non-emergency care. But since their free care is distorting care in the paying world, more formally socializing their care may be the best answer...if we could figure out how to do it somewhat efficiently.

I've lived under socialized medicine my entire life (military brat, then in the military, now a disabled vet). Removing the profit incentive for doctors and cost incentive from patients causes quality of care issues. The average person who doesn't have to pay for medical care in the military (and their dependents) visits the doctor 4.5 times more often than do their civilian counterparts (back when I used to inspect military hospitals in the mid-90s, that was the stat...not sure what it is currently, but you can see the point). If the care is free, one places less value on doctors' time, clogging the system with unnecessary visits while allowing medical professionals to catch a few more conditions that patients might not otherwise have visited the doctor for. So the military sets up checks and balances to protect doctors' time. One often sees a physician's assistant on an initial visit, a person who can treat and prescribe a limited amount of conditions. Of course when the patients know they have a more serious problem, having to see a physician's assistant to gain a referral to a militayr doctor a few days or weeks later wastes time and adversely affects the military's (and their families') productivity. And of course, sometimes the physicians assistant, through his/her limited knowledge, refers something simplistic to the doctor, wasting everyone's time. If this seems a lot like an HMO, you're right, but believe me, it's less efficient (and calling some HMOs efficient is a bit questionable).

Having a system like the military's probably seems great to those who lack access to medical care at all, but for most folks who have something better, national health care is asking them to take a step or three backwards, and mandatory health insurance pushes the nation in that direction. And we've already motivated to many people not to plan for their futures...spend versus save all your life, then bitch that the government doesn't give you enough money, medicine, and the like to live as comfortably as desired. The broader the government's umbrella to take care of people, the less people will bother to take care of their own needs...that's a great way to decrease productivity, increase inefficiency.

Maybe mandatory health insurance parallels capitalism...it's the worst system available except for every other one. The people who seem to have the most need for health insurance are the poor for whom their already free care doesn't provide them with sufficient care or urgency and the folks for whom getting the necessary health care will drive them into the poor house, where ironically they'd find their future care was free via emergency rooms. Attempt to tighten bankruptcy laws probably causes these folks stress. Many of the voluntarily uninsured are rolling the dice that their health and lack of insurance won't someday go awry and drive them into the poor house. I guess we don't want them to have that choice any more. And, we don't want to reward folks who plan for rainy days...the lazy squirrels will get to pay the same amount for health care as the savers will.

Quite the moral dilemma this is.

Posted by: gordie at August 12, 2003 02:52 PM

Sounds good on paper, but as someone who always "makes too much money" to get a voucher, but never quite makes enough to afford insurance, I can tell you that it won't work. My husband's job covers him for insurance, but in order to include me, it costs $400 - $500 month (depending on various factors). Let's say the universal plan is cheaper, but still out of reach for me. I would be breaking the law by not buying it, but still not qualify for a voucher.

Under this new plan, my husband's insurance would no longer be free (because it wouldn't be provided by his employer), and I would be an outlaw. Sounds horrid to me.

Posted by: karrie at August 12, 2003 04:40 PM

Karrie,

Under this law your husband would still get insurance benefits. The only thing that would change is that he could choose which company his employer buys the insurance from.

And, of course, in order for me to support it, the vouchers would be given out to people who really can't afford it, not only to the most wretchedly poor.

Posted by: Michael J. Totten at August 12, 2003 04:43 PM

P.B. is right in pointing out that a significant portion of the uninsured are uninsured by choice. They are young, not at risk for disease and have better uses for their money. Why should we force them to subsidize the rest of us, they already subsidize the elderly, irrespective of need?

Posted by: Jamie Jacoby at August 12, 2003 04:51 PM

Thanks for the clarification about my husband's work insurance. (And I knew you would be a big supporter of anyone who needed help!) - Karrie

Posted by: karrie at August 12, 2003 04:56 PM

Jamie,

We have to subsidize the uninsured as it is because they can't pay their medical bills. They may be uninsured by choice, but it makes my premium cost more.

