Universal health insurance wouldn’t help that much anyway

A page one Wall Street Journal article (Health-Insurance Gap Surges as Political Issue), charts the ascent of the uninsured as a political issue. With one in six Americans lacking health insurance, it’s a juicy topic. Despite all the rhetoric, it’s unlikely we’ll see much happen at the federal level. The voices of change are too fractured and it’s unclear that there’s room for consensus.

The picture is different at the state level: Massachusetts has enacted legislation requiring residents to have health insurance. California and others are following suit.

But just for a minute, assume we did achieve universal insurance coverage. There would still be plenty of problems; costs might be even higher. A common argument is that costs would go down as uninsured patients head to less costly primary care physicians rather than emergency rooms for routine treatment. That would be great if true, but there’s evidence that insured patients use the emergency room more than uninsured patients. That could be because the uninsured tend to avoid treatment unless they’re in dire straits. Once the same patient has insurance he or she may want to test it out.

Employers complain now that the prevalence of uninsured patients drives up their premiums, but it could get worse if greater availability of insurance leads to the need for larger and larger subsidies.

Insurance mandates make sense in Massachusetts. The proportion of uninsured is relatively low, and a good number of the uninsured are healthy, young adults who could afford to pay. The cost of living is high; we need knowledge-based businesses that offer high pay and high benefits. I’m less sanguine about efforts in states like CA where the gap to close is much bigger and lower paying industries like agriculture are a substantial portion of the economy.

I’d like to see insurance for routine care done away with. Instead, allow a more efficient market to develop where people pay directly and doctors don’t spend so much trying to collect payment from third parties. Walmart, Walgreen, CVS and others are starting down this path. Physician practices could begin to do the same. If we hope to have affordable care, this is a more promising path than spreading insurance around to everyone.

January 19, 2007

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