The Hidden Costs of Private Health Insurance

Other, smarter people have written at great length about how screwed up the health insurance system is in the United States. To sum up, we're the only industrialized nation without any form of universal health insurance. There are a few reasonably good arguments against it, that basically fall into three categories: that it will cost too much, that the quality of care will go down, and that incentives for medical research will diminish. I'm of the opinion that the first argument is basically 100% bogus. Those with good jobs already pay for health insurance, be it through an explicit deduction or implicitly through a reduced salary. Huge companies like General Motors are basically HMOs with investments in product manufacturing. And health insurance for the poor in this country is paid for on behalf of minimum-wage employers and the unemployed by public hospitals and the insane rates they charge for services not paid for by insurance companies. And there's not a lot of evidence that as health insurance becomes cheaper people use more of it. In other words, the moral hazard myth is largely bogus, too. In the end the total cost of health insurance doesn't vary much with the cost to any particular end user, and hence doesn't vary much with respect to who is paying the bill. Empirical evidence suggests that people with private health insurance don't need to wait as long to obtain care as those who depend on socialized medicine. While most of the countries that have implemented socialized health care seem to have more-or-less phased out retail healthcare, I can't think of any particularly good reason why this has to be so. Under a well-designed plan, those with additional resources (be it cash or supplemental insurance) ought to be able to purchase their healthcare on the open market, whereas those who would otherwise go without (or be financially ruined by accident or illness) might have to wait a while for non-emergency services. So I don't see how this is a compelling argument either. Finally, some people are of the belief that financing health insurance privately will somehow flush the existing incentives for medical research down the toilet. But the existing incentives for the creation of lifesaving treatments doesn't have a lot to do with who pays for healthcare; it has far more to do with what sorts of treatments are patentable. With the reasons against it out of the way, what are some reasons for implementing universal health insurance in the US? First off is the ever-increasing mountain of paperwork we have to fill out, replete with odd "choices" to be made that strike me should really have been made for me by an actuary whose full-time job is to make these sorts of decisions. It reminds me of the recent company holiday party, where the invitation explained that it was a "mandatory meeting" and that we should "please RSVP." Redundancy aside, if it's not really an option, why are you asking me? Case in point for me is the so-called Flexible Spending Account. That sounds good, but in reality it's a pretty-darned inflexible account I can only use on certain uncovered medical expenses. Oh, and if I don't use it up, the money is "forfeited." Forfeited to whom is anyone's guess; does it just sort of disappear in a puff of smoke? The only upside is that it's deducted pre-tax. It's one of those stupid "bets" that American companies seem to be so big on. For instance, why do I have to decide at the beginning of the month how much I'm going to yak on my cell phone? Why don't they charge me less per unit the more I use it, like any other sensible consumer product? But I digress... The second case is the new Medicare prescription drug coverage. From their FAQ:

Question:
Do I have to join a Medicare drug plan?

Answer:
No. Joining a Medicare drug plan is your choice. However, if you don’t join a plan by May 15, 2006, and you don’t currently have a drug plan that, on average, covers at least as much as standard Medicare prescription drug coverage, you will have to wait until November 15, 2006 to join. When you do join, your premium cost will go up at least 1% per month for every month that you wait to join. Like other insurance, you will have to pay this penalty as long as you have Medicare prescription drug coverage.

Who the fuck thought up this brilliant piece of nincompoopery? Lemme guess: a mobile phone exec?

Can't you just take a chunk of my income, consumption, property, or whatever, and pay the good doctor when I get sick? Do I really need to be involved at every step? How much time is wasted in making and administrating these "choices"? Speaking of which, one of the major impediments of me going off and, say, starting my own company is not lack of money or good ideas, but the fact that I'd basically being playing fast and loose with my life savings in the event that I break my arm or get a bad case of food poisoning, let alone come down with some rare, serious and expensive medical condition. And that's me, as a perfectly healthy thirty-year-old. What about the mom and pop types in their fifties that want to open a bed and breakfast? How are they going to compete with the Holiday Inn if literally no one is willing to sell them health insurance? It seems that by shuffling around the risk a bit, we could remove a lot of the completely unnecessary uncertainty from being an entrepreneur, or even running or working for a small business.