High Programmer > Alan De Smet > Rants > Guaranteed Health Care Is a Good Idea

Guaranteed Health Care Is a Good Idea

This essay has been bouncing around in various forms in my notes for years. It's never been to my satisfaction, but I realize that it may never get there. I think the arguments are solid and believe it's more important to share them than to get it perfect. So this is a sort of perpetual draft that I'll add to and refine as I go.

If you have ideas on improvement, please let me know! You can post a comment or send me email. Either way, I'd like to credit people whose ideas I use, so please let me know how you would like to be credited.

- Alan

Our health care system is a mess.

It's a functioning mess. For many Americans, they actually get very good care at reasonable prices. I'm lucky enough to be one of those Americans. But the price is high, both individually and as a country.

We need guaranteed health care for all Americans. It will cost a lot. Taxes will almost certainly need to rise. But it will still cost less than we are already paying.

Guaranteed health care will cost less in human lives, cost less in direct money, will lead to better health care, faster and more available emergency rooms, fewer lawsuits, cheaper liability insurance, increased entrepreneurship, more flexible workers, and more.

There are a lot of details to sort out. Do we cover non-Americans? Do we nationalize the health care system? Do we go with a "single payer" system, and how do we implement it? What specific things do we cover or not cover? But these are details, and in the big picture guaranteed health care will be better for everyone in the US.

We can afford this. We'll have to pay for it somehow, probably through increased taxes. But in exchange employers can immediately cut or dramatically reduce the amount they spend on health coverage benefits for their employees.

(I'm using "health coverage" to refer to both traditional health insurance as well as health maintenance organizations.)

The cost in human lives

The most obvious cost in our current system is in human lives. Some may argue that an adult without health care coverage ultimately made that choice and must suffer for their own bad decisions. Do children deserve to die because of their parents' choices? (backup link) I don't think so. Thousands of people die each year because they lack health insurance. (backup link)

Even without death on the line, do children deserve to merely suffer because of the parents' choices? Maybe the child suffers an illness. Or maybe the child lives in poverty because the parent is ill and so cannot work, and lacks health coverage and so is unable to get better.

Guaranteed health care won't save every life. Some lives, sadly, can't be saved. And every system must have limits. But lives would be saved.

Emergency rooms

As President Bush unhelpfully pointed out, " ...people have access to health care ... just go to an emergency room." This is sadly true. We do have free, guaranteed health care for people whose medical condition is serious: the emergency room. This is a catastrophic failure.

First, we end up wasting money. Refusing to cover a relatively simple procedure for $80 now may lead to spending $250,000 for emergency care later. (backup link) Maybe only 1 in a 1,000 $80 treatments save $250,000, but even at that rate we're saving money at a mere $80,000.

Second, who pays these huge bills? Everyone who has health insurance! Hospitals accept that a huge number of people in emergency care will default on payments. I've heard reports that some hospitals have the majority of emergency room bills defaulted on. So they raise the prices elsewhere to compensate. We already have socialized medicine, we're just paying extra for it because we refuse to pay for cheaper, earlier treatments.

Third, if emergency rooms are actually losing propositions for hospitals, unsurprisingly many are scaling back or closing them. Patients in ambulances are being diverted multiple times, waiting 45 minutes to even get to a hospital. (backup link). You can wait a half-hour to even be triaged, then wait hours more for care. (backup link) To take a personal example, in 2003 I suffered a bad cut at a convention, arguably due to negligence on the part of the facilities. An on-site paramedic patched me up, but directed me to an emergency room, saying I needed stitches, and that if I didn't get treatment within an hour or so, I was likely to end up with a serious scar. So I immediately headed off to the nearest emergency room as instructed. There I waited for several hours before seeing a doctor. I got lucky and ended up with only a minor scar, but it was profoundly frustrating to be unable to follow the professional medical advice I'd been given.

If emergency rooms remain our health care of last result, we will continue to suffer these problems. We'll end up paying for the health care anyway, it will be more expensive, and when we need emergency care it will be delayed.