Posted by: Michael J. Totten at August 12, 2003 05:36 PM

Karrie,

I would also point out that your husband's insurance is not really "free." Think of it as a part of his salary which you and he can't spend as you want -- you're forced to spend it on the company's insurance plan.

A few folks mentioned subsidies: consider that employers get a tax break to offer health insurance. The means that everyone who does not get employer-based health insurance subsidizes health care for those who do. Fair?

Another crazy aspect of our current "system" -- some welfare recipients have stay out of the workforce in order to keep their health coverage. Should we really expect a mother to give up health coverage for her kids in order to take a low-paying job? Mandatory insurance would get rid of this terrible incentive.

Posted by: Oberon at August 12, 2003 05:54 PM

The American Enterprise Institute just held a conference that addressed this, and I believe that it is a topic that would find support from both sides of the center. CSPAN recorded it, so it will likely be re-broadcast over the next few days.
http://www.aei.org/events/eventID.585,filter.,type.past/event_detail.asp

Actually, Newt Gingrich has been advocating a similar plan for much of the past year.
http://www.newt.org/index.php?src=news&prid=383&category=Opinion

Regarding comments that insurance companies may have the power to raise prices even if costs are contained, there is no reason the government would halt its regulation of the industry to prevent abuse. Regulation is not necessarily incompatable with individual choice.

And in response to a previous comment arguing that 'old europe' has something to teach us, during my study in that part of the world I learned that it is common among those who can afford it to avoid the national health care in favor of (costlier) private instiutions that provide better and more timely care.

Posted by: Brian at August 12, 2003 05:58 PM

Michael,

You said "We have to subsidize the uninsured as it is because they can't pay their medical bills. They may be uninsured by choice, but it makes my premium cost more." in reply to Jamie. I think that you are ignoring the fact that a fair percentage of the noninsured do pay directly for treatment received (including those using emergency rooms for primary care). Many doctors knock their fees down for the uninsured and many young people are shrewd enough to understand that paying $60 per visit five times a year is a lot cheaper than $500 per month for the number of visits. Many people assume that "poor" and "dumb" are synonymous (I'm sure you don't).

I know too many people working in the black (cash) economy for me to buy into the "40 million without insurance" scenario. There is also the matter of transition in and out of of that "40 million". What is your estimate of turnover in that group? 10%? 20%? How do you set up an evaluative program that is not wildy susceptible to fraud with a heavily transient (or even stable) group of this size? I concur with your general thesis but fleshing out where the bottom cutoff (voucher level) would leave me more comfortable.

Posted by: RDB at August 12, 2003 06:06 PM

Michael I am aware that we must pay for the uninsured that are indigent. My previous occupation was a hospital CEO. Indigent patients accounted for approximately 10% of the patient population at the hospitals I worked for and we all do subsidize them, but RDB is correct about young people.

We end up back in the whole class warfare tax debate. How do you give a tax deduction or credit to an indivdual who pays no taxes?

Posted by: Jamie Jacoby at August 12, 2003 06:21 PM

Jamie,

How do you give a tax deduction/credit to people who pay no taxes? You give them a "refund." I know conservatives will gripe about "redistribution," but we just don't agree about this.

I have no problem with giving assistance to poor people who work for a living. No one who works 40 hours a week should suffer below a subsistence level, not in the richest country on Earth.

Posted by: Michael J. Totten at August 12, 2003 07:30 PM

Michael,

You are right, that's just not one we can agree on. That is socialism in its rawest form, but I have no problem agreeing to disagree.

I'm finding the posts made here to be very interesting, well thought out and reasonable.
Keep up the good work.

Posted by: Jamie Jacoby at August 12, 2003 07:48 PM

And in response to a previous comment arguing that 'old europe' has something to teach us, during my study in that part of the world I learned that it is common among those who can afford it to avoid the national health care in favor of (costlier) private instiutions that provide better and more timely care.

Well, we certainly don't want their dental care. It's like a damn bread line in the Soviet Union.

Posted by: linden at August 12, 2003 08:07 PM

I would solve the problem the precise opposite way: I would make all third-party payor systems, other than for catastrophic situations, illegal. That means you pay for your own treatments, your own drugs, your own tests. Does that scare you? It shouldn't. You are ALREADY paying for it, you just don't realize it. If you have benefits at work, your employer is paying money for insurance that otherwise would go mainly to you. And even with your boss paying thousands and thousands of dollars for your health insurance, you STILL have copays and referrals and deductibles and all those other fine things.

Fact is, if you had to pay for your own health care, you'd watch every penny of it and be as careful with it as you are with food shopping - prices would come down because someone else isn't paying the bill, and the market wouldn't tolerate constant price increases. Doctors' overhead would go down becuase they wouldn't have to hire people whose job is to deal with insurance companies, and prices for office visits would come down. Institute a system where the people who are using the product are paying for it and you'll begin to see a rational market system: more availability, better service, lower prices. And wouldn't it be nice to see the doctor YOU want to see, without having to "stay in network" or get a referral?

Anytime someone perceives him/herself to be getting something for nothing s/he will use more of it than he needs and s/he will not care about price increases. That's a huge reason why medical care and drugs are so expensive. Get rid of that perverse incentive and pricing will become rational again.

I seem to remember reading a while back that Gov. Dean of Vermont, understands at least a kernel of this. He wants to expand coverage but hugely increase deductibles and copays, on the theory that people will think twice about getting stuff
they don't really need if they have high copays and deductibles. His concept is right but the execution is flawed - his system would give us BOTH the paperwork horrors AND self-pays. That's ridiculous. I say get rid of the paperwork. Make it illegal to have a third party payor system, period. Pay for your own medical care.

Posted by: Stuart at August 12, 2003 08:28 PM

Fact is, if you had to pay for your own health care, you'd watch every penny of it and be as careful with it as you are with food shopping...

And you'd probably defer diagnosis and treatment of really heavy-duty ailments out of fear that it would break you financially. Then you end up in the emergency room, ringing up astronomical bills that could have been avoided and that the rest of the community has to (face it- has to) soak up somehow. The "everything out-of-pocket" fantasy is a sound argument for high copays and deductibles, and diverting enough as a sort of thought experiment, but in the real world, consumers are often the last people fit to make a rational decision as to how much they ought to pay for a particular product.

There is an unavoidable consensus that decent health care ought to be available to anyone, no matter how poor. To the libertarian individualist, I suppose this seems patently unfair. Congratulations on your ideological consistency. Meanwhile, to the rest of us, it seems self-evident in its fairness, and we will continue to work towards a squishy-headed "redistributive" solution that involves paying some of my hard-earned money to care for some slob who never paid a dime into the system. So be it.

As the posts above indicate, most people understand that our challenge is to come up with a "least-worst" health care policy that avoids the most serious pitfalls and minimizes the inevitable fraud and injustice. I don't know whether the compulsory insurance scheme is workable or not. But somehow, the cost of health care for everyone is always going to be shared by those who can pay something. Better to accept that as a first principle, and work to create a system that is as transparent and intuitive as possible., in which the "sharing" is apparent to all involved.

Posted by: matt at August 12, 2003 09:21 PM

Sorry, Matt, your contention is that policy has to get set soley by reference to the populations at the margins, and that just plain makes no sense. You really think most of the population won't go for checkups if someone else didn't pay for them? What do you think people did before health insurance became widespread?

I will stipulate that there will be implementation issues (especially at the margins), but that is true of any system. We can't continue having the sort of spiralling costs and piss-poor service/bureaucracy forever, which is what any third-party payor system will produce.

