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Defining Universal Health Care

Posted Aug 26 2008 4:08pm
Peter Huber has written a brilliant op-ed in today's IBD (via InsureBlog ) which effectively dissects the issues surrounding universal health care. I recommend it to anyone who seeks to truly understand the issues with a minimum of dogma, but there is some.



Mr. Huber points out that medicine has entered the expensive era of chronic disease which is quite a bit more expensive to manage than the infections that dominated the early era of scientific medicine. He goes on to point out that a huge disparity exists in survival between the best and worst race-gender-county combination in the country. The explanation appears to be related to being "health-careless."



This last argument is a repackaging of an a centuries-old elitist argument that people do well because they make good choices and people do poorly because of poor choices. The logic that better consequences follow from greater adeptness at making choices is not at issue. The issues relate to the choices that will present to people born in certain circumstances. The choices I was born into were between a Subaru and a Mazda for a first car; some of my friends, between a Lotus and an MG. Others between the bus and the subway. Such possibilities present in health as well.



The greatest single predictor of health outcome is socio-economic status. The best way to be healthy in life is to be born into a wealthy family. While there are things that we can do to influence our health over the years, much is related to the vagaries of genetics and chance. In fact, genetics seem to affect behavior more than any of us would care to admit . Maybe our behavior, which governs our choices, is in fact frequently determined by our personality. The impulsive personality makes different mistakes that the meek and over-prudent one, but there are mistakes to be made all-round.



In a brief aside, I have made the observation that cocaine addicts seem to frequently have anxiety disorders which become apparent when the drugs have worn off. I have also observed that alcoholics were frequently depressed prior to their addiction reaching crisis. This is not a scientific or controlled observation, but I like to think a somewhat educated one. The implication would be that not all our poor choices are merely the result of having been careless and thus living the natural consequences of our actions.



If nature wins out over nurture, it becomes a eugenic argument and invites a return to royal systems of centuries ago. Even if nature does not completely win out, it still influences the outcome... of health, options being presented and quality of decision being made. Even in a mechanistic world, where everything can be explained by either nature or nurture, there must allowances made for accidents or chance occurrences that affect health.



Mr. Huber, cholesterol and most of the behaviorally determined health risks we face today, are nowhere near as lethal as cholera, or in fact, even TB, a slow-moving infection if ever there was one. The fickleness of the infectious era has not completely disappeared despite the modern impulse to control everything and believe that one is actually in charge of one's destiny. Being the captain of the ship does not imply control of the winds.



I feel the need to respond to a couple of other points. First, I do not understand universal health care to imply either an entitlement or a single payer. This is very important because it is at the root of the current health care debate which I would liken to two people arguing about a color: one person is screaming it's not white, the other screaming it's not black while all the while it was gray. Canada has a single payer and universal health care. Much of the Europe has state mandated or subsidized health care through multiple payers. The UK has a national health care system in parallel with a private system, which negates the common American fear that they won't be able to get health care outside the public system.



Universal health care ensures that everyone contributes. Health insurance then is the choice method for redistributing the financial risk. While this would result in adjusting a young person's cost of insurance upwards and reduce an older person's cost, I am not so sure the young would reject the notion. The young person still finds herself taking care of elderly parents or grandparents and living with the financial impact. Everyone stands to benefit from a pooling of resources, but the old elitist and eugenic arguments come to bear: why pool my resources with genetically inferior individuals who are unable to make wise choices.



I must agree with Mr. Huber about the reasons we must pursue Universal health care, although we come to very different conclusions:



The cost of health care has a big, direct impact on both the cost of labor and the marginal tax rate. If California defies the new medicine's economics by requiring insurers to ignore everything but age and geography, firms can flee to Texas or Shanghai. Efficient labor markets require efficient health insurance, which will be found only where actuaries are allowed to find out as much as the rest of us can, and craft policies accordingly.


While many people complain about the NHS, it accomplishes universal health care at the lowest cost in the Western world. In addition, it allows the wealthy and much of the middle class access to a better level of care in more luxurious surroundings and more timely intervention for non-life-threatening events. In other words, it achieves the objectives of providing a competitive level of health care at a competitive national cost. It is imperfect and probably wouldn't work here, it is instructive that one's assumptions are so porous.



I feel obligated to point out that the extent of federal subsidy could reduce the potential profitability of the insurance industry and that would be bad for America. Let's not be shy about calling a spade a spade: health care is an economic engine and many players share an interest. Insurance is probably the most powerful. The rest of us are learning what the actuaries already know, "the one with the most information wins..." But utilizing such information to pad one's margins and select people for coverage negates the original purpose of insurance, which is to share risk.



Universal health care can work, but before we even try to figure it out, we need to define it properly. Then we need to figure out a compromise that all the players can live with.
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