Monday, November 16, 2009

Five health insurance issues (5)

In response to my post on catastrophic health insurance, Grim commented:

I like the idea of market-based reforms. However, I'm not sure why a government plan would be better at simulating the market than, you know, the market.

For example, the DeLong plan that I surrender 20% of my income for health care expenses? The market as it currently exists offers much better deals than that.

In general my preference is for a free market with only as much government regulation as is necessary to keep the more predatory impulses of capitalism in check. However, I have a lot of reservations about whether a totally free-market approach is appropriate for health insurance. I prefer regulation that says, “Thou shalt not” rather than regulation that says “Thou shalt”. Once you wander into government telling private companies what they should do, you’re in trouble and that’s increasingly the case with government regulation of insurance companies. They’re being told what they must do - who to cover, what conditions to cover, how much treatment to provide. That’s a bad situation; bad for the companies, bad for the government, bad for the company’s customers.

Yet I understand why we’ve gone down that road. We want certain things from health insurance and we are trying to get them via government intervention while still maintaining - or appearing to maintain - the companies as private entities. I’m not at all sure that’s working well. We may simply be unable to get what we want from health insurance within the framework of our current system.

This is a big part of why I was so intrigued by the catastrophic insurance plans I discuss in my earlier post. These plans may be the best way to address five issues I think any health care or health insurance plan must handle, the issues we’re trying to handle through our increasingly intrusive regulation of the insurance industry. In sorting out why I think these plans are promising, I’ve written at considerable length about those five issues.

My post about the first issue is here; about the second issue is here; about the third issue is here; about the fourth issue is here. This post is about the fifth issue; my next post is the grand finale. As usual, I’ve created a new category - “Five Health Insurance Issues” - to link the posts.

Issue 5: Not only are we not willing to let people die because they’re too poor to afford or too sick to get health care and/or health insurance, we’re not willing to let people die because they’re too stupid to buy health insurance even when they could get it and could afford it. And even if we’re willing to let an adult die from such stupidity, we’re not willing to let his children die.

Take a look at Tom. He’s 45 years old, married, two children. He’s made a good salary all his life and been in good health all his life. He’s always free-lanced and has never been willing to ante up for health insurance for himself or his family. Suddenly he’s diagnosed with, say, Hodgkin's lymphoma. This is an eminently treatable disease but Tom can’t afford to pay for the treatment himself - and he’s got no health insurance. It’s possible Tom will be unable to obtain treatment and will die - it depends on whose horror stories you listen to - but if we as a society knew about that outcome we’d be unwilling to tolerate it. And even if we were willing to tolerate Tom’s death, what if his eight-year-old was diagnosed with leukemia? Again, very treatable; again, very expensive. There’s no way we’d be willing to knowingly let her die just because her father was an idiot.

So point the fifth: Either we have to toughen up and let people - including children - die when they - or their parents - are too dumb to buy health insurance they could get and could afford or we have to find a way to force them to chip in for the health care we’re willing to give them if they get sick.

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