The Lesser Evil

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New at Reason: Ron Bailey makes part of the case for mandating private health care insurance.

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  1. Why aren’t in-home medical appointments popular in the US as they are in France? In France there are several large companies that will deliver medical services to your front door. Are there places in the US where this is common?

  2. Yes, but they’re called “Senior Living Environments.” You can get medicine delivered but not services. So does France have traveling proctologists or something? I’m not being a smart ass, I’m serious.

  3. Citizen,

    Yes. What you order (its a bit like ordering a pizza over the phone if you see the analogy) is what shows up at your door. They can even bring sophisticated testing equipment in vans/large trucks if that is what is needed (e.g., MRIs, etc.). I think its cheaper to do it this way because it cuts down on the cost of having a building with all the amenities and the like.

    So if you wanted a cardiologist to come check you out, you would order up the cardiologist. A few hours later, the cardiologist arrives and goes to work. Its actually very cool.

  4. I seem to remember seeing a story on 60 Minutes a few years ago about how European countries have a much higher supply of doctors because medical school is subsidized. If true, this would explain why premium services are more available, and why doctors would be willing to go out of their way more to find patients.

  5. ^No kidding?! That’s fun.

    As far as the article is concerned I think I agree with Bailey. I’ve become increasingly alarmed as I see more and more liberal and centrist pols talk about immenant national health converage as though it was a forgone conclusion. I don’t think the US education system will ever be adaquetely disolved and by the same token I can see the national health coverage machine bloating ad infinitum. This proposal looks like possibly the best compromise around, but as Bailey states, “The devil is in the details.”

  6. OK, I don’t get it–if people who can’t afford coverage now are covered by Medicaid, how are they expected to afford coverage under a manditory plan? Wouldn’t that still be a transfer payment of some sort, and, hence, just repurpose the Medicaid bureaucracy, not eliminate it? I can see some savings there, but I’m a little puzzled as to how this would work in practice.

    That being said, I think the problem of poor people not getting preventive care is an issue libertarians should rethink. It’s creating places for diseases such as resistant TB to live, and hence, increasing the health risks for the rest of us. I’m not sure what the answer is, but I think there has to either be an answer or an explanation of how a private system would avoid this problem.

  7. Here’s an URL to another side of the story:
    http://www.pnhp.org/publications/would_single_payer_health_insurance_be_good_for_america.php

    The US Medicare system has a 2% administrative overhead while the 1500 different private insurers run anywhere from 9% to 30% in administrative costs. The magic of the marketplace is a myth when it comes to health insurance.

  8. joe,

    Well, its also the fact that they get paid much more $ for doing this kind of work. That, and the hours are more flexible generally. The few doctors I know who do this perfer it because they even being outside a hospital.

  9. Does Mr. Bailey ever have any bright ideas that don’t make the State much larger?

  10. Gwen,

    I believe Monsieur Bailey is simply being practical about such things.

  11. I don’t know Sandy. If you’ve got the immunization for a given disease, I don’t see how others having that disease puts you at risk.

  12. Lefty,

    There are several reasons I can think of why Medicare’s lower admin. costs might not actually reflect greater efficiency in providing health care.

    1. The coverage Medicare provides is more limited in scope than the coverage private insurers provide (for instance, as has recently become a Hot Political Issue ™, it lacks prescription drug coverage).

    2. Medicare is a part of the federal gov’t, and as such does not have to worry about state gov’ts telling it what to do. A private insurer has to deal with 50 different sets of state regulations.

    3. It’s harder to sue the federal gov’t than to sue a private insurer. I’ll bet a lot of the admin costs of private insurers arise from CYA measures designed to forestall lawsuits.

    So, Medicare’s apparently lower admin costs might well be an argument for harmonizing (or just reducing!) state health insurance regulations, and/or an argument for tort reform, rather than an argument for government-provided health insurance.

  13. If, for the sake of argument, we take it as a given that gov’t will try to meddle in health care, then this seems like a “lesser evil” approach. (I’m NOT saying the gov’t SHOULD mandate private insurance. I’m saying that it’s a “lesser evil” and discussing its relative merits compared to the current situation. I’ll repent with burnt offerings to John Stuart Mill and Ayn Rand.)

    (Just had to pacify the purists who tend to jump all over me.)

    I’ve heard details of this proposal in other venues. They include:

    1) The gov’t mandates a very basic plan that essentially covers emergencies, catastrophes, major illness, etc. Anything else an individual can opt not to buy, and an insurance company can opt not to cover.
    2) To ensure easy access to insurance regardless of health condition, the premiums can be based on only two factors: A person’s geographic location (a doctor in New York has to pay more rent on his office than a doctor in Milwaukee, for instance) and the services covered. Age and health history cannot play any role in pricing.