I say, take care of the margins, but don't oppress the big middle of the bell curve to do it.

Posted by: Stuart at August 13, 2003 05:16 AM

Matt, good point against the (us?) lib individualists -- in the richest country on earth, there is inexorable pressure to help the poor.

There is a utilitarian issue -- what works best. There is a moral issue -- what is "fair". How much should faithful, married Christians pay to defray the HIV & other costs of promiscuous gays? Or should gays pay to support births and children? Or on what grounds could a private insurance company differentiate rates?

Auto insurance companies are allowed to charge males 18-25 more. Will they be allowed to charge gays more, or the elderly? Or drug users, drinkers, smokers, or motorcycle riders? Or forbidden to?

Involuntary insurance always has fairness issues.
But, as a general principle, mandatory health care insurance seems the best on-the-table option, and better than more of the same.

Posted by: Tom Grey at August 13, 2003 05:31 AM

You really think most of the population won't go for checkups if someone else didn't pay for them?
Maybe checkups, but not the CT scan or ultrasound or whatever that might be recommended if the doctor suspects something wrong. Remember, I'm speculating about a world in which everybody pays everything out of pocket. (Maybe this is the world that existed before widely available insurance. If so, I don't know enough about how things worked back then to compare.)

It's not just the marginal population that can't afford to pay for an emergency cesarian birth, or other urgent and expensive services. The middle of the bell curve counts on a third party- the insurance company- to pay those whopping and unavoidable bills. And for most of us this seems like a pretty good deal.

But meanwhile, it is the marginal population that drives the policy debate, because we have decided that a very expensive product- medical care- ought to be available even to those who can't or won't pay for it. This leaves us hunting the Goldilocks solution- one that uses price rationing to control consumer demand and the profit motive to spur supply, just not too much of either.

So no- you ought not set policy based solely on the margins, but in this case, it's the marginal population that defines the scope and nature of the policy problem. Just as Stuart puts it- how do you take care of the margins without sticking it to the middle of the bell curve?

Posted by: matt at August 13, 2003 06:21 AM

and Tom-
You bring up the creepiest and most dystopian side of the question. Combine the ideas that society has a collective economic/utilitarian interest in maintaining good health with the moral imperative to help those who can't pay for health care, and you have a real dillemma. Especially once you apply insurance-type risk analysis.

Maybe my grandkids will grow up in a world in which only the very wealthy, with their high-dollar insurance plans, can smoke cigarettes or eat bacon or ride bikes in traffic, and the poor can be locked up if they fail to attend morning calisthenics 3 times a week. Being obese will again be a sign of class status, and schoolkids will wear giant padded suits on the playground.

Heck, that horse is already out of the barn.

Posted by: matt at August 13, 2003 06:33 AM

Matt, your argument works only if you think MRIs will continue to be as expensive in absolute terms as they are now. Static-state thinking is what got us into our situation that we are in now. The wonder of throwing the whole shebang back into the market, instead of insulating the producers from loss and the consumers from price signals, is that lower cost solutions become available, or prices get driven down, because the market requires it. Dynamism and innovation push prices down. Remember the $1000 VCR? It costs $69.99 now. MRIs are as expensive as they are because there is no true market to force their prices down or create alternatives.

I had to replace the roof of my house. I didn't want to, but didn't have much choice: it was leaking everywhere. And I had to forage around for the money to pay for it. If I needed an MRI, and it was expensive, then I'd figure out what I needed to do to pay for it, even if it meant carrying a bigger balance on my credit card than I would want to. Sometimes life throws you a curve ball and it sucks, but that's life. You deal with it. And the same will be true of health care.

So long as insurance is available for the really catastrophic things - that is, so long as it's really INSURANCE, and not cost-shifting - only good can come from getting rid of the blasted HMOs and the whole parasitic structure of health care support.

Posted by: Stuart at August 13, 2003 12:40 PM



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