Guaranteed medical care would eliminate much of this problem. Minor problems will get treated early and less expensively. Lines at emergency rooms will be shorter. Hospitals won't be spending as much money chasing after unpaid bills.

Reduced liability costs

As a society we spend a lot of money on liability for negligence. This is the nature of any modern society, and on the whole it doesn't bother me. Without liability for negligence many people seriously injured through no fault of their own would have their lives destroyed. But some of these costs can be reduced without victims suffering.

In many cases all a victim wants is to be compensated for their medical costs. This is perfectly reasonable. But the party who would have to pay resists. Perhaps the compensation is too expensive. Perhaps it would set a precedent for future expenses. So they fight back. Now the victim brings in a lawyer, and the compensation demanded goes up to the cost of the medical treatment plus the cost of the lawyer. And maybe a bit more for the victim's time and trouble. And maybe even more because the lawyer pushes them to. As a society, we all pay for the courts involved. The party at fault must raise prices to cover their lawyers. Everyone loses.

My injury at the convention is exactly such a case. Fortunately I had good medical coverage at the time and paid either nothing, or a small co-pay (I don't remember). I was lucky and despite slow treatment, I didn't end up with an infection, a long term injury, or serious scarring. So despite the fact that the convention center was arguably at fault, I didn't demand any compensation. I accepted whatever co-pay I might have had to pay. I accepted to minor scar. I accepted the waste of perhaps a dozen man-hours of me and my friends time. (We were about to begin a multi-hour drive home at the time. Instead they were stuck in the city until I was stitched up.) But this might not have been true. Without insurance that visit surely would have run me several hundred dollars. The liability of the convention center wasn't a clear thing, and they may have fought back. It would have been another victory for lawyers, but not for anyone involved.

(To be clear, I like lawyers. Most of them are doing their best to represent their clients, and many are actively trying to make the US a better place. But I suspect that most would also agree that the US would be better off if fewer situations required lawyers. But that's not today, and if I needed compensation for someone else's negligence I'm glad I could get a lawyer to help me.)

Let's take a more famous example, the McDonald's hot coffee case. (backup link) (If you think the case is an example of liability lawsuits gone crazy, please read the linked article! The common understanding of the case is simply wrong.) The woman wanted $20,000. A lot of money, but 8 days in the hospital isn't cheap. McDonald's fought the claim because of risk of many payouts. Instead it dragged through the courts, spending the public's money. There ultimately was a settlement, but it certainly cost McDonald's more than the original $20,000. If the woman would have not had any medical bills, she might not have brought suit at all, or asked for far less.

So in the event of an injury or illness due to negligence, at least some cases would be solved if the victim's medical expenses were guaranteed covered. But the profit motive in health coverage means that usually the victim owes some money, many victims have no coverage and owe everything, and health coverage providers have incentive to try and force either the victim or a negligent party to pay. We end up unnecessarily wasting money on judges and lawyers. Individuals end up wasting time serving on juries. Liability insurance ends up more expensive to pay for all of this. All of these things are the result of our existing health care system.

(Again, I love juries and view my time them as a civic responsibility and an honor. But we could cut down on the time people spend serving on juries without hurting people, that's pure benefit.)


46% of personal bankruptcies are due to illness and medical bills, at least in part. (backup link) When these people default on their debts, everyone else suffers. The people and businesses they owe suffer. Those people and businesses raise their prices to compensate, so now you and I suffer. The people declaring bankruptcy lose access to credit, making them less efficient participants in the free market, representing a drain on the economy as a whole. Guaranteed health care would ensure that at least some of these people wouldn't enter bankruptcy and our economy would be stronger.

Stifling innovation

Our current medical coverage system stifles innovation.