    Of course, if most of the people requesting a certain type of coverage have a certain health history, then that will indirectly get folded into the price, but that’s just a reflection of overall demand, not a deliberate decision to charge a particular individual a higher rate.

    I know, I know, it isn’t perfect, but in many ways it’s better than the current situation. If these were the only regulations placed on health insurers then health insurance would actually be far less regulated than it is right now. A step in the right direction, or a little more water in the currently empty glass. See it as you will.

    Another thing I like is that it at least gets the welfare state out of the hospital. Welfare would still exist, but the problem would now be “Some people are poor, they need money” not “Some people are poor, they need money AND a health bureaucracy.” Of course, the solution I’d advocate is private charity and job creation through de-regulation. But at least the bureaucrats would only be saying “Let them have money”, not “Let them have money AND let us regulate the hospitals even more.”

    See, step in the right direction. Get the bureaucrats to focus on fewer things, not more things. Get them out of at least a few things.

    Finally, if individuals paid their own premiums and shopped for their own plans, health care costs would start to go down. People would probably opt for cheaper plans that include more copays and deductibles. They’d be more careful about how they utilize services. At the same time, when they do utilize services they’d be in a better position to “take their business elsewhere if the quality doesn’t improve.”

    I kind of like it.

    And, now that I’ve (gasp!) suggested that something can be better than the status quo without being perfect, let the purists flame me.

  14. What’s practical,Jean,about a mandatory State insurance scheme?We have one for auto insurance here in NJ and practical is an adjective no one would apply to it.It’s Gwyn,by the way,”I’m a boy,I’m a boy,but my Ma won’t admit it…”.

  15. Citizen:

    Vaccines only work for things which a) have a vaccine and b) you have been vaccinated for. There are lots of strains that you aren’t vaccinated for. The resistant TB I mentioned, for example, isn’t covered by the standard TB vaccine. SARS is another example of something that doesn’t have a vaccine and is a direct result of unsanitary conditions and poor health care in one area leading to people dropping dead in still-mostly-libertarian Hong Kong.

    Lefty:

    Do you have a link to the source of that 2 percent claim? I’m finding it kinda hard to believe because my experience at USAID was that in a really efficient program, 50% of money actually ended up being spent in target countries and not consumed by US consultants, etc. Most programs were not efficient. So 2% would be a story worthy of front page news. I don’t know how Medicaid is administered, so I’m open to education here. I know Medicare is nowhere near that number–I temped at a place that did auditing for them.

  16. 3 Words.

    Healthcare Industrial Complex.

    The fusion of business and government is the new fascism.

  17. Sandy,

    Well, that’s what happens when uber-libertarians run into reality.

  18. This is one of the Left’s oldest gambits-propose some halfway measure,get “practical” and “reasonable” people on the other side to endorse it,and then when it proves an utter failure claim this shows the need for a more radical program.And Fabian libertarians like Mr. Bailey and company fall for it every time.

  19. Ahhh yes, the “lesser of two evil.” It was as if we were given the choice between lung cancer or liver cancer. The state should force you to buy health insurance (whether you can afford it of not) or else that same state will nationalize. BRILLANT.

    Cancer is still cancer, and evil is still evil.

  20. Gwyn says, “What’s practical,Jean,about a mandatory State insurance scheme?We have one for auto insurance here in NJ and practical is an adjective no one would apply to it…”

    We also have mandatory auto insurance here in CA. The interesting thing about government-mandated “private” insurance to me is that, of course, government expects a reasonable amount of control over the scope of coverage, in exchange for turning cops into auto insurance salesmen. Thus, government gets the best of all worlds: its hands on the levers of a wealthy industry (whose representatives will, in turn, spend lavishly to lobby the politicians for favors); little, if any actual responsibility for actually making that industry run; and the ability to blame “private companies” for any failures of the industry.

    I have little reason to believe that compulsory medical insurance will come to any different end, in those respects. If anything, politicians will have even more incentive to meddle with mandatory scope-of-coverage minima, than in the auto insurance case.

