OP-ED

A Health Plan for Rugged Individualists

In his “The Great American Health Care Divide,” Brad DeLong laments the great ideological divide that has so long prevented this great country from developing a coherent national health policy.

I am glad to have Brad’s company, because I have whined about the same divide for several decades now, as evidenced by my “Turning Our Gaze from Bread and Circus Games,” penned in 1995 and “Is there hope for the uninsured?

Finally, after a nice visit with my friends at the Cato Institute and reading the often amazing commentary on John Goodman’s NCPA blog , I was moved to pen a post on The New York Times blog Economix entitled “Social Solidarity vs. Rugged Individualism.” It was inspired by the often hysterical description of the Affordable Care Act (ACA) as a government takeover of U.S. health care or a trampling on the freedom of Americans, as in mandating individuals to have minimally adequate health insurance, lest they become freeloaders on the system.

The basic idea of my proposal is simple.

In 2009, Paul Starr had warned Democrats of a potential voter backlash against the individual mandate and proposed instead a nudging arrangement. Uninsured Americans would be auto-enrolled into health plan, if they chose not to select one, but could opt out of it with the proviso that for the next five years they could then not buy insurance through the insurance exchanges established by the ACA at community-rated premiums, and potentially with federal subsidies.

My proposal is to make that a lifetime exclusion. An individual would have to choose one or the other system by age 25. Should individuals opting out fall seriously ill and not have the means to pay for their care, we would not let them die, of course, but to the extent possible we would cover their full bill – possibly at charges — by expropriating any assets they might have and garnishing any income above the federal poverty level they subsequently might earn. Something like that.

As Jay Gaskill’s somewhat opaque reaction in “RUGGED INDIVIDUALLISM is NOT the Essential Value of Freedom” suggests, people who oppose the ACA as trampling on their freedom are not comfortable with my prescription, which does not at all surprise me.


Frankly, I was only calling the self-styled rugged individualist’s partisan bluff, knowing how much they actually cherish their or their parents’ Medicare and the other many handouts – farm subsidies prominently among them – that rugged individualists enjoy. The New York Times had a splendid article on that issue about a year ago (see here and here).

As Dean Baker noted, there are actually very few rugged individualists in America (my back-of-the-envelope estimate is three). Most self-proclaimed rugged individualists do tend to rediscover government’s beneficial side when the going gets tough.

When you Google “rugged American individualist – images,” you will come upon the image below.

One can see these freedom riders on heavy bikes in the Colorado mountains, T-shirts fluttering in the wind, and bandanas as a head protection. Some of them might be uninsured, because the opportunity cost of health insurance would have been the very bike they are riding.

It is a safe bet, though, that even the most rugged uninsured individualists among them would expect a helicopter from Denver to pick them up and fly them to Denver, should they take a severe spill in the mountains. They would expect the finest health care Denver can offer, even if they had no means to pay for either helicopter or health care. It would be presumed that America has a moral obligation to extend them this civic nicety.

And I have only hinted here at farmers and not even mentioned bankers.

Uwe Reinhardt is recognized as one of the nation’s leading authorities on health care economics and the James Madison Professor of Political Economy at Princeton University. He is a regular contributor to The New York Times Economix Blog.

Livongo’s Post Ad Banner 728*90

35
Leave a Reply

25 Comment threads
10 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
18 Comment authors
24hr vetHealth ReformerUwe ReinhardtTom LeithPeter1 Recent comment authors
newest oldest most voted
24hr vet
Guest

I do consider all of the ideas you have introduced to your post.

They’re really convincing and will definitely work. Nonetheless, the posts are very quick for starters.
May you please lengthen them a little from next time? Thank you
for the post.

Look at my web blog – 24hr vet

Health Reformer
Guest
Health Reformer

Medical training and socialization of doctors has been depreciated such that the care they offer in inferior and insufficient, regardless of how they are paid. For most, it is no longer a calling, but rather, has become a game of dodging the darts tossed by insurers and the US Government. As for the crash victims sans insurance who want all modern care, keep in mind that there are dead beats in all businesses and industries, but free medical care paid by others should never be tolerated. The same folks find money for cigs, beer, and other. In the past, these… Read more »

