Is Nationalized Health Care Moral?

“So: in order to provide health insurance to less than 3 percent of the population we must mount a moral crusade to change the entire American health system?” — Daniel Oliver, writing in the American Spectator.

Health Reforms Fall Short

With federal health reform legislation, we get an unconstitutional tax, untold billions of dollars of new spending, and further government intrusion into your experience with health care providers. But at least we’ll get rid of the moral squalor of millions of Americans not having health insurance.

Right?

Not exactly.

As the New York Post recently put it in a recent editorial

The Democrats’ sweeping health-care plans may bankrupt the nation, but every American will be insured.Except for 24 million of ‘em.

No kidding: The Congressional Budget Office figures that by 2019, long after the new programs kick in, the reforms will trim the ranks of the uninsured by just 57 percent — leaving another 43 percent, or 24 million residents, without coverage.

And for this, Americans will have to cough up an extra $1 trillion over 10 years, starting next year (and $2.5 trillion in the 10 years following 2014, when the programs’ benefits start going out).

As the Post asks, “What’s the point?” Not fixing a health care problem (of which there are many) as much as scoring ideological points by expanding the role of politicians.

Exaggerating the Number of Uninsured in Pursuit of Power

President Obama is going for broke on health care. He and his Democratic allies call for controls on insurance companies, mandates and penalties on individuals and employers, new excise taxes on insurance, drug, and medical device companies, and the creation of a new government-run insurance plan.

To support his sweeping makeover, Obama and other liberal Democrats repeatedly point to the 46.3 million uninsured Americans. According to annual data released last month by the Census Bureau, the number of uninsured increased by 600,000 in 2008. By contrast, America lost an average of 700,000 jobs a month in the first three months of this year.

A careful examination of the data, however, reveals that Obama and his allies are misrepresenting the problem of the uninsured. Democratic plans would not come close to driving the number of uninsured to zero. At best, about only 29 million would be covered. Fixing existing government programs and creating targeted programs to improve access to health care would be far more effective. (more…)

Reordering Political Life for the Sake of 0.04% of the Economy

What do seat-belt laws, motorcycle helmet laws, bans on fats and an attempt to make health insurance mandatory have in common? A belief that government must impinge on personal freedom to keep its own expenses down.

That sounds reasonable, but–to focus on compulsory health insurance–just how much do the uninsured cost governments?

According to this fact sheet from the Kaiser Family Foundation, people who were uninsured for any part of 2008 received $56 billion in uncompensated care. That, the foundation says, is 2% of all health care spending. There is “little evidence” that the uninsured (as opposed to people on government programs) make private insurance any more expensive.

It also says that 75% of that uncompensated care is paid for out of government funds.  So people who go without insurance (or forgo enrolling in Medicaid) cost all governments a total of $43 billion.

The gross domestic product last year was about $14 trillion. Total uncompensated care amounted to 0.04%, or less than one-half of one percent of the economy.

To make this number go down, we’re going to subject every person’s health care to the whims of Congress? Health reform of the sort envisioned there will fundamentally alter the relationship between the government and the governed, turning a semi-free nation into one of people whose every breath is a matter of politics.

That’s a very high price to pay to reduce the amount of uncompensated care.

How What We Think We Know about the Uninsured Really Adds Up

Although it is convenient to assign a single number to describe the uninsured, a more robust analysis helps uncover the varied experiences and characteristics of this population.

Thomas P. Miller of the American Enterprise Institute focuses on what we know, more broadly, about the uninsured; some of the limitations in trying to measure the scope and dimension of the problems of the uninsured; and several often-neglected considerations in assessing the broader issue of how to improve health outcomes at lower overall costs.

Miller points out that attributing increased private insurance premiums to any greater uncompensated care costs in treating the uninsured (so-called cost shifting) is a misperception. He adds that the last federal survey to ask the nonelderly about being denied coverage for medical reasons found that only 0.8 percent of them had been denied coverage at any time in the past (accounting for just 1.3 percent of those uninsured in the survey year).