  21. Gwyn Thomas-

    If somebody proposes that we

    1) Drastically reduce the number of regulations on health insurance from an encyclopedia’s worth to just 2 (everybody must buy a minimal amount, and prices are based solely on the services covered and where they’re rendered rather than an individual customer’s health and background)

    2) Get the government out of the business of providing health plans (no more Medicare or Medicaid)

    3) Make it so health coverage is no longer part of the welfare state, except in the indirect manner that recipients might be spending some of their transfer payments on health insurance costs

    4) Bring health insurance decisions back to individual consumers (where it used to be before wage regulations and tax laws provided huge incentives for people to get health coverage through employers) so that consumers have incentives to control costs and also have the market power to demand higher quality

    Well, I call that a pretty big win. It isn’t a half-measure, it isn’t a boondoggle that will collapse. It’s an _almost_ completely unregulated market for health insurance (notice I say health insurance, not health care, since the FDA will still be meddling with drug approvals and licensing and all that).

    Explain how this idea is a Trojan Horse for a bigger boondoggle, or how this isn’t really an improvement.

    Really, this doesn’t look like a gambit to me. Looks like almost complete deregulation of health insurance.

  22. I think the link between employment and health insurance is going to be broken at some point. Employers don’t want to pay for it any more, among other reasons. So the question is which way will it go: will we nationalize heathcare, or some sort of private insurance scenario like this?

    The latter sounds better to me. Why can’t health insurance be like auto insurance? There’s 1000s of companies competing for your business, you can get whatever level of coverage you want/can afford, etc. There’s no talk of an auto insurance crisis, or suggestions that we nationalize the auto insurance industry.

  23. Sorry,Thoreau,it’s still a slave’s bargain,and I’m having none of it.Look at all the qualifiers you’ve provided-“almost” completely unregulated,no longer part of the welfare state(except indirectly),and my favorite,the government gifting others with “market power.”You will be nibbled to death by the “almosts”,and you cannot win a bidding war with the Left,who will say the imperfections in the scheme cry out for a “simpler,more direct” way of providing health care-Single Payer.If the regulations are reduced to only two,and they are you will buy this service despite your situation,and you will buy at the price we have determined,I don’t see how we are any better off.

  24. And Dude,if you would like to see what a mature insurance scheme looks like,please come to New Jersey and bring your automobile with you.

  25. I have to say, that the argument made in the article is pretty convincing. The thing is, to those who say that those without health insurance should suffer and die, I think you miss the point. Perhaps there should be variations on level of coverage.

    I really doubt there are enough Mother Theresa types to provide care to all of the dying without insurance from private charities. Also, if you deny health care from a pool of people in your society, you breed a cess pool of disease, that will eventually negatively empact your health. I guess that is one of those “devil in the details”.

    On the other hand, do I want my money to pay for all of their Paxil and kids’ ritalin? nope.

  26. OK, libertarians. In your world everybody must have insurance or pay for their own med treatment.

    Pretend you’re a doctor. A guy shows up with pneumonia with no insurance and no money. What do you do?

    You treat it, of course, and eat the cost or pass it on to the other good libertarians. As enough of these situations arise you’re right back in the situation you’re in now.

  27. Alright then,Dr.Thomas on call here.I would direct the gentleman to a charity hospital,or one of the ethnically-based care groups that existed before the State decided to “help”,or I would treat him out of my own pocket.In a libertarian society,I could not pass on my costs to other patients,as my numerous competitors would be only too glad to undercut my non-market price.

  28. The only “wasted” vote is a vote for staus quo.

  29. I don’t think pointing out that price controls don’t work is being a purist.The State insurance scheme for cars in NJ used much of the same rhetoric,promising to lower costs and afford at least minimal protection for all.Needless to say,it hasn’t quite worked as advertised,and I dare say that Mr. Merritt could say the same for California.Nationalized health care is not inevitable,and was not long ago stopped in its tracks by a campaign of private individuals who did not wait for a lead from their elected officials,most of whom had Hillary-Lite plans of their own.I’m hardly a fan of the status quo-have the words abolition and rollback been purged from the vocabulary of the Right?

  30. “once you introduce coercion into the equation you get mushrooming irrationality.”

    Happened in Russia and in Nazi Germany, didn’t it?

  31. A majority of Americans wanted Hillarycare to pass on the day Bob Dole killed it. And that was a lousy plan.

    Inevitable.

  32. Technically true,but support dropped from the high seventies to the mid fifties,also more people thought the scheme would increase their personal costs.I don’t recall the enraged public taking aim at Republican offenders in the next election cycle either.Dole was in fact co-sponsor of the Chafee bill,a Hillary-Lite variant.

  33. The Republican tactic of proposing half assed versions of popular legislation they oppose, in order to cover their asses with voters while derailing it, should not be interpretted as having any other meaning. Though the efficacy of the tactic is demonstrated in your last sentence.

