While not wishing to concede to the idea that a publicly run health insurance option would not lower health care costs and that the current insurance status of Americans is adequate, for the sake of discussion, I will temporarily grant an acceptance, and ask that you consider what is commonly referred to as signal-payer health care or how I learned to stop worrying and accept government run health care.
My keystone premise consists of the notion that adequate health care is a common good: a good that is limited but from which an individual cannot (or should not) be excluded. Moreover, I suggest that as a society we are not currently ensuring that individuals have access to this common good. I will employ an analogy to police protection to illustrate why single-payer health care is necessary.
Like basic police protection, basic health care is used by everyone in a society, often without recognition. You may have never had direct need of a police officer, but the mere existence of that officer's work benefits you constantly. We recognize this, and require all to pay a share of the cost through taxes. Should you need direct services, say to file a report of a robbery, they are available to you at no extra charge to encourage active enforcement. If you feel that because of certain circumstances you deserve and can pay for additional protection that does not withdraw the resources from others, you can hire additional private security. Now imagine a system where all are afforded an equal access to health care.
In this system, individuals would benefit constantly from the security of knowing that if they or their families need medical assistance, it is available to them. Moreover, their neighbors, friends and coworkers receive needed care. And at some point in time, it is likely that the majority of individuals will need significant care, and so everyone pays through the tax system. While the level of care is not what some want (we can't all have a police officer next door), society decides what is adequate (Paul's previous post suggested that care is already rationed through the emergency room structure; I argue that explicit rationing is more efficient and humane). Finally, even if laws are created to limit the domestic ability to acquire private care, the privileged will (and always have) found away to purchase what they want, perhaps internationally. This system does come with obvious inefficiencies.
One could argue that unlimited health care a no extra charge to the individual creates a moral hazard. If fact, that is a current argument for why employer-subsidized health care drives up costs. It is not possible to completely eliminate some sense of this moral hazard, but I believe that if adequate care is available, it will be minimal. Adequate police protection could cause one to negligently leaves the car key in the ignition, but the individual opportunity costs associated with the ordeal are very high, even if the car is recovered. Opportunity costs will also eventually limit moral hazard associated with available health care. But will government run health care be able to control costs?
A single-payer health care system will control costs better than the current system. Care will be better rationed and wages will be brought down. An automobile theft usually does not require the SWAT or special forensic analysis, and headaches do not require a CAT scan. As mentioned earlier, the system already rations care to many by making care less accessible. Opportunity costs are significant with emergency rooms, and emergency room doctors are much less likely to request a CAT scan for a headache than a specialist would (just guessing). I am inclined to sympathize with the notion that Americans will never accept explicit rationing, but that shouldn't limit our discussion of what would be optimal. Speaking to wages, the current system pays doctors, nurses, and hospitals too much, and I reject the notion that qualified folks won't do it for less. Most doctors are much more interested in helping folks and prestige than they are with pay. Being the only game in town doesn't prevent police agencies from finding detectives.
A society that does not have the ability to provide police protection may be close to not being a society. For the same reason, our nation should act to provide health care to all by providing a single government sponsored health care system to all.
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3 comments:
Alright! Debate’s on.
I accept your analogy, to some extent. We have a moral imperative to provide some level of care to everyone, so it's non-exclusive. But while every police action creates some positive externalities for me (one less thug on the street, deterrence), not every medical procedure you get helps me. Vaccines do, but you can’t deter an arm from breaking by waterboarding the last one.
You argue that the comfort of knowing you and your family/friends/coworkers (hereinafter “superamigos”) are taken care of is an externality. I think the heart of your argument is the comfort that others are taken care of. For those who can afford it but choose to be uninsured, they should have that freedom. (See e.g., Mr. Burns turning down a promise for eternal happiness---“I’d be happier with the dollar.”) For those who can’t afford insurance, see my discussion below about expanding Medicaid.
But to be comforted that your superamigos will get the best is a much tougher issue. And you’re right that if you have to go to the emergency room and not pay the bill you never know what type of care you can get. I agree this is inhumane. And I agree it is inefficient because people can’t make optimal choice with poor information. But if the superamigo can afford healthcare and chooses not to, can I really force him to pay so that I can take comfort? If our concern is helping poor superamigos, why overhaul the whole system? Why not just expand Medicaid (in scope/coverage/utilization)?
I think your extension of the free-rider problem here is brilliant. I’ve never looked at it this way. Each person would contribute something to have the person insured, but would also prefer to free-ride. But most people don’t know which of their superamigos have coverage. Those that I do know, (hereinafter “superamigosfantasticos”) are a much smaller group and free rider issues are much easier to overcome because of the lower negotiating cost.
