Monday, August 31, 2009

A Reader's Response to Healthcare

A reader responded to my Four Components of Healthcare Spending by advocating for a baseline level of government-sponsored health insurance, where people can purchase additional coverages if they want to. A tiered healthcare system, in the jargon of the day. Or similar to how MediCare has a "MediCare Part B" from private insurers.

It is important to note that the American Administration has specifically rejected such a tiered system in its current proposal, due to equality concerns.

Personally, I think we will end up with a tiered system. My analysis of the four components supports that conclusion. So actually, Anonymous, I somewhat agree with you. Where we differ, is on what the base healthcare plan should provide.

In your basic healthcare plan, it looks to me like you are covering all health problems/diseases, but only paying for standardized, concensus treatments for each of them. The coverage appears to be similar to private group plans today.

I disagree. I think the base plan should omit a couple categories. For example, there are many people who believes vaccines are bad. We should allow these people to opt out of the vaccine component of our base health plan. In return, however, we should either tax them, or charge higher insurance premiums, for their risky behavior, and for the greater disease transmission resulting from their actions.

Another example: Some people engage in risky behaviors such as drunk driving or speeding. Their actions increase demands for expensive trauma care. We should charge these people dramatically higher premiums for their risk to society.

Another example: Obesity is positively correlated to a whole host of health problems, and is also the probable cause for many of these problems. Treating Type II diabetes is expensive. So we should charge such individuals for the present value of these treatments. [ie, if they're young (20-ish) and obese, we should charge them enough money to cover their later treatments.] At the same time, we should reward people who lead a healthy lifestyle by lowering their premiums.

On the subject of healthy lifestyles, some people exercise too hard and sustain sports injuries. These injuries, such as hurt knees, ironically make these people more prone to become obese later in life. We should charge them for exercising too hard.

On the OB/GYN example you cited: Many people don't want kids, and some of them actually hate(!) kids. Should we make them share the cost of a child birth? Or is a newborn baby an inherent public good, which deserves taxpayer subsidy? Should we subsidize the families that bear more than 4 children?

The theory of mandatory healthcare coverage is that, by having a bigger client pool, we reduce the average expense for everyone. The assumption here is that, most of the uninsured Americans are of the young, healthy variety. However, that is not necessarily the case. By having mandatory coverage, we may in fact raise the per capita expense. Massachusetts's experience should hopefully have dispelled some of that assumption.

Another reason I broke out the four healthcare components is to show that, many individuals are willfully negligent, or in some cases, reckless, in managing their healthcare. As I commented elsewhere, we should not subsidize people's bad judgement. The moral hazard is too great. As a democracy, we expect voters to take responsibility for their political decisions. How can we then abrogate their responsibilities for their own personal health decisions?

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