Our current system chains people to their jobs. Do you have a year of take-home pay saved up and a brilliant idea? You might think of quitting your job and working for yourself for almost nothing to realize your idea. This is part of the American ideal; the bold entrepreneur working in his garage and taking a risk to found a new business, to create a new product, to potentially start a new industry. This is what keeps America on the leading edge, creates new jobs, and makes us all wealthier.

Unless, of course, you have a chronic medical condition. Or are older. Or have children. Then the cost of medical coverage will eat through your savings at an alarming rate. You'll be a lot less likely to take that risk. If you do take the risk, a single illness could drive you into bankruptcy.

People with great ideas and savings are sticking with their jobs, allowing America to fall behind in innovation, because they're literally afraid for their lives.

The impact on innovation is deeper as well. Small businesses create many of the new jobs in our country. (backup link) Obviously some small businesses don't exist because the potential entrepreneurs look at the cost to cover their family's medical expenses and turn away. But those businesses that do start up have problems attracting workers. Start ups don't have much money, so to save money they may have lower quality health coverage, or higher co-pays, high employee contributions, or no health coverage at all. Even if the coverage is good, startup jobs are high risk. This means many potential employees stay in safer, but less innovative jobs. In a bad job market an employee may elect to stay with a non-innovative but safe job so his children will have reliable health coverage instead of joining a startup that may fail in a few months. Our current health coverage system discourages workers from being flexible. Our labor system is freezing up, and our economy as a whole suffers.

Similarly, startups and small employers have incentive to pass up skilled employees who may have higher medical expenses. Health coverage agreements for small companies will fluctuate based on the health costs of the employees. Have an expensive chronic condition? Small companies have active incentive to find out and to either not hire you, or to fire you. Apparently you should only work for large corporations.

If everyone were guaranteed a reasonable basic level of care, these problem evaporate. More people will be able to take the risk of entrepreneurship. More employees will jump jobs seeking something better. We will end up a more innovative country and our economy will be the better for it.

Discourages stay-at-home parents

Have a two parent family and plan to have one parent stay home to raise the children? That's a risky idea in this modern era. It's no longer the world where a man can join a company and expect to retire there. Layoffs with little warning are distressingly common. Expecting loyalty from a company is foolish. When you have children, medical coverage is absolutely essential, and relying on one person's job to provide that coverage is a big gamble. Maybe you'll find a new job quickly, but maybe you won't. You can buy your own insurance with COBRA, but only at cripplingly high prices which are hard to afford without a job. So our current health care system discourages traditional stay-at-home parents.

There are people who want a more traditional family, in which one parent stays home to raise children, but can't because of risk of losing their health care. Guaranteed health care would allow more of these people to follow the traditional model.

Discourages full time jobs

Because of the expectation and sometimes requirement of health coverage for full time employees, many companies are switching to part time employees. This increases the number of uninsured and results in less efficient employees because they are forced to juggle two different jobs to make a full-time income. Guaranteed health coverage would eliminate this cost.

Employees are less productive

Employees who skip medical treatment as too expensive are likely to be ill longer and thus be less productive. They're also more likely to eventually need more serious medical care, care that could leave the employee unable to work for a long time.

An employer can suffer these losses, essentially subsidizing employees who try to save money in the short term. Or an employer can fire an ill employee, creating new costs to hire and train someone, as well as potentially adding someone to the uninsured.

Guaranteed health care will help, as employees won't skip seeing a doctor or skip a treatment to save on medical expenses. (Of course, they may skip seeing a doctor or taking bed rest because of lack of sick-leave, or social pressure, but one problem at a time.)

Money wasted by the system

The current system eats money in a number of inefficient places. The health coverage companies act as middlemen who demand a profit. Health care providers must spend time verifying that people have coverage and chasing down money owed. Health care providers also must spend time justifying expenses to heath coverage companies, lest claims be denied. Health coverage companies must spend time trying to avoid paying claims. Patients end up fighting both health care providers and health coverage provides to get their claims paid. Employers spend time shopping around for insurance and having employees fill out forms. And surely some of the employee time fighting the system will be done on company time. Waste all around. If a health care provider was guaranteed that certain medical procedures would be paid, much of this waste goes away instantly.