Regarding moral hazard. The police analogy applies because people understand it’s a hassle to use the police, so they monitor themselves. I think you argue it’s a hassle to go to the doctor so people will self-ration. You may not call the police for a stolen French fry, but you certainly would if you found a dead body (unless you caused it). Small crimes aren’t a matter of life and death, but every cough might be. Because people care about their lives more than most other things, I don’t think we’ll see a lot of self-rationing based on the hassle. (Although, if we let the same group run hospitals that we let run the DMV, the hassle might increase sufficiently to make us stay home.)
A few final points: Doctors may value altruism most, but you can’t pay student loans with altruism. We should cut the cost of getting a degree (eliminate bachelor’s req.) to raise their disposable income while lowering their salary. Being civilized requires taking care of the poor, but imposing a public option on everyone is using a full-body cast to fix a finger.
Positive externalities: These go far beyond deterrence for waterboarding and peace of mind for superamigosfantasticos! On a individual level, you would be much better protected from contagious disease. On a societal level, benefits include a healthier, more productive population, similar to the benefits of a clean water system or public school.
Expanding Medicaid: One problem with expanding Medicaid (though I would certainly take an expansion over the current status) is that it will further increase the cost of regular health insurance on society. Health insurance is tricky, because as I say above, almost everyone will end up needing expensive health care at some point. To compensate for this, insurers try to get as many health people into the pool as possible, hoping that you will hold on without cancer until you reach Medicare. If Medicaid is expanded, the pool will only get smaller, and the costs will go up.
With government already covering the costs of the most expensive (the old dying, the poor childbearing, and the we're so sick we can't work), we should just add everyone else into the pool (through a general tax)to lower our costs.
Moral Hazard: You are correct that I argue that medical care is a hassle so folks self-ration. Do you go to the doctor for every cough? The folks least likely to self ration are parents for their children. Nevertheless, this is the one group that should have the least amount of rationing, because kids are much more cost efficient to treat than adults.
Concerning wages, I would argue that doctor pay is so high because doctor debt is high, but the reverse - doctor debt is high because pay is high. The same is true for law school - they could get away charging (and you are among the lucky of your contemporaries who are able to pay) because they knew the pay would be enough to cover it. In addition, if we are going to pay for the whole system, we might as well cover the full advanced training costs.
Finally, single-payer health care isn't about providing care to the poor (Medicaid and Medicare do that), it's about providing adequate care to everyone
Externalities: I agree mostly on contagious diseases, but I don’t think that’s the bulk of medical care costs (guessing it’s cancer or birth). I think giving away free flu shots and common vaccines is good policy. But I’ll accept your argument (with a caveat that if I got the flu shot, the amount of benefit I get from curing your flu is reduced because I’m already immunized).
Society’s externality of healthy citizenry is limited to increased tax revenue, increased variety of products in the market, world influence and neighborly comfort. The debt from the program will likely counter the world influence, and if the tax revenue were sufficient to cover the costs on an individual level the individual would have purchased the insurance himself (that is, spending millions to make a paper boy healthy isn’t cost-reducing).
Expanding Medicaid: I’m not an expert here, so I’ll defer to your understanding as legislative cock of the walk, but it seems that if insurers make money off the young and lose money on the old, why wouldn’t someone make a fortune insuring only the young and do so at a lower cost than competitors? I would have expected that the insurance company would have to break even with every divisible group to not get cut out of the market. Term policies expire at some time and there is no right to renew so the market is divisible.
Of course, if the government were the only game in town they could force everyone to pay for the elderly and poor, thereby shifting costs from old to young, but that seems regressive. The old are usually wealthier than the young, so it seems more progressive to just tax whoever has money and send it to the old/poor that way. Whether I give the money in higher insurance premiums or in higher taxes, they are benefited the same, but taxing won’t burden the poor as much or restrict their freedom to choose a provider.
Moral Hazard: I agree. But with limited supply, someone has to ration if we are expanding coverage. Not sure who that should be, but I agree that it shouldn’t be kids.
Wages: You’re probably right. But there is a shortage of medical and nursing schools because they can’t retain professors. Like law professors, medical professors make a killing, but it’s still a 90% pay cut from what they’d earn in private practice. It’s cyclical.
Final line: If the focus isn’t on the poor, why don’t the people purchase the adequate coverage they want? This would be a different question if the plan cut health care costs, but the CBO study says it doesn’t lower the cost curve. If the Democrats had the integrity to take on malpractice lawyers we might have a different argument here.
Bottom line: if this isn't about helping those who can't afford coverage, there should be some clear and convincing externality we are fixing before we limit people's freedom.
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