The Uninsured in Georgia

How many people are without insurance in your state, and can they afford it? The Georgia Public Policy Foundation breaks out the numbers for Georgia, and provides a link to a nifty data tool that provides some answers–or at least estimates from the Census Bureau.

Here's the item from the foundation's Friday Facts publication:

Who are the uninsured? The proportion of people without health insurance in 2008 (15.4 percent) is virtually unchanged from a decade earlier. Of Georgia’s 9.5 million residents, 1.7 million were uninsured in 2008. This includes 299,000 non-citizens, 284,000 with household incomes above three times the poverty level ($66,000 for a family of four) and 580,000 living in households earning less than $25,000, many of whom are eligible for existing government programs and are not signed up. You can explore the latest estimates yourself here: http://www.census.gov/hhes/www/cpstc/cps_table_creator.html.

Fixing a Short-Term Problem with More, Long-Term Problems

Shouldgovernment take over health care because "46 million people don't have insurance?" We can start by asking whether that number is actually true.

A graphic accompanying an op-ed in Investors' Business Daily does a nice job of giving a visual presentation of the estimates.

The Cato Institute's weekly dispatch offers some perspectives, which take up the rest of this post:

The number of Americans without health insurance has been debated extensively.  Estimates range as high as 46 million, but with a little help from Carl Bialik at The Wall Street Journal, Cannon points out some major flaws in that estimate:

Experts including the non-partisan Congressional Budget Office said that no, 40-some million is the number who are uninsured on any given day, and a lot of those people quickly regain coverage.  The number of Americans who are uninsured for the entire year is actually 20-30 million.  Yet the Church of Universal Coverage kept using that 40-some million estimate as if nothing had happened – even though the meaning of that estimate had completely changed.

The Congressional Budget Office also reports that as many as 15 percent of those 20-30 million chronically “uninsured” are eligible for government programs, so they’re effectively insured.

According to economists Mark Pauly of the University of Pennsylvania and Kate Bundorf of Stanford, as many as three-quarters of the uninsured could afford coverage but choose not to purchase it.  Again, according to the Congressional Budget Office, 60 percent of the uninsured are under age 35, and 86 percent are in good-to-excellent health.

Government intervention has made health insurance unnecessarily expensive for them, so these folks quite sensibly don’t want to be ripped off.  Mandating that they buy coverage is really about hunting them down and taxing them.

Cato scholar and Harvard economics professor Jeffrey A. Miron argues that whether it’s 46 million people without insurance or 46, it does not matter:

The problem is thus that insurance companies can determine all too well who is a good health risk and who is not, so they will price insurance accordingly if the law permits. This strikes many people as unfair, so they want to subsidize insurance for those born with unhealthy genes.

If insurance subsidies had few unintended consequences, this might be a reasonable form of social insurance. The problem is that subsidizing insurance exacerbates moral hazard, the tendency of people with insurance to consume too much health care. This is a crucial reason for rapidly increasing health expenditures.

Policy must therefore accept a trade-off: subsidizing health insurance will increase some people’s perceptions of fairness, but it will make the health care market less efficient.

A reasonable balancing of these two concerns suggests subsidizing insurance for the truly poor, but no more. In fact, the U.S. already does that via Medicaid. The uninsured are mainly people with too much income to qualify for Medicaid, or people eligible but fail to apply. Thus expansion of subsidized insurance to the currently uninsured, whatever their number, is likely to generate substantial inefficiency relative to any increase in “fairness” it creates.

Health Insurance Doesn’t Always Make Financial Sense

Official counts place uninsured Americans at roughly 46 million, an alarming 15 percent of the population. Yet a closer look paints a less scary picture. Of the 46 million, one in three, or 17 million, live in a household with an income greater than $50,000. Four in 10 are 18 to 34 years old — an age range where health spending averages less than $1,000 a year out of pocket.

