Wednesday, September 14, 2011

More on Letting People Die Without Health Insurance

Remember some in the Tea Party audience shouting: "Let Him Die!" when Wolf Blitzer asked Ron Paul a question about?:
...who would pay to treat a 30-year-old healthy man who chooses not to have health insurance, then ends up in a coma. Paul responded that freedom is about “taking your own risk.” “Are you saying that society should just let him die?” Blitzer asked. A few audience members at the Tea Party-sponsored debate cheered and yelled “yes.” Paul said no, and suggested that churches, friends and neighbors would take care of the person, and government should not have to.

I have already covered the blood-thirstiness of the audiences in the two Republican presidential debates. Now it's time to address something in Blitzer's question which does matter: The qualification that the hypothetical 30-year-old man in his example did have enough money to afford health insurance.

Why Blitzer chose this particular example is worth thinking about. The largest group among the uninsured Americans are the working poor, people who cannot afford to pay for adequate health coverage. The other two large groups without insurance are the medically indigent: those with expensive pre-existing conditions, and certain groups among young adults.

Given this, why did Blitzer specify his imaginary coma patient in a way which makes him a poor fit with the typical types among the uninsured? Was he fishing for a particular type of answer?

Or was he that interested in the problem of well-paid young adults not buying health insurance? Note that the reasons why young individuals might not have health insurance are not limited to recklessness or the refusal to take responsibility for one's own needs (as Paul suggests):
Young adults make up the largest age segment of the uninsured, are the most likely to be uninsured, and are one of the fastest growing segments of the uninsured population. They often lose coverage under their parents' health insurance policies or public programs when they reach age 19. Others lose coverage when they graduate from college. Many young adults do not have the kind of stable employment that would provide ongoing access to health insurance.[13][14]

Given all this, there are young adults who could afford to pay for health insurance but choose not to do so. The explanation for that has to do with the small risk of illness at that age and the fairly large costs of getting coverage. One approach to solving this is to offer healthy young individuals cheap policies which reflect their actual low risks of ill-health.

But guess what? If this is done to all the low-risk individuals, what happens to the cost of health insurance to high-risk individuals?

It will go up. Ultimately the markets might offer different policies for the low-risk people and the high-risk people. The more such fragmentation happens, the less the benefits of insurance (the pooling of risks) will be over one's lifetime.

The basic problem is not the short-sightedness of the healthy young or their willingness to take risks or even their lack of personal responsibility. The basic problem is this: Insurance is a poor model for the funding of health care expenses. It's well suited for cases where an illness strikes a person like a lightning from a blue sky. But most health care needs are nothing like that. For one thing, the need for health care increases fairly predictably by age.

But this means that voluntary participation in health insurance is also going to increase with age. Thus, either many among the young will decide that health insurance is too expensive for them or we lose the benefits of real risk-pooling by offering the young cheap policies and by raising the premia for everyone else.

A universal health care funding system would avoid this problem, by the way, especially if it is tax-based. The "contract" would be the length of one's lifetime. One might pay more in when young but would most likely take more out later in life.