Bob Hertz
Guest

I believe it was in an interview with Dr Reinhardt that the outgoing head of Medicare called his own program “a dumb price fixer.” My own study of Medicare claims has been brief, since as a layman the data is hard to come by. But my impression is that Medicare has both some very high prices and some rather average prices, by international standards. I believe that the astronomical prices paid for some transplants and cancer treatments and complex bypass cases just overpower the well controlled prices paid for many office procedures and diagnostic tests. A recent study of large… Read more »

Barry Carol
Guest
Barry Carol

Dr. Reinhardt – I’m actually a fan of insurer choice and am willing to pay somewhat more for it but only up to a point. I think there is enormous room for consolidation within the insurance sector and there is also lots of room for insurers to shrink and simplify their plan offerings. I note that in numerous sectors of the retailing industry, two or three competitors in a market can provide plenty of competition in both price and service to customers. Think Wal-Mart, Target and K-Mart; Home Depot and Lowe’s; Walgreens, CVS and Rite Aid; Staples and Office Max.… Read more »

Barry Carol
Guest
Barry Carol

Al – I don’t view Medicare as a completely rational actor because it’s vulnerable to political pressure from powerful interest groups. I remember the incredible pushback it got from what I thought was an obvious strategy to seek competitive bids from sellers of durable medical equipment. The committee that deals with reimbursement updates for doctors operates behind closed doors and is dominated by specialists who protect their own interests at the expense of primary care doctors. CMS is specifically prohibited from taking cost into account in deciding what to cover and not cover so it winds up paying for every… Read more »

Uwe Reinhardt
Guest
Uwe Reinhardt

Barry, What you say is true and well known among a subset of policy wonks, yours truly included. Years ago Mark Pauly wrote on it in Health Affairs. A group of us subsequently published “It’s the Prices Stupid” in Health Affairs. The McKinsey Global Institute in 1996 came out with a study making your point — also pointing out that we spend vastly more on administration than do other nations. It IS strange that we are so fanatic about evidence based clinical medicine, but never about evidence based administrative processes. The rationale is that we get “choice” for all that… Read more »

Al
Guest
Al

You are right Barry, Medicare is not a rational actor and neither is or will the ACA be one because under our system health care becomes politicized. Thus it’s not the prices (stupid) rather the vision that people have which is converted into politics. You provide an interesting fact that generic drugs are cheaper in the US than elsewhere which is likely to be mostly true, but over the counter medications are likewise frequently less expensive. Markets account for a good deal of that price benefit. There are many reasons our costs are greater than they should be, but to… Read more »

Barry Carol
Guest
Barry Carol

Bob – If a hospital ER had capacity to treat 100 patients per night, they might have enough beds to treat up to six or eight or ten patients at any given time. Whatever the number is, if demand went to 200 patients per night, they would need twice as many beds as they had before and twice as many docs and nurses. They have to staff for their peak load though not all staff needs to be full time. So, the extra beds would double the amount of square footage needed for treatment space. The waiting room would also… Read more »

Al
Guest
Al

Barry, C. I agree with most of your response to Bob H., but I wonder about the referral to “It’s the Prices, Stupid”. We all recognize that prices count, but is that the real difference between nations? Maybe the difference is our individual visions of how things should be. If it were simply prices and Medicare was paying twice as much for colonoscopy than to privately owned out patient clinics Medicare and the government would be encouraging the growth of out patient clinics to do colonoscopies. But, they aren’t. In fact they are trying to stop the growth of these… Read more »

Uwe Reinhardt
Guest
Uwe Reinhardt

Al: A card carrying Liberal would not endorse HSAs for two reasons: 1. Because of the progressive income tax code, they (along with employment based insurance) do benefit high income people more than low income people. And two wrongs don’t make a right — just to be preemptive here and save you some ink. 2. Unless everyone gets endowed by government with the same deposit in the HSA (and that’s all you can put into it on a tax preferred basis), the high deductible policies that are the sine qua non of the HSA deal do ration health care by… Read more »

Al
Guest
Al

Uwe, you are looking for a way to save money. HSA’s demonstrate part of a method, but one can use the same payment system adding things like tax credits and even subsidies so that whatever program is enacted maintains our liberties and has the least effect upon the market place. I didn’t require your #2 because I am well aware of the problem you fear for we fear the same thing, but I am happy you mentioned it. I don’t even dislike your Social Solidarity Insurance idea whether said in jest or not, except I removed your idea from the… Read more »

