Monday, November 07, 2005

On Health Insurance

Paul Krugman's recent column in the New York Times is on the American system of providing health insurance through largely two sources: employment-tied private policies and various government programs. Both of these base their premia on large groups which offers savings compared to what you'd have to pay for a private policy outside the labor market. Which means that if your employer doesn't offer health insurance and if you don't qualify for one of the government programs (say, you are not old enough for Medicare, haven't been in the military for the VA program and aren't poor enough with enough children for Medicaid) your insurance policy will be very expensive. Hence the many uninsured working people in this country.

What we have is a patchwork quilt of coverage. If you happen to snooze under one of the cushy and thick patches you are ok. If you turn around in your sleep you may find yourself outside the quilt altogether or trying to cope under a frayed and thin patch, and what happens to you is almost completely outside your hands.

This is why we have around forty million uninsured Americans. Not all of them are poor. Some of them are too chronically ill to find affordable coverage and some are young and unable to find cheap enough coverage to reflect their beliefs that they won't fall ill any time soon. But whatever the reason for the uninsured state of these people, when they do become ill they will either suffer alone, wait too long for treatment (and then require more expensive treatments) or try to get it at hospital emergency rooms which mostly don't turn people away. All these outcomes are undesirable and the use of hospital emergency rooms as primary care is extremely wasteful and doesn't offer the continuity of care that is deemed optimal.

Note also that someone ultimately pays for the care of those who can't or won't pay for it, and that someone is largely those of us who are insured. The unpaid care is rolled into the next year's health insurance premia. So the important question isn't about paying for this care; it will get paid in any case, the question is making the health insurance system more rational so that we don't give the uninsured incentives to become even sicker or to cost us even more.

As Krugman points out, most industrialized countries do better in this respect than we do. Not that this makes any difference to the decision-makers here; I have been told more times than I can remember that the United States of America has nothing to learn from the rest of the world. Because we are, like, better. Mention that to the young woman with lupus I know whose choices today are either to go on welfare so as to qualify for a state health insurance program for the indigent or to let her parents spend all their old-age savings on her.