As many as 14 million — including many children — are already eligible for taxpayer-funded health insurance via Medicaid or SCHIP, but simply haven't signed up. One in five, or 9.7 million are noncitizen immigrants, a portion of whom are here illegally. Seven in 10 people are uninsured for a year or less.

Then, too, health insurance often doesn't make financial sense for people with few assets, good health and limited income. They can pay out of pocket for routine care — and rely on the social safety net for large, unexpected and unlikely events.

In the United States, that safety net includes: federally funded health centers, open-door policies at hospital emergency rooms, extra payments to hospitals that treat large numbers of uninsured, and charity care. Together, these work to insulate Americans from catastrophic medical bills.

In 2008, uninsured Americans consumed an estimated $86 billion in health care, or $1,686 per person. This was (predictably) less than Americans with insurance, yet evidence suggests the system functions as an informal insurer.

The uninsured reached into their pockets for only $536 of the care, less than the $681 that privately insured patients paid out of pocket. The other 65% of that care was paid for by either existing government transfers or absorbed by the institutions providing care. In short, anyone living in America — citizen, immigrant, documented or undocumented — has access to health care on multiple levels. The same is not always true under "universal coverage."

The Invincibles

Should your right to control your health care be upended because some people would rather spend money on snowboarding than on health insurance? That's the bargain being offered by arguments such as "everyone should have health insurance." Inevitably, such statements lead to calls for measures (an individual mandate, the expansion of public programs, etc.) that weaken the viability of insurance.

I'm a snowboarder and I write about snowboarding, so periodically I come across a story along these lines:

Please help! Sammy Snowboarder was badly injured while performing in the finals of the Red Dew Suburu SlopeJam. He fell on the first of two scheduled runs, and shattered his pelvis along with two vertebrae. He was airlifted to Major Medical Center. He has a long recovery ahead of him, and like many professionals in this sport, he doesn't have health insurance. His friends have set up a "Cash for Sammy" fund at Uncle Sam's Bank. Please give back to snowboarding by making a donation now. Paypal accepted.

To the credit of people who write such stories (whose subjects can also be skiers, dirt bike competitors, etc.), I've never seen them use these events as an excuse to launch into a call for GovernmentCare.

I'm also encouraged by the fact that snowboarding enthusiasts are willing to help friends and even strangers with medical bills. (We could, in fact, use more charity when it comes to paying for health care.)

But such stories remind me that there are many different reasons why people are part of "the uninsured," a label that gets trotted out every year in updated reports that serve as a drumbeat for GovernmentCare. Some of those people are between jobs, while others are wealthy yet chose to forgo coverage.

Still others have priorities that make it hard for them to get insurance. For example, instead of getting a job that has insurance (even Starbucks offers insurance), they seek the freedom and opportunities that come from being a snow bum. To which I say, well, hey, good luck.

Few snowboarders will achieve the professional and financial success of, say, Shaun White or Gretchen Bleiler, so full-time snowboarders are going to be poor and without health insurance. They've made a tradeoff.

So the claim that we need to do this or that because there are 45, 47 or 50 million people without insurance ignores the very real differences among people in that group, differences that call for a variety of responses, rather than one.

One response, for example is to take a whack at the regulations that inflate the costs of insurance.

Four Myths About Universal Coverage

University of Illinois law professor David Hyman has posted a paper entitled, "Employment-Based Health Insurance and Universal Coverage: Four Things People Know That Aren't So."

He covers four commonly-held myths about insurance and universal coverage, including:

• Employers pay for EBC (employment-based coverage)
• There are 45.7 million uninsured Americans
• Universal coverage means everyone will have access to high quality care
• Universal coverage will solve the cost problems of American health care

We do need significant reforms. But his paper explains why government-run "universal health care" will take us in the opposite direction.

And given the fact that the current employment-based system has its roots in bad tax policies, we should eliminate the laws the link employement to insurance, not strengthen them. This would be genuine reform in the right direction.

(For more information on this latter point, see "Healthcare shouldn't be linked to employment," by Jeff Jacoby in the October 19, 2008 Boston Globe.)