47 Million, reasons to think, twice
Nancy Pelosi is cited as having put forth 47M as the number of health-care uninsured in America. Who are these these people, how many will directly benefit from a given health care reform notion, and how will the "general welfare" be effectively promoted thereby?
Let me first look at a purely economic analysis. I do this partly because it's easier in principle to quantify economic matters (as opposed to say spiritual or intangible matters), and partly because a main concern is fiscal or financial - who will pay how to whom for what expected benefits? In addition to ignoring spiritual matters, this review does not deal with plausible Constitutional issues (such as some folks claiming health care as a right while others see it as something outside the proper scope of USA government).
Health care reform advocates promote two kinds of economic benefit: These people will get health care for diseases or conditions which currently disable them (short term like flu or long term like diabetes). Reducing disability generally has the effect in principle of increasing effective ability and thus potential productivity, too. That means they can do better work as workers, assuming they have jobs. One could then do a cost-benefit analysis to determine a global measure of effectiveness for the proposed specific reform. If the plan costs $100B/yr then we have a first order decision point -- if the net benefits are less than that, it pays back less in terms of increased output than we invest into it. That would be an economic failure, whether marginal or worse. If it instead pays more, we can say that it is at least a marginal plus. And if it pays back say $200B/yr it should be considered a wild success. It helps both the individual (at least in the collective sense) and the economy at large (which presumably helps economic leeches such as government employees paid by taxes on economic output). Of course there could be transition costs in addition to annual costs, but those could be amortized (annualized) rationally in a medium or long term picture.
The second kind of benefit promoted is a negative benefit in this sense: Reducing the number of uninsureds cuts down on publicly subsidized health care costs mandated by law or conscience. This presumably then frees up cash flows to be spent otherwise. That is, the current system has a lost-opportunity cost to it, one which might be significantly reduced by the proposed reform. That then would be an implicit benefit to those who subsidize things like ER care for indigents. If we have good data on the status quo we can make reasonable inferences as to how a given reform program would perform on this aspect.
Now, what about the realities? Is there clear-cut status quo data?
Who are these 47M? Some quick stats (and these numbers may overlap) --
9.5M are non-citizens
17M have plenty of income to buy basic health care (or are dependents in such a household)
18M are 18-34 and not necessarily in need of significant health care coverage or just choose not to get it.
Of those under 65, 70% who lost insurance regained it within a year, and 50% within 4 months.
How many "indigents" receive what benefits now at a cost to the public (whether via government or NGO charity)? How would that change?
What reasonable projected benefits and costs can we expect, and what is the reality of the status quo? This of course applies not only to the 47M but to the system as a whole.
If we consider that health care is currently rationed partly by price (one can buy levels of coverage) and partly by access (waiting lines, "preferred providers", denial of coverage), how would the proposed reform ration it? Would the reform affect quality of care separate from those considerations (competence of providers might go up or down, for instance)?
Previous blogs by me on health care:
Is it too late to reform health care reform? February 26, 2009, 2:41PM
Rationalizing the Health Care Debate March 6, 2009, 9:51PM
Let me first look at a purely economic analysis. I do this partly because it's easier in principle to quantify economic matters (as opposed to say spiritual or intangible matters), and partly because a main concern is fiscal or financial - who will pay how to whom for what expected benefits? In addition to ignoring spiritual matters, this review does not deal with plausible Constitutional issues (such as some folks claiming health care as a right while others see it as something outside the proper scope of USA government).
Health care reform advocates promote two kinds of economic benefit: These people will get health care for diseases or conditions which currently disable them (short term like flu or long term like diabetes). Reducing disability generally has the effect in principle of increasing effective ability and thus potential productivity, too. That means they can do better work as workers, assuming they have jobs. One could then do a cost-benefit analysis to determine a global measure of effectiveness for the proposed specific reform. If the plan costs $100B/yr then we have a first order decision point -- if the net benefits are less than that, it pays back less in terms of increased output than we invest into it. That would be an economic failure, whether marginal or worse. If it instead pays more, we can say that it is at least a marginal plus. And if it pays back say $200B/yr it should be considered a wild success. It helps both the individual (at least in the collective sense) and the economy at large (which presumably helps economic leeches such as government employees paid by taxes on economic output). Of course there could be transition costs in addition to annual costs, but those could be amortized (annualized) rationally in a medium or long term picture.
The second kind of benefit promoted is a negative benefit in this sense: Reducing the number of uninsureds cuts down on publicly subsidized health care costs mandated by law or conscience. This presumably then frees up cash flows to be spent otherwise. That is, the current system has a lost-opportunity cost to it, one which might be significantly reduced by the proposed reform. That then would be an implicit benefit to those who subsidize things like ER care for indigents. If we have good data on the status quo we can make reasonable inferences as to how a given reform program would perform on this aspect.
