THCB

Why Do You Care Whether I’m Insured?

If you care a great deal, I’ll give you an account number you can use to make a deposit.

[Note to Self: Send this Alert to the folks at Commonwealth. Also to Nancy Pelosi and Harry Reid. CC Uwe Reinhardt as well. You never know what they might do. They certainly talk about this topic a lot.]

While you’re thinking about the initial question, here are a few follow-up questions:

Do you care whether I have life insurance?

What about disability insurance?

Homeowner’s insurance?

Auto casualty?

Auto liability?

What about retirement insurance? (A pension or savings plan.)

Do you care whether I keep my money at an FDIC-insured institution?

Or whether I bought an extended warranty on my car?

Or whether I bought travel insurance before taking my scuba diving trip to Palau?  (It pays off if you get sick and can’t go.)

I’m sure there are busybodies who would like to run everyone else’s life. But society as a whole has taken a more rational approach. We basically don’t care whether people insure to protect their own assets (at least we don’t care enough to make them do so). But we do care about events that could create external costs for other people.

Through Social Security, we force people to pay for life insurance benefitting dependent children (who could potentially become wards of the state) but not for a working-age spouse. All but three states force people to have auto liability insurance (covering harm to others) but not casualty insurance (covering one’s own car). We basically don’t care whether people insure their own homes, but we force them to contribute to retirement and disability schemes to prevent their accidental dependency on all the rest of us.

Here is the principle: government intervenes in those insurance markets where people’s choice to insure or not insure imposes potential costs on others. Because of our basic human generosity, we’re not going to allow people to starve or live in destitution. So when people don’t insure for retirement, disability, etc., society is going to step in and help (where help is needed) anyway. Implicitly, we have a social contract that socializes the downside of certain risks. If we allow the upside to be left to individual choice, we will have privatized the gains and socialized the losses. When people don’t bear the social cost of their risk-taking, they will take more risks than they would otherwise.

Another way to think about the problem is in terms of the opportunity to become a free rider on other peoples’ generosity. Consider the person who has no life insurance (for dependent children), no disability insurance and no retirement savings program. Because he is not paying premiums or saving for retirement, he can consume all of his income and enjoy a higher standard of living than his cohorts. But if he bets wrong (dies too early, becomes disabled, reaches retirement with no assets), he is counting on everyone else to help him out.

How does all of this apply to health? Considering all of the trees that have been felled to facilitate health policy writing, you would expect an exhaustive literature. But aside from Robin Hanson’s thesis that health care is different (which I’ll save for another day), there is almost nothing!

I’m not kidding. There is virtually nowhere you can go to find a rational, well-thought-out, consistent analysis of why you should care whether or not I have health insurance.

After you finish reeling from that revelation, allow me to partially fill the intellectual void.

If we are concerned that the uninsured will impose an external cost on the rest of us, there is a simple remedy. Impose upon them a fine equal to the expected cost of any unpaid medical bills they might occur. Elsewhere, we have estimated that the full time uninsured get about $1,500 per person in free care, on the average. So the appropriate fine is $1,500.

Note, however, that uninsured middle-income families are already paying higher taxes (probably in the range of $1,500) because they do not have the tax subsidized insurance their neighbors probably have. So far from being free riders, these families appear to be paying their own way. Of course, the extra taxes the uninsured pay tend to go to Washington, D.C., while uncompensated care tends to be delivered locally. This mismatch of revenue and expense is not caused by the uninsured, however. It is the result of government not having its act together.

Note: The above argument applies to middle-income families. It doesn’t work very well for people who have assets—say, $1 million or more, and that’s about 1 in every 30 people. Also, the argument becomes weaker the lower a household’s income. People who cannot afford health insurance anyway are not willful free riders. They are not making choices that impose new costs on others. So there is no obvious social reason to force them to insure. They will need health care from time to time, however.

What is the best way to get health care to people with low incomes and few assets? The answer is not Medicaid. Nor is it SCHIP. Nor is it any other system, inappropriately modeled on the “insurance” approach to health care. More on this in the future.

Bottom line: aside from the need to coordinate government revenue and expenses that relate to the uninsured, it’s not at all clear why you should care whether I have health insurance.

If I have overlooked something, I invite readers to weigh in.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

 

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Mike SmithjohnCarolAkin FadeyiDestinkeys Recent comment authors
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Mike Smith
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Mike Smith

Yes I care whether you have all of the items you mentioned. Why? Because in this country, people are taken care whether or not they have these thing. The insured pay more and higher insurance premiums because some don’t have insurance. Car insurance? I have to pay over $100 per car every year for the “Uninsured Motorist Fund” in Michigan where everyone is suppose to have insurance but don’t. No job or form of retirement? Well just look at all the transfer payments to the chronically unemployed, even talk about 401K seizures by government to make retirement a reality and… Read more »

john
Guest

problem is mainly for the poor people.they didn’t get work and for them a better health care is a night mare

