Friday, June 12, 2009

Why health care reform matters

A friend of mine recently sent the following message to a mailing list I subscribe to:

We have a family friend who was diagnosed with 2nd stage breast cancer yesterday.

Several months ago she lost her job that provided health insurance. She continued her health insurance after losing her job, and set up automatic payment on a credit card. But then the card expired, and she didn't check the bills carefully and the insurance company dropped her.

Because she had a very expensive and difficult third pregnancy, no insurance company wanted her and the one that was legally required to provide the insurance was pretty happy to be rid of her. She spent a few months trying to get insurance, but then gave up.

Now she has cancer....

I'm curious - what happens to people like her.

The answer is, sadly: they go broke, at least in the U.S. Then they qualify for medicaid.

Or they die.

Or, in many cases, both.

My friend goes on to explore various options for this unfortunate woman, but the sad fact of the matter is that she's screwed, a victim of, depending on your political leanings, the private insurance system, or her own poor choices. Once you get a life-threatening illness while you are uninsured under our current system, that's it. Game over. You can never get insurance again, at least not for that illness. And it makes sense that you should not be able to, otherwise there would be an incentive for people to wait until they got sick to get insured. It would be like waiting to get auto insurance until after you had an accident. The entire system would collapse.

[UPDATE: it turns out that the situation isn't quite as bad as I thought. I learned, to my astonishment, that you can sometimes get coverage for pre-existing conditions after a waiting period of, typically, 12-18 months. But that's a long time to let a stage II breast cancer go untreated.]

So here we have the entire health care debate in a horrible nutshell. The conservative position is that people should be free to make their own choices, and must assume the responsibility that goes along with that freedom, and bear the consequences if they make bad choices or fail to pay their bills on time. The liberal position is that the consequences of getting those choices wrong are so severe both on an individual and a societal level that government intervention is necessary.

The U.S. is gearing up to have this debate (again!) right now. If you live here, you should pay attention, and urge everyone you know to pay attention too, because it really matters.


Don Geddis said...

There's also a middle position. Namely, that even if you believe in individual responsibility, it's still the case that health insurance is a very odd kind of market.

The conflict is basically: if you could perfectly predict the medical future of an individual, then some people are just unlucky and can never generate enough income during their lives to pay for their medical costs. At the same time, though, if you pool everyone together, then there are very few such unlucky people, and it's easy for a large pool to afford to take care of the few.

But US medical insurance has two problems (as relates to these efficiencies). For one, the incentives on private insurers are to shrink the pools as narrowly as possible (which makes them more profitable), but that eventually collapses the whole idea of pooled insurance. Secondly, most US medical insurance is tied to your company, which maybe made sense some generations ago with lifetime employment, but with today's multiple-company careers, it's just inertia slowing down a mobile labor force.

So. There are good reasons to think that a government-run single-payer insurance program might be better for pretty much everybody, even if one doesn't have much compassion for the poor and/or uninsured.

Padmanabhan said...

The question to ask is "why is health care expensive and unaffordable in US?"

When private hospitals in third world countries can perform some surgery for 2000$, why is the same costing 100000$ in US with more or less same quality of service.

This is THE most important question to be asked in this debate. I believe asking this question can unravel all those clumsy scams involved in insurance companies / hospitals / govt etc etc.

Don Geddis said...

Re: US vs. 3rd world medical costs.

There's a (much) higher cost of labor, and generally a higher cost of living in the US. Plus, much more extensive malpractice liability.

If you think that "the" important question is about medical "scams" in the US, I really think you're barking up the wrong tree. That is not the big story on US medical costs. It's really a forlorn hope, if you think you can control US costs merely by rooting out fraud.

Padmanabhan said...

Well, then I should ask, what stops the Govt from importing cheep labor from third world countries, to make health care more affordable.

If you think the salary and living standard of doctors here would deteriorate if that's done, well, is that more important than the lives of those who can't afford health care? If quite a lot of doctors in third world countries would be more than happy to come and treat the patients here, for one tenth of what it would cost here, then why isn't the Govt making that process more simpler?

Thomas Lindgren said...

In Sweden, a country with a single-payer system and competently run healthcare, your FOAF would get access to the regional health care queue at a low direct cost. The progression to treatment would depend on available resources, the length of the queue, and priority inside the queue (as determined by the health professionals). There is little legal recourse for patients to influence this, and what I expect are to an american negligible malpractice awards. (Though seriously inept doctors can, as I understand it, eventually be barred from practicing.)

While cancer may be treated quickly, there can also be long waiting periods for some treatments (e.g., I have elderly relatives who, in the usual pain for this condition, had to wait multiple years for hip joint replacements). This is the rationing effect you would expect.

Some readers may be surprised to learn that since the 1990s, Swedish health care has experimented both with increasing fees (to reduce demand) and privatization (to increase supply).

NB: I'm not a health care professional, just a well-educated taxpayer. Thus, some of the details above may be outdated. But that's the composite image of the system as I have seen it.

Don Geddis said...

Padmanabhan: There's a question whether those 3rd world doctors actually provide the same level of quality. And whether they're trained in the US "standard of care", i.e., what you should do for the patient, for any given situation. But let's leave that aside.

How is your question different from any other industry? I live in the San Francisco area, where the cost of living is very high. It's expensive to hire construction workers to build a house; it's expensive to hire cashiers to work at McDonald's. You don't need to leave the US; you can get much cheaper labor in states like Wyoming of Louisiana.

But just because they're cheaper there, you can't just "import" them here. At those low wages, they can't afford to buy food here, or rent an apartment. That's kind of what "cost of living" means. They can only afford those low wages, where they currently live.

Don Geddis said...

Thomas: great comment. Thanks for sharing that perspective.