Now, what about the realities? Is there clear-cut status quo data?
Who are these 47M? Some quick stats (and these numbers may overlap) --
9.5M are non-citizens
17M have plenty of income to buy basic health care (or are dependents in such a household)
18M are 18-34 and not necessarily in need of significant health care coverage or just choose not to get it.
Of those under 65, 70% who lost insurance regained it within a year, and 50% within 4 months.
How many "indigents" receive what benefits now at a cost to the public (whether via government or NGO charity)? How would that change?
What reasonable projected benefits and costs can we expect, and what is the reality of the status quo? This of course applies not only to the 47M but to the system as a whole.
If we consider that health care is currently rationed partly by price (one can buy levels of coverage) and partly by access (waiting lines, "preferred providers", denial of coverage), how would the proposed reform ration it? Would the reform affect quality of care separate from those considerations (competence of providers might go up or down, for instance)?
Previous blogs by me on health care:
Is it too late to reform health care reform? February 26, 2009, 2:41PM
Rationalizing the Health Care Debate March 6, 2009, 9:51PM
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"18M are 18-34 and not necessarily in need of significant health care coverage or just choose not to get it."
It only takes one, if it's the one you love.
June 17, 2009 8:57 PM | Reply | Permalink
That remark doesn't make sense in the context of the quoted line. What are you trying to get at, family members who choose not to pay for coverage?
June 18, 2009 5:30 AM | Reply | Permalink
IMHO, THIS is the argument for Universal Healthcare. Insurance works best if more people are involved in the process. The game is that you pay a little when you do not need it and much, much less when you do. If fewer people participate, then it costs much more. You pay for someone else now so the coverage will be there for you later. We are all going to need healthcare at some point in our lives and it is critical that it be there when that time comes.
Here's the history of insurance, very crudely. The American Farmers started it to enable their brethren to survive calamities like failed crops, or environmental catastrophes. It became this huge pot of money that Wall Street took notice of and infiltrated. Soon, they depleted the pot and farmers lost their farms. It was not an environmental event that caused them to lose their farms, it was that they sold their insurance to shareholders who were not farmers. Essentially, they went from being farmers to being a crop for the farmers on Wall Street.
Same thing happened with all those pension funds. People put money into a pot and it became abig pot of money and attracted parasites who drained it. Like Medicare with the pharmacies, and social security. There is a lot of inactive money that attracts parasites. That this is the savings of others over time means nothing to these bloodsuckers. Nothing at all. We will do just fine with Universal Healthcare, but we have to be sure everyone participates. It's not for the sick, it's for everyone because we will all get sick at one time or another in our lives.
June 18, 2009 3:39 PM | Reply | Permalink
Thanks for commenting on my post.
That's not a great argument you offer.
--Insurance works best if more people are involved in the process.
Not really. Once you reach a "critical mass" number, there's no significant improvement. Plus of course "works best" is subjective. Insurance is a bet against your hopes. If other people with worse conditions are in your pool, insurance works against you. Insurance works best overall when it is done right and risk pools are not muddled (like good drivers get discounts on their auto insurance). And it pays off best for those who need the health care while it's a big drain on those who don't.
--The game is that you pay a little when you do not need it and much, much less when you do.
Not really. You pay a lot when you don't need it, and if you get coverage (it is not denied) when you do need care, you might pay the same or you might pay less, depending on deductibles, rationing, and fine print. Yes, in cases of catastrophe insurance can really pay off for the individual.
--If fewer people participate, then it costs much more.
Not at all, see top response. The truth is that if you can force people who don't need or want it to participate (pay into it), costs for those who want to participate might go down if the incremental overhead doesn't go up too much. "Misery loves company" seems ironically apt here.
--You pay for someone else now so the coverage will be there for you later.
That's reasonable as a description even if not reasonable in practice if you are a healthy prudent person who doesn't want to participate. If you are a good driver, why should you pay inflated premiums on account of being pooled with reckless drivers, for example?
--We are all going to need healthcare at some point in our lives and it is critical that it be there when that time comes.
It's not generally critical, and the amount of care each of us will need is quite uncertain. Also some people refuse some kinds of medical care on "religious" grounds. So it's not necessarily right to charge people with different needs or beliefs the same for different services. Also, since we all need to eat, why don't we have Universal Coverage for all of our food needs (we can include or exclude restaurants)?
June 18, 2009 4:37 PM | Reply | Permalink