Destinkeys
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Destinkeys

Any society rises or falls depending on how well supported it is. No nation can survive without its’ populace healthy, educated and well defended. At least, not ‘survival’ that anyone would want to live through. Unfortunately, in the USA, only the defense of the country is not allowed to fall into the hands of private, for-profit hands (and even that is beginning to happen). In a society of ‘we the people’, our government’s primary job, maybe even it’s MAIN job, is to ensure the safety, health and overall education of its’ populace. We seem to understand the danger of farming… Read more »

nate ogden
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nate ogden

“We seem to understand the danger of farming our defense out to greedy for profit corporations, no-one in their right minds would disband the US Armed Forces, and put it all in the hands of Halliburton, hoping for the best. But in health and education, we appear to have done just that. None of these main ‘tripod’ societal needs should be for profit. Our country cannot afford it.” Congrats on the time traveling Destinkeys, how do you like the future so far? Miss 1920 much? 90% of Education has been provided by government and it has been a major failure,… Read more »

xrepublican
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xrepublican

If you want to see what a purely free enterprise health care system is like, go spend a few years in Somalia. The Somalians are experts in the arts of waging pointless wars and ignoring sick people who can’t pay. Also, regarding the remark supra, that the country took care of sick poor people 100 years ago : the author of that statement would do well to pick up the works of Jane Addams, Lincoln Steffens, or the non-fiction of Upton Sinclair and Samuel Hopkins Adams. They lived through the early 20th Century and described the horrific neglect and mistreatment… Read more »

nate ogden
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nate ogden

“If you want to see what a purely free enterprise health care system is like, go spend a few years in Somalia.”

Sure and if you want to see Government healthcare go to North Korea

xrepublican
Guest
xrepublican

Mr. Lane is edging back to the conversation about what to do with all those poor people. Mr. Ogden worries about the national budget. The big question is how we meet both concerns ? We have wasted a TR!LL!ON $$$ on richard nixon’s failed War On Marijuana. Legalizing and taxing the stuff would make a huge difference in our national finances, besides dramatically cutting the income (and ability to buy assault weapons) Mexican gangsters make. We squandered $$$4TR!LL!ON in the Bush crime family’s OFF BUDGET Iraq Fiasco II, and continue to waste $1 B!LL!ON/day there for no good purpose. We… Read more »

Margalit Gur-Arie
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I don’t know who you are, but I like you….

John Ballard
Guest

Me, too.

John Ballard
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nate ogden
Guest
nate ogden

“Let the oil companies save the expense of trying to establish their own defense forces, by making them pay the US navy for their services. This will easily bring in a TR!LL!ON $$$ per annum.” always amusing watching liberals and their half whit ideas chased over the ledge by equally clueless liberals. If only the ledge was higher the problem of liberalism would be solved. 1 trillion from protecting oil shipments, really now? The entire oil industry is around 3 trillion a year. Why would Canada pay our navy to protect their pipelines? Why would domestic producers pay our navy… Read more »

KSLane
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KSLane

This is in response to the initial question of why do I care if the next man is insured. I would say “I don’t” if we lived in a society where our actions did not impact other people. I choose to pay for health insurance because I prefer to have the security of knowing that if anything does happen I have the support provided by insurance. However, there are a few that think they are the picture of health and paying insurance premiums for services never utilized is a waste. Then there are others whose jobs don’t offer coverage and… Read more »

John Ballard
Guest

Repeating my comment from another thread in January…

https://thehealthcareblog.com/blog/2011/04/21/and-the-worst-health-care-system-in-the-world-isae/comment-page-1/#comment-53798

Wow! Almost ninety comments.
It’s called The Last Word Game.
Reason and logic are not part of the equation.
Whoever has the last word wins.
For those who haven’t figured it out yet, nate always wins.
Most trolls are innocent of any sense of reason and he is no exception. He seems to be a deeply wounded individual, incapable of compromise, courtesy or sincere apology. However, I think he must be very successful in his work because, as seen here, he stays on task with unrelenting energy and determination. That level of commitment takes exceptional dedication.
Okay, sir.
Your turn…

nate ogden
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nate ogden

At risk of taking your crown why is it you are always the last comment saved only by some spam? Do you project much John? Speaking of trolling I comment on the subject you run your mouth on trolling, again, project much? 2:26 am you must be really rich with nothing but time to kill.

