Health Insurance

The Tribune ran an editorial today about "the insurance gap," or the number of people without health insurance.

Let me preface what I am about to say by admitting that obtaining health insurance is a significant problem for many families, even those who make a good living. The inefficiency of our system is glaring when one considers that a family whose primary seeking of health care is getting one's sniffles wiped by a physician's assistant runs $700.00 - $1,000.00 per month in health care premiums. Clearly, that family is subsidizing someone.

My point, though, is not to minimize the problem. It is to illustrate that, perhaps, the problem is not what it seems, and to suggest that misleading analysis could actually make it harder to find a solution.

First, the Tribune points out that 18.4% of Montanans (compared to 15.7% nationally) lack health insurance. In other words, roughly 82% of Montanans have health insurance.

What the Tribune fails to point out, or even consider, is the number of uninsured who make the at least arguably rational decision not to pay for health insurance. In other words, if I am a 25 year old, healthy adult who just graduated from college, and I haven't been to a doctor in years other than a physical, maybe it makes sense for me not to spend $300.00 a month on health insurance. If we remove these people from the analysis, the numbers get better.

The Tribune goes on:

While Montana officials say the number of uninsured kids is declining, it's still about 35,000.

Child or adult, you can be sure that every time one of them has an accident or gets sick, someone (the rest of us?) is paying for his or her health care.

Worse — and too often — people are going without health care.

That creates a vicious cycle: Uninsured people tend to wait longer before they go to a doctor or hospital; a result is that they are in worse shape when they do go; and as a result the solution winds up costing even more.

Wait a minute. Are people going without health care? Who? When? Or, are they going, and then the rest of us having to pay for it? Notice that the Tribune makes the two contradictory assertions together? Which is it? Which is the problem? Is it that a significant number of people are not getting health care, or that they are getting it but expecting someone else to pay for it?

And, in the Tribune's eyes, is the latter even a problem? In other words, isn't that exactly what they are advocating, that the uninsured get insurance and someone else pays for it?

They make another leap, too. They suggest that people without health insurance won't get care, or wait to get care until it will cost more (says who?). Let's think about this in terms of one demographic, low income families with children.

We have a subsidized Children's Health Insurance Plan (CHIP). There is currently no waiting list, meaning that everyone who wants health insurance for kids can obtain it. (In other words, if they can afford it in the marketplace they can obtain it, and if they can't afford it in the marketplace, they are eligible for and can obtain the CHIP insurance.) Now the Tribune would have us believe that someone who cannot be bothered to sign up for a free or subsidized health insurance plan for their kids will nevertheless think twice about taking those same kids to the doctor when they are sick. Based on what?

Seriously, I think they just make this stuff up.

I would suggest that a parent who is so completely irresponsible as to be unwilling to obtain free or low cost health insurance for their kids would not give a thought to taking little Johnny to the doctor. ("Oh, little Johnny broke his arm, but we can't go to the ER 'cause we don't have any affordable health insurance..." Yeah, sure.) Seriously, I think they just make this stuff up.

Providing healthcare to our citizens is a legitimate issue worthy of our attention. But fake examples and imaginary scenarios get us no closer to a solution.


Anonymous said...

GG; A few points;

First, the whole point of insurance (health, casualty, liability, etc.) is for most insured to pay premiums without submitting claims. All insurance is about subsidizing the few who have to "use" the service. If everyone has claims, then the whole system shuts down.

Therein lies the problem with Health Insurance. Most everyone paying premiums has claims.

I manage the HR for my company. Part of that job involves managing our health insurance program. As frustrated as I get with the 20% annual price increases sent to us by BCBS, I also understand that cost increases are part of the ball game when everyone paying a premium submits regular claims.

Now, with Health Insurance, people make a rational calculation. If they figure that they will not submit enough claims to offset their premiums, they drop out of the program. And the vicious cycle continues.

Allen said...

TSJ is right.

For insurance to function properly, it must involve, low-frequency high-severity risks. Health Insurance breaks both halves of this rule, because it has evolved to cover high-frequency, low severity risks. Result: increased health care costs and usage, drastically increased administrative costs. If health insurance were offered to cover what health insurance should cover, it would have a very high deductible and kick in for catastrophic losses, leaving families to budget for routine and minor health care expenses like any other part of their living expenses.

GeeGuy said...

While TSJ and Allen are both a bit off of my original point, theirs is an issue I recently wrote about: