Single-Payer National Health Insurance around the World Part VIIIby admin on 10/10/2015 11:31 AM
Lives at Risk by John C. Goodman, Gerald L. Musgrave, and Devon M. Herrick
(Continued from the July 2015 HPUSA Newsletter)
Reforming the U.S. Health Care System: Designing an Ideal Health Care System
CHARACTERISTICS OF AN IDEAL HEALTH CARE SYSTEM
Among people who believe the American health care system needs serious reform, attention invariably turns to the large number of people without health insurance. An estimated 43.6 million people, or 15.2 percent of the U.S. population, were without coverage for at least part of 2002.1 What can be done about this problem?
There are typically two types of proposals: (1) force people to buy private health insurance whether they want to or not, or force their employers to buy it for them (which amounts to the same thing); and
(2) have government pay for all or most of the cost of their insurance by subsidizing private premiums or enrolling them in public insurance.
The first proposal not only involves government coercion, but also constitutes a dangerous further intrusion of government into the medical marketplace.
The second proposal would require new taxes and inject billions of additional dollars into a health care system that is already the most expensive in the world.
As we shall see in the next chapter, neither reform is necessary or desirable.
In fact, we can have a workable form of universal health insurance without intrusive mandates or more government spending.
THE ROLE OF GOVERNMENT
But before turning to a solution, we should consider a more basic question.
Why should government be involved at all?
Designing an Ideal Health Care System
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The Free Rider Argument
Aside from the burden of providing charity care to the poor, is there any reason for government to care whether people have health insurance? The traditional argument for government intervention is that health insurance has social benefits apart from the personal benefits to the person who chooses to insure. The reason is that people who fail to insure are likely to get health care anyway, even if they can’t pay for it. And the reason for that is that the rest of the community is unwilling to allow the uninsured to go without health care, even if their lack of insurance is willful and negligent. This set of circumstances creates opportunities for some people to be free riders on other people’s generosity. In particular, free riders can choose not to pay insurance premiums and to spend the money on other consumption instead—confident that the community as a whole will provide them with care even if they cannot pay for it when they need it. In other words, being a free rider works. It works because of a tacit community agreement that no one will be allowed to go without health care. And this tacit agreement is so established that it operates as a social contract that many people substitute for a private insurance contract.
Evidence of a Free Rider Problem: The Growing Number of Uninsured
What evidence is there that free riders are a problem? One piece of evidence is the number of uninsured. According to the Census Bureau, a larger percentage of the population was uninsured in 2002 than a decade earlier (see figure 23.1). The rise in the number of uninsured occurred throughout the 1990s, a time in which per capita income and wealth, however measured, were rising.
Although it is common to think of the uninsured as having low incomes, many families who lack insurance are solidly middle class (see figure 23.2).
And the largest increase in the number of uninsured in recent years has occurred among higher-income families:
- About one in seven uninsured persons lives in a family with an income between $50,000 and $75,000, and almost one in six earns more than $75,000.
- Further, between 1993 and 1999, the number of uninsured increased by 57 percent in households earning between $50,000 to $75,000 and by 114 percent among households earning $75,000 or more.
- By contrast, in households earning less than $50,000 the number of uninsured decreased approximately 2 percent.
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