A Reflective Christian

All for God’s Kingdom

Why the US health care reform could work, but probably still won’t

In the recently passed health care reform in the United States, you have the usual amount of confusion, lies, misperceptions, etc., etc. that serve to detract from the discussion of health care in general.

Probably the biggest misperception is that the health care bill is transferring health care to the government. By in large, this is not the case. Insurance companies and already present Medicare and Medicade programs are still being relied upon to provide medical care. However, the government is more involved indirectly in the health care system.

If I could boil down what the bill attempts to do is to subsidize, subsidize, and subsidize health care insurance (though, this is a gross oversimplification). Secondly, it mandates health insurance for all individuals, or one must pay a penalty. Before looking at the negatives of this, I think it is important to see the potential positives and then weigh it against the negatives.

One big part of medical costs (one of many which I outlined here) is the inability of many to pay for services, which translates those costs getting passed on to others who can afford to pay. As it is, those who can afford medical care are already paying for it for others to a degree. That doesn’t mean a person who couldn’t afford health care themselves can receive all the health care they wanted, but certain services, such as emergency health care, would still be provided.

In getting rid of the cases of people who can not pay for their medical care costs, you are theoretically going to reduce the costs of health care across the board. Furthermore, by providing care across the board, you would allow more preventative services to be provided by those who couldn’t afford it in the first place. Therefore, more expensive procedures wouldn’t be as necessary, placing less of a burden on the health care system.

But there are some vast negatives, from an economic perspective, in this bill. First off, medical insurance companies are required to cover those with preexisting conditions. One might think this is morally good, but a moral good doesn’t have to be economically feasible.

Medical insurance succeeds largely based upon one principle: the costs of medical care of the few who need it are covered by the many who pay for this insurance. For many people, they are actually going to pay more through insurance than they would if they had kept their money and then invested it. However, the benefit is the loss of risk on the part of the individual.

This system can only work when many people are not prone to sickness. By including persons who are highly prone to need medical care, you are essentially forgetting the primary reason any insurance works. Thus, either a greater number of healthy people are necessary to balance out the high risk persons, or higher insurance premiums become a necessity.

Now, one thing the bill does is that it mandates medical insurance for everyone, healthy or unhealthy, provided largely through subsidies. Most of the uninsured are still relatively healthy. It is possible that healthy insured, as they are “paying” health care premiums, will balance out those with preexisting conditions and other high risk persons. That itself is a partial gamble.

However, the real problem in this system is that there is even less competition in the health care insurance. As it is, there isn’t a lot of true competition in the health care industry, and the reason isn’t what most people would think. The idea that the free market with anti-trust and anti-monopoly laws in place ensures competition is a fallacy. It is very possible for corporations in the same industry to refrain from competition without making any explicit agreements.

As a demonstration of how, take the USA and the USSR during the Cold War. Both had massive nuclear armaments. At one level, this cause massive suspicion in the other entity. However, this level of suspicion and fear also acted as a preventative on both sides from using the weapons against each other, because of the fear of revenge. To initiate a war with the other would have been costly. They had much to lose. In the same way, established companies who have a lot to lose will be much less likely to act competitively because of the the possibility that competition could ruin their own company.

(It does need to be stated, that in part, Reagan acted “competitively” with the USSR, but it would have been through making the US a greater perceived risk forcing a response, and not by directly competing in war with the USSR)

However, insurance still wasn’t a necessity till the bill was passed. Insurance companies had to compete with the option of refraining from getting insurance. If the costs were too high, a person might refrain from getting insurance. Now, that is no longer possible, as there is a high cost to the individuals for refraining. In other words, a barrier to higher insurance premiums was knocked down.

To act as a check then is a government board that has to approve premium increases. This might act as a check to prevent government greed, but it could also act as a check to prevent appropriate and necessary rise of premiums for the system to continue to work. As a society, we tend to work under the assumption that higher prices are due to greed rather than as a necessity. Such a skepticism may also take place in the entity that oversees health insurance premiums and may deem necessary rises in premiums and unjustifiable and greed.

Placing price controls in an entity other than the one who is immediately affected by the decision is a potential disaster. Just as persons misread the intentions of other persons, so one entity can misread the perceptions of another group. Additionally, giving that power to an entity that will thrive regardless of the rightness or wrongness of the decision is a dangerous proposition. In part, this is why Communism failed; they were unable to adapt prices to the current actual needs of the market for various reasons.

Last for this post, but not the last of any possible criticisms, is that real reason for the costs of higher health care I feel are due to inherent mortality of human life and the increasing difficulty of providing medical care. I addressed these somewhat in my post that I previously linked to, so I will refrain from thorough explanation. I will simply say two things:

1) The higher the supply of medical care, the higher demand will increase. The more people get sick, the more likely they will be to get sick in the future. One may cure an illness, but the illness affected the body in ways that may not be treatable or detectable.  So, by providing life saving care, which is morally right, those people will continue to need medical care and at an increased rate.

2) Even in provided preventative care, you are only delaying the inevitable. Given the human lack of willingness to die without fighting, you are simply delaying the high costs associated with health care to a later date when the population gets older.

In short, the medical care bill addresses a few factors in health care, but it fails to adequately address all the various factors, in part because it is humanly impossible. At best, in my opinion, the health care reform is merely treating the symptoms and not the real problem, and it is a large possibility that no human effort can actually address the deep rooted illness in our health care system, along with all others.

April 1, 2010 Posted by | Uncategorized | Leave a comment