Corporate freeloading

As a society, we're already paying to cover working people. Georgians have paid to provide health care to employees of Wal-Marts. (backup link) The specifics change for place to place, but we're paying taxes to cover people who actually have jobs. The corporations have decided that health coverage is too expensive to provide. Why should some businesses get to freeload, while others don't? Guaranteed health care sets a level playing field.


Everything below this point is extra-drafty and borderline nonsense.

Co-pays are nonsense

Most co-pays are nonsense. Co-pays on prescribed medications? If a doctor specifically prescribed the medicine, do you really want to give people incentive to not take the medicine?

(A premium for a brand name when a generic is reasonable, provided the doctor didn't specifically request the brand name and that the doctor is reminded to use generics whenever possible.)

Gaps in coverage

Legal requirements for diabetes treatment in Florida. Miminum is something like 2 tests per day. So at least one insurer only covers 2 per day. A friend's doctor prescribed 4-5 per day. Sucks to be him. Pay out of pocket. The system as a whole encourages him to skip tests, to risk higher medical costs in the future to save money today.


Moral hazard

Moral hazard: BS for medical care. People hate getting medical attention. Our problem is, generally, people avoiding getting treatment, not seeking too much treatment.

There are people who abuse the system, either intentionally or accidentally (hypochondriacs). But denying treatment to people with real problems to avoid given a small number of people unnecessary benefits is throwing the baby out with the bathwater (GET BETTER ANALOGY. Burning your house down so your ex-spouse doesn't get half?)

You won't get to chose your doctor

If you have no health coverage at all, you don't get any doctor at all.

If you have a typical health insurance policy, you theoretically have a choice. But you only get to change doctors once per year, and you're limited to doctors who signed up with the insurer. Many people will end up with only a single practical option anyway.

Competition improves quality and reduces cost

Competition only works with a reasonably well informed, rational customer base armed with choice. It's difficult to identify good doctors from bad doctors. As a patient, you don't tend to see the actual costs of procedures, so you're not in a position to bargain hunt. Even if you were, you have no incentive to bargain hunt because in many cases, since you are just paying the co-pay and nothing more. For many cases you don't have a choice; if you decide you don't like your primary care provider you're frequently locked in for a year at a time before you can change.

As a patient, how much time do you really spend shopping around for a doctor? A friend tried. She called around to the dozen or so doctors covered by her plan who were listed as accepting new patients. She asked for brief appointment, 15 minutes, to meet the doctor and discuss some issues she's had with previous doctors. Naturally, it wouldn't be billable, since she hadn't yet selected any one of them to be her doctor. Every office refused.

A family member tried to shop around for pricing for a medical procedure. The procedure was common, and my family member knew exactly what was needed. (The procedure was specifically indicated by their primary care provider.) The local hospitals and clinics would not provide pricing, let alone price breakdowns.

When you have an actual emergency, do you tell the ambulance crew, "No, not this hospital, can you drive a few miles to the next on?"

As an employee, how much do you shop around for health insurance? Most people have no choice at all.

Employers have choice in insurance. This means that someone wanting a choice in coverage now has to entangle finding a new job with it. Which is worth more, a $2,000 a year raise, or a slightly better insurance provider? Perhaps better health cover is worth a boss who verbally abuses you. These aren't reasonable decisions to ask people to make.

Employee contribution

Employee contributions are a crock. They don't discourage abuse. You either don't pay, and hope you don't need the coverage, or you pay. It becomes a knob companies can use to essentially cut pay without actually cutting pay. And indeed, companies do exactly this. Understandably, since costs go up so quickly.

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"Guaranteed Health Care Is a Good Idea" is copyright 2009 by Alan De Smet and is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License. Reuse must credit "Alan De Smet" and link to http://www.highprogrammer.com/alan/rants/guaranteed-health-care.html as the original source.

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