Enterprise Software

Why everyone's healthcare sucks

I'm going to indulge one of my rare moments of willful stupidty and

jump headlong into the nationalized healthcare debate, with a little

help from Malcolm Gladwell (author of Blink and The Tipping Point).

It's Gladwell's argument that universal or nationalized healthcare in

the U.S. has had two major onstacles which it has yet to overcome.

The first obstacle is historical inertia. In the US, health coverage

was brought about by virtue of labor union demand. As such, the

legacy of health coverage in America has been conceptually bound at the

employer level, and we've simply never had good reason to break away,

despite horrific inefficiencies in the system.

The second obstacle is the spurious "moral hazard" argument, which

suggests that subsidizing healthcare makes consumers more likely to use

healthcare, which

in turn drives up cost. This is the thinking behind copays and

deductibles: not to force consumers to bear additional costs

burdens—the fees are often too low and infrequent to justify more than

the administrative costs of enforcing them—but simply to place some

psychologically emphatic surcharge on the consumption of medical

services, so that consumers won't equate "no immediate cost to me" with

"free" medical services, thereby overindulging the system.

The first reason is understandable, if not defensible; change is hard

and longstanding tradition requires great effort to overcome, no matter

how stupid the old methods may be (see: U.S. adoption of the metric system). As to the second reason, I'll defer to Gladwell's own words for rebuttal:

"The moral-hazard argument makes sense, however, only if we consume

health care in the same way that we consume other consumer goods, and

to economists...this assumption is plainly absurd. We go to

the doctor grudgingly, only because we're sick. ... For that matter, when you have to pay for your

own health care, does your consumption really become more efficient? In

the late nineteen-seventies, the rand

Corporation did an extensive study on the question, randomly assigning

families to health plans with co-payment levels at zero per cent,

twenty-five per cent, fifty per cent, or ninety-five per cent, up to

six thousand dollars. As you might expect, the more that people were

asked to chip in for their health care the less care they used. The

problem was that they cut back equally on both frivolous care and

useful care. ... [H]ow should the average consumer be

expected to know beforehand what care is frivolous and what care is

useful? ... The focus on moral hazard suggests that the

changes we make in our behavior when we have insurance are nearly

always wasteful. Yet, when it comes to health care, many of the things

we do only because we have insurance—like getting our moles checked,

or getting our teeth cleaned regularly, or getting a mammogram or

engaging in other routine preventive care—are anything but wasteful

and inefficient. In fact, they are behaviors that could end up saving

the health-care system a good deal of money."

The whole debate comes down to a simply either-or choice: so-called

"social" insurance versus "actuarial" insurance. Social insurance is

about redistribution of risk, so that the young and healthy subsidize

the old and sick, creating relative cost certainty. Nobody goes

bankrupt by a huge, unexpected medical expense. Detractors might term

this socialist insurance because of its redistributive

nature. Actuarial insurance adjusts costs based on the risk represented

by the insured. The young and healthy pay less than the old and sick,

so that those who most need the system pay the most for using it. On

the surface, this is appealing—as a non-smoking, non-drinking

20-something who works out twice a week, I don't like the idea of

subsidizing lazy, overeating chainsmokers who all but willfully give

themselves diabetes and lung cancer—but the problem with actuarial

insurance is that it denies coverage to those who most need it: the

sick and the poor. That's precisely contrary to the whole point of

insurance—to provide assistance so that medical care doesn't become

prohibitively expense, especially where preventive care is concerned.

Social insurance means more people staying healthy, and more people

going to work. Decoupling insurance from employers means that the

unemployed can be insured, increasing their ability to become employed,

meaning more people going to work. It's not perfect, or even fair, but

its effective, and that's the whole point of insurance anyway.

Let the debate begin!

About Jay Garmon

Jay Garmon has a vast and terrifying knowledge of all things obscure, obtuse, and irrelevant. One day, he hopes to write science fiction, but for now he'll settle for something stranger — amusing and abusing IT pros. Read his full profile. You can a...

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