Archive for December, 2009
HEALTH REFORM AND END OF LIFE
Death is an unavoidable theme this time of year. Having just celebrated a great religious martyr, we move on to witness last January’s swaddled babe transformed into an ancient, arthritic geezer doomed to die at Thursday’s midnight toll. We ponder the lives of those who’ve passed this past twelvemonth—whether near, dear, or merely famous. And stories like the New York Times’ “Hard Choice for a Comfortable Death: Sedation” challenge us to ponder the process of dying itself. Such is the end of the year and a troubled decade.
Hence comes to mind “Life-Line,” the great Robert A. Heinlein’s first published science-fiction story (1939). In it, the ingenious Professor Pinero invented an apparatus that accurately predicted the exact moment of any person’s death. Although many of Heinlein’s speculative musings later came to pass (waterbeds, rail guns, travel to the moon), this one, thankfully, did not. Such a device (doubtless following a hideously expensive and lengthy FDA-approval process) would cause no end of mischief, including cutting billions from medical costs by simply denying care to people about to die.
THE COST OF ABORTION UNDER SENATE HEALTH REFORM
This week’s deal on abortion-funding between pro-life Nebraska Senator Ben Nelson and pro-reelection Senate Majority Leader Harry Reid got me thinking about its fundamental economics. You probably know that, to secure Nelson’s essential 60th vote for the Senate’s health reform bill, the other 59 Democratic and independent senators agreed to his Read-My-Lips-No-Federal-Funding-For-Abortions ultimatum (plus an incidental $100 million in extra Medicaid funding for his native Nebraska). According to the deal, the individual states will decide for themselves whether to allow abortion coverage in their respective health insurance exchanges. But any state that allows it must also require that any women who choose it and who receive federal insurance subsidies must buy the abortion coverage separately as an extra-cost insurance policy, or “rider.” Nelson was satisfied that this will force all such women to pay for their abortion coverage with their own—not the government’s—money.
WE DON’T NEED AN INDIVIDUAL MANDATE TO BUY HEALTH INSURANCE: PART 2 – WHAT THE SENATE AND HOUSE BILLS MISS
People will game any economic system for their own benefit—whether medical care or anything else. It is this characteristic human behavior that makes markets thrive while assuring that no alternative, centrally-controlled mechanism will ever match markets’ ability to optimize the creation and distribution of economic goods. The necessary rules and top-down decisions that govern centralized systems can never be sufficiently detailed or flexible to match markets’ indescribably complex and dynamic interactions among millions of consumers, producers, and intermediaries—each gaming the system for his own advantage. No one really understands why this emergent property of human behavior works, but it does.
Thus, we should always seek minimally regulated market solutions for creating and distributing economic goods, even—or especially—in the presence of market failure. Accordingly, enacting health reform to correct the health insurance market failure requires setting up a new regulatory and safety-net framework that reforms the system to allow everyone to purchase (or not) affordable individual insurance while preventing people from killing the market with free-riding adverse selection.
WE DON’T NEED AN INDIVIDUAL MANDATE TO BUY HEALTH INSURANCE: PART 1
A key requirement of the House and Senate health reform bills is that all Americans without employer or government coverage must purchase health coverage through a new insurance exchange. The reason is to avoid the ravages of “adverse selection” by “free-riders” who wait until they get sick to buy insurance and thereby bankrupt the system. This free-rider problem is at the heart of the market failure I’ve written about that prevents universal access to necessary, affordable health insurance.
In effect, insurance mandates are a required license to breathe. The often heard argument-by-analogy is that it’s no big deal, because we already require drivers to buy auto liability insurance. But driving is a privilege subject to reasonable public safety regulation and comes with the right to abstain—as 100,000,000 non-driving Americans do. Everyone breathes. Also, mandatory auto insurance is to protect the victims of drivers’ mistakes, not the drivers themselves. Car insurance mandates aren’t just irrelevant but also ineffective—14.6% of drivers still don’t buy it (similar to the 15.3% who lack health insurance).
THE 10 COMMANDMENTS FOR A WORKABLE HEALTH INSURANCE EXCHANGE
The raging health reform debate on the public option has sucked all the air out of the room on the central question that we should be addressing: How can we fix the insurance market failure that prevents everyone from buying affordable health insurance that covers all medically necessary, otherwise unaffordable care?
The current House and Senate health reform bills try to accomplish something like this by creating an insurance exchange that allows the uninsured to buy coverage (and by expanding Medicaid). But they do nothing to correct the overwhelmingly dominant employer- and government-based programs that constitute the real looming train wreck.
In theory, an exchange or similar mechanism that allows universal insurance access is not just a good idea, but an essential one. But it must be open to everyone, regardless of employment status or eligibility for government coverage. Properly structured, it can be the critical component for achieving an effective, sustainable health insurance and medical care delivery system. Neither of the shortsighted, overreaching congressional bills will yield this result.
