I came across
this recent article by Malcolm Gladwell on some of the inherent problems in the American healthcare system. It's an excellent read, and leads one to the inevitable conclusion that we need universal healthcare. This is the punchline, but you should read the rest of it to see how he got there:
In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem.
Choice quotes and analysis below the fold.
Malcolm Gladwell, recently of
The Tipping Point and
Blink fame, and regular columnist for the New Yorker (though I must admit I came to know him primarily after reading Blink) has
this new column discussing one of the main reasons why healthcare insurance is so screwed up in America, and why instruments such as HSAs will most likely exacerbate rather than fix the problem. I came across it while reading
The Healthcare Blog which has a great in-depth analysis and critique of some of the specifics in the article.
The crux of the article deals with the misconception that healthcare is a product that can be viewed like any other - that we can easily choose to spend less on it if we want to. But while that's true in terms of "spending less today" doing so may only delay and exacerbate the overall expense. An additional corollary to this misconception is that the more you insure care, the more people want to consume it:
...in the past few decades a particular idea has taken hold among prominent American economists which has also been a powerful impediment to the expansion of health insurance. The idea is known as "moral hazard."
...
"Moral hazard" is the term economists use to describe the fact that insurance can change the behavior of the person being insured. If your office gives you and your co-workers all the free Pepsi you want--if your employer, in effect, offers universal Pepsi insurance--you'll drink more Pepsi than you would have otherwise.
He says that thinking of healthcare as an ordinary good like Pepsi inevitably leads to people believing that the more people pay for the healthcare they use (via higher deductibles, HSA's, etc), the better off everyone is.
But this is only true in the case where current consumption of care doesn't affect future consumption. He has a few choice examples, such as basic preventative dental care or monitoring blood pressure, in which a little now saves a lot later. But people who are forced to choose between food, rent, or dental care will inevitably choose the first two, which will ultimately result in more expensive dental work down the line or the loss of teeth (which leads to second-order effects that can also be costly).
"Moral hazard is overblown," the Princeton economist Uwe Reinhardt says. "You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it's free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?"
Clearly not, and Gladwell cites a RAND study from the 70s that hinted that when you force people to pay for care, they make some pretty bad choices about what care is and is not necessary.
Then he discusses the Bush philosophy on HSAs. The article says the 2004 Economic Report of the president, which can be paraphrased as:
...those with health insurance are overinsured and their behavior is distorted by moral hazard. Those without health insurance use their own money to make decisions about insurance based on an assessment of their needs. The insured are wasteful. The uninsured are prudent. So what's the solution? Make the insured a little bit more like the uninsured.
... which is basically the opposite conclusion of "Uninsured in America", a book by Sered and Fernandopulle, and of pretty much anyone who is not divorced from reality.
In the Administration's view, people are offered insurance but "decline the coverage" as "a matter of choice." The uninsured in Sered and Fernandopulle's book decline coverage, but only because they can't afford it.
He then discusses the two very different ways in which people view insurance: "social insurance" vs. "actuarial insurance". "Social insurance" means "Peter pays for Paul in case Paul can't afford it" whereas "actuarial insurance" says "Peter pays in case he can't afford it later". That this fundamentally different understanding of insurance is what causes friction between those who want "universal care" and those who want to have an "ownership society."
I think this is precisely where things get stuck. "Social insurance" sounds like a great idea to me. However, to people with an inherent aversion to socialism in any form this concept is negative. The American "can-do", "self-made" attitude leads many to believe in the "actuarial" model is better (though there is some evidence that when phrased correctly, a majority of people actually prefer the social insurance model). This is getting kinda long so I will refer you again to the article. Gladwell is a much better writer than I.
Although I am a strong believer in the greatness of the American healthcare system in terms of its ability to innovate new technologies (I do basic research on bio-related stuff so I'm admittedly biased), I think that the delivery end of the process is completely messed up. I am really coming to the conclusion that the best way out of this mess is to adopt universal healthcare. We only need a good way to do so without triggering the traditional "communist" backlash that comes with such movements.