Thanks for the healthy dose if iron(y) to start the day

xrepublican
Guest
xrepublican

The political question is not whether skinflints can save a buck, or whether resources are finite. The political question is whether it is in the best interests of the nation to finance a minimum health care program. The host of this blog may feel that destitute people deserve to suffer, but the vast majority of the people of this nation disagree. As to Mr. Goodwin’s inquiry as to whether anyone cares if he has insurance, I only care self-centered people act in such a way as to make themselves as inexpensive to treat as possible. You see, their consumption of… Read more »

DeterminedMD
Guest
DeterminedMD

“Pay them [doctors] more and you will have plenty”. My god woman, you are on a roll today!!! Who in god’s name is going to support this in DC? And would any doctor believe the pay would be seen? I’m done at this thread because the absurd that does spark some humorous response will degrade to outrage sooner than later. I just leave with this to try to bring back the readers to the point of the posting (you know, what that guy Goodman said at the top about whether you should be concerned about having insurance), it will come… Read more »

Margalit Gur-Arie
Guest

My dear Dr. D., I completely agree with your final comment, those LIMITED resources being cash on hand.
I knew we were in agreement the whole time 🙂

DeterminedMD
Guest
DeterminedMD

Ever see the M*A*S*H episode when Hawkeye and BJ feign a fight to humor Frank Burns for his birthday and they end up really fighting, and BJ’s beef is Hawkeye has to always have the last word, so when they make up, BJ says “thank you”?

You’re welcome. NOT! It is not strictly a cash interpretation. May you never know the pain of having a care procedure delayed in a hospital because something was in short supply. Honestly and seriously!!!

Margalit Gur-Arie
Guest

Thank You!

DeterminedMD
Guest
DeterminedMD

per Ms G-A’s 10/10 12:29 comment: “Health care resources are not limited in any way in this country.” Wow, I don’t even know how to respond to such an extremist interpretation, other than remind at least readers grounded in the reality I seem to share with those who are clinicians that there are not infinite supplies of drugs, supplies, oh, and bodies to fill as providers. I know I have said some questionable outrageous things in my time here, as not everyone appreciates or agrees with my perspectives as a provider, but that above statement is just absurd to read.… Read more »

Margalit Gur-Arie
Guest

I am starting to gain a new appreciation for conservative methods of debate. I don’t watch Fox news, so this is rather new to me… First Dr. D. who is asserting that because supply is not infinite, it must somehow be limited. Are there only two forms of availability: infinite and limited? Is adequate or sufficient even a possibility? How many empty hospital beds do we have? How many MRIs, CTs and all that fancy machinery sitting idle for hours every day? How many fully qualified students are not accepted into medical school each year? How many foreign trained physicians… Read more »

nate ogden
Guest
nate ogden

so you satill don’t grasp that money doesn’t grow on trees? Money is not infinite, despite the way you spend it

Margalit Gur-Arie
Guest

Yes, Nate. I do understand.
I just want people to stop saying “in a world of finite resources, we have to ration care”. I want them to be honest and say “we don’t want to spend our money on your care. Period.” Let’s see how that goes over….

DeterminedMD
Guest
DeterminedMD

“…not to the degree most are today [regarding reimbursements alone, Ms Stephanie?]. People here are blurring what people make in income versus how they invest it for further income outside of patient care and then try to say that any doctor making over set amount is just being greedy. Show me the majority of doctors doing daily clinical care in primary care, pediatrics, psychiatry, and other select specialties that have a lot of patient care flow in the office are making larger incomes, when in fact, they are not making more money, they are getting lower reimbursements and are running… Read more »

nate ogden
Guest
nate ogden

does anyone have data on the number of hours an overpaid american doctor works compared to those in say Greece, France, or UK?

Would also be curious to see how length of carrier compares and pension.

John Ballard
Guest

Here’s a four-year-old article that might perk things up a bit…

http://reason.com/archives/2007/10/05/the-secrets-of-intangible-weal

Stephanie
Guest
Stephanie

I have never been accused of pot-stirring, but I think I might be guilty of it today! Clearly I have hit a few nerves and will admit to two shortcomings of my earlier post: I failed to link a resource that supports my position and I failed to take into account that folks out here might not be able to have an adult debate without resorting to name-calling. Not much I can do about the latter, so let me try to correct the previous: I am not in favor of physicians and other healthcare providers donating their skills purely for… Read more »

nate ogden
Guest
nate ogden

“I have included a link to an interview with a former Cigna VP” LOL could you be any more naive? This fraud has been discredited for years now, how could you still fall for this? Did you even notice what Mr. Potter did while there? “I was head of corporate communications and that was the ultimate PR job.” He wrote press releases and stood in front of a camera. His knowledge of actual insurance and how the business is ran was right around the same level as yours. Now lets call you out on your other lies you seem to… Read more »

tim
Guest
tim

To all those who are anguishing over whether or not you should still come here, what with all the “sniping” and “trolling” from those who have the audacity to disagree with you: you really don’t want to miss this discussion. It is of historical importance. You thought Marxism had already been litigated? Well, you would be wrong. We’re still trying to decide, right here on this comment thread, whether the “rich” really own what they have, or whether they “plundered” it; whether the poor are employed, or “exploited”; why we allow the “capitalist” to capture the excess “value” of the… Read more »

Margalit Gur-Arie
Guest

“How did we get from $0.50 to $7.25?”

The same way we got from 1957 to 2011. Time flies when you’re having fun….

medical-x-ray machine
Guest

It is fantastic and this is a good article that I saw,thanks for sharing!

BobbyG
Guest

What is this troll crap?