    Polls in support of universal health care are marginally below Mom and apple pie.

  34. dude,

    Breaking the link between health insurance and employment is at the core of the real motivation behind socialized medicine. Right now, it’s the largest corporations that disproportionately include health insurance in benefit packages. Much better to cartelize that function by organizing it through the State, and thus remove the competitive advantage of smaller firms that don’t provide insurance. As usual, when something “progressive” is proposed for (sob, sniff) “working families,” the main “family” behind it is named Rockefeller.

    Why do you think there’s so much talk about going after the Canadian national health insurance system as giving a competitive advantage for Canadian firms?

  35. Kevin, you’ve got it backwards. The efficiencies of scale allow larger corporations (and I know your opinion of how they get that way) to offer health insurance at a lower per-employee cost than smaller companies can. By removing health care from employment, we remove one more accounting-based advantage that fat cats have over small businesses and individuals, and force them to compete on the actual cost of doing business. “the competitive advantage of smaller firms that don’t provide insurance.” You mean the advantage of having to pay higher salaries to make up for not being able to offer insurance, a differential which is still not equal to the health benefit of a large company due to the big guy’s ability to take advantage of the aforementioned economies of scale?

    Not to mention increasing labor mobility by removing the financial and bureaucratic incentive to stay at a worse/lower paying job in order to keep health benefits and avoid the hassle of switching.

  36. “How is a burger flipper going to afford monthly premiums of several hundred bucks?”

    I don’t know, but I’d ask how are they gonna pay for an emergency appendix operation? If they can’t afford the premiums, they surely won’t be able to pay actual costs when they need to. And that leaves you and me with the bill.

    BTW, as far as tracking. You could require proof of insurance when you file your taxes. I don’t think we’ll be getting rid of those any time soon.

    Lastly, for the purists like Gwyn, I think you’re missing something. Nationalized health care is coming. I agree that it’s not a right, but I assert that the populist has been led to believe that it is, and they’re beginning to demand it. You can sit back and complain if you like, but you’re wasting your vote.

  37. About the cost of medicaid versus private insurance:

    “Another frequent assertion that turns out to
    be incorrect is the claim that a government
    health care takeover would lower overhead
    costs. Though government monopoly advo-
    cates like to play fast and loose with the facts
    by citing a study by a national health insur-
    ance advocacy group, Citizen Fund, that
    claims private insurers spend 33.5 cents of
    every premium dollar on overhead, more
    balanced estimates put private insurer
    overheads at roughly 16 cents. The state of
    Washington requires that major insurers file
    information on overhead. Its data suggest
    overhead for three major health insurers of
    11 to 14 percent.

    Actuary Mark Litow estimated Medicare and
    Medicaid overhead at almost 27 cents out of
    every premium dollar.”

    http://www.cascadepolicy.org/pdf/health_ss/I_122.pdf

    I know, lies, damn lies, and statistics, but there isn’t universal agreement on the 2% figure, looks like.

  38. Like it or not, libertoids, the majority of our society wants to guarantee that people don’t die of burst appendixes because they’re poor. Not “hope there’s a good private charity around to take care of most of them.” Guarantee. We already do this through government insurance for the poor, paying for to make up for free treatment at hospitals, and a half-assed network of community clinics (that are always under the budget knife, and are closing left and right in California). You can either shovel shit against the tide, or you can work to make the second-best option more reasonable. The best you can hope for by adopting the former strategy is to lock in the lousy status quo.

  39. Mandatory auto insurance is enforced with a stick: you have to have proof on insurance to get your car tags in a lot of states, and you can get a big fine if you can’t produce such proof for a cop who pulls you over.

    What’s the equivalent for health insurance? How do you periodically verify that everyone has it–tie it to some other bureacratic hassle, as in the case of car tags, or spy on them? And how do you punish someone who can’t afford it? You can’t squeeze blood out of a turnip. Hell, a lot of people just get a couple months worth of auto insurance when it’s time to renew car tags, let it expire, and drive careful as hell the rest of the time. Whether it’s car insurance or health insurance, regardless of what “the law” mandates, if it’s a competition between paying rent and paying insurance premiums, guess which one will give?

    A second problem is, if insurance is mandatory, what will people in high-risk actuarial groups do, like people with pre-existing conditions? How is a burger flipper going to afford monthly premiums of several hundred bucks? Are you going to introduce mandatory risk pooling or mandatory price controls along with mandatory insurance? As Hayek predicted a long time ago, once you introduce coercion into the equation you get mushrooming irrationality.

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