Bob Hertz
Guest

Barry , I know precious little about running a hospital, but here is what I was thinking: If an ER goes from 100 patients to 200 patients a night, it needs some number of extra nurses assigned and more visits by hospital physicians. If these people are already on the payroll and underutilized elsewhere, there are no extra costs. If there is new hiring, there is some extra cost I admit. But the hospital mortgage and utilities and utilities and accounting departments are barely touched at all. I was under the impression that this fixed overhead was a big part… Read more »

Barry Carol
Guest
Barry Carol

Bob – You’re not looking at this correctly. If an ER can accommodate, say, 100 patients per night, if demand swelled to 200 patients, it would have to double its capacity even though it might be able to handle an extra one or two or three patients without too much trouble. Conversely, if we could cut imaging use in half by eliminating unnecessary defensive medicine driven tests, the radiology department could effectively serve twice as many patients across its region without having to build expensive additional capacity. Or, it could retire rather than replace one or more of its expensive… Read more »

Bob Hertz
Guest

In theory, Barry, if the ER was fully funded by tax dollars, would it make that much difference how many people went there? The marginal cost of an extra ER patient cannot be that high, I would think, once the fixed costs are met. A fire department that fights 600 fires a year cannot be that much more expensive than one which fights 300 fires. The personnel and equipment costs go up a little, the cost of extra water is trivial. But I see what you are saying…..that extra ER admissions will lead to a bulge in more expensive hospital… Read more »

Peter1
Guest
Peter1

Bob, when I lived in Toronto the issue of ER over use (instead of waiting to see PCP) was an ongoing discussion about how to curb it and it’s costs. There everyone walks into an ER and walks out without a bill.

Some numbers on the cost of the two systems here:

http://www.cihi.ca/cihi-ext-portal/internet/en/document/spending+and+health+workforce/spending/release_03nov11

http://www.cdc.gov/nchs/fastats/hexpense.htm

Apparently free controls costs better.

Barry Carol
Guest
Barry Carol

Bob – Many hospitals get half of their inpatient admissions or more through the ER. When patients call their PCP with a problem, they are often told to go to the ER, especially if it is after normal business hours. Many poor people routinely go to the ER for even minor problems because they perceive it as a better and cheaper (for them) one stop shop that eliminates the need to schedule multiple appointments, try to arrange transportation and take time off from work. If people knew that emergency care were funded by taxes, even more patients would go to… Read more »

Bob Hertz
Guest

Because the ACa tries to solve all health care issues through private insurance, albeit with subsidies, we have all become a little fixated on how to persuade or compel everyone to buy private insurance. There is another solution, as follows: – Treat emergency medicine as a public service, not unlike fire and police departments. And pay for emergency care with taxes, not backbreaking user fees or backbreaking insurance policies that are needed to cover the user fees. Every individual and every employer in the country would pay 1% of income, or whatever, and the money would go to emergency facilities.… Read more »

Bobby Gladd
Guest

Far too sensible. 😉

Barry Carol
Guest
Barry Carol

While I would support denying people the chance to buy health insurance later if they don’t buy it when they are first eligible for it, I don’t think such a bill could ever get through Congress for the reasons I explained in my last comment. One alternative approach might be to require those who didn’t buy the insurance initially to prove insurability if they want it later. That means they would need to pass medical underwriting unless they could qualify under a legitimate exception like losing employer coverage or coverage under a spouse’s plan or aging out of coverage under… Read more »

Peter1
Guest
Peter1

I lived in Alaska for about 5 years – place is full of self described “rugged individualists. The joke is though that the anti-guvment type vent their worst as they walk to the mailbox to collect their guvment check. “but to the extent possible we would cover their full bill – possibly at charges — by expropriating any assets they might have and garnishing any income above the federal poverty level they subsequently might earn.” One question on the above Uwe, since we have the most expensive system in the world how would you arrive at the “appropriate” charges? The… Read more »

Tom Leith
Guest
Tom Leith

The Rugged Individualist would surely agree that any charges the hospital and docs care to make is “appropriate”, or at least not to be questioned by the gubmint.

A better question I think is how we arrive at the federal poverty level.

tomintexas
Guest
tomintexas

I have not always agreed with this author, but this time, he nailed it.

Dr. Rick Lippin
Guest
Dr. Rick Lippin

Thanks Dr. Reinhardt,

Brilliant – I’m for it -But Uwe- this isn’t a “civic nicity” – It is a moral obligation of any nation that calls itself a civil society.

The US has not yet achieved that preferred status 🙁

Dr.Rick Lippin
Southampton,Pa