Tuesday, September 30, 2003

15.2% of Americans Have No Health Care Insurance
The Census reported today that 43.6M American have no health care insurance.

What are the consequences of this delivery approach to healthcare in the US?

Well, first, it is pretty clear that healthcare is being damaged for all Americans. The evidence is pretty clear:

1. Emergency rooms are clogged. I recently advised a business whose primary product typically involved helping ambulances divert emergency patients to hospital emergency rooms that had room to admit people. Perhaps this is not a good way of running emergency service rooms.

2. Healthcare outcomes in US are not particularly good. Generally they are worse than countries that spend less on healthcare when you measure infant mortality or life expectancy.

3. US economic growth is certainly lower due to the high percentage of the economy spent on non-productive healthcare activities, which are estimated by healthcare economists at as much as one third of the total health care bill or around 5% of the GDP.

4. From a transparency perspective (an important issue in governance for private and public sector organizations), the flow of fund is essentially unmanaged with the corporate and middle class healthcare programs indirectly paying for the health care of the poor and uninsured through free poor quality healthcare to the poor.

5. The strong political voice of older Americans is likely biasing direct medical expenditures without examining the systemic biases that create bad health throughout life.

6. Unlike more interventionist governments in other countries, the US with its fragmented and disorganized healthcare delivery, has done a relatively weak job in marketing healthy life styles. Countries that have examined the return from investment in fostering healthy life styles vs. increasing expenditures on remedial healthcare have typically found the return to be much higher on encouraging healthy life styles (e.g. the 1971 Canadian Lalonde Report). After all, it stands to reason that avoiding treating a disease is typically less expensive than having to cure it. Obesity, smoking, excessive drinking all pretty much no-brainers as policy issues. The US does little in this area and even worse, does not reward those who pursue healthy life styles.

The most common objection I hear is based upon fear. "If we have a single-payor health care system, then we won't be able to get healthcare when we need it. So I prefer to control my own insurance destiny." The problem with this view is that it may appear to make sense personally, but systemically it does not recognize the increasing cost of healthcare due to indirect charges from providing healthcare to the uninsured, which makes healthcare uninsurable for many.

But wanting to be able to purchase a higher level of health care does seem reasonable in a free society, so let me argue that there exist two levels of healthcare need.

The first is the basic healthcare where universal coverage is just more effective and lower cost. Without addressing issues of fairness or political questions of government involvement in healthcare, does anyone really disagree with the advantages of treating children and pregnant mothers so that they avoid problems that will be expensive in later life for society? Vaccinations make a whole lot of sense in terms of the public good. And catastrophic insurance coverage is a traditional role for insurance.

The second type of coverage involves purchasing a higher level of testing, service and comfort. It is discretionary and is no different than buying an expensive car. But even here there are ethical issues. I doubt that most people would find it acceptable for a wealthy person to purchase a kidney from a poor person. But the issue starts to get more complicated in a world of biotechnology where a kidney might be growable. Should we prevent a person from saving up to buy a new kidney if biological materials become products?

I feel fairly sure that biotech and medical innovation is likely to experience lower growth in an environment of medical system collapse. So the systemic effects of the current healthcare system may cause the breakdown of the current research environment at teaching hospitals as they drown in losses from deliving a mandated healthcare to the uninsured, but receive no funding to do so. Voters may become so upset that short sighted politically appealing programs may jeopardize US leadership in healthcare products -- something seen in the parochial stem cell decisions of the recent president.

The problem is that universal coverage only appears expensive to those who have only listened to the superficial analysis of political campaigns, when in fact the US already has the most expensive system in the world. And then those who are covered worry about their ability to purchase discretionary medical coverage under such a system. If the two can be separated, then there may be hope for a higher quality more effective system.

Finally, there is the question of equity. I am in awe of people I meet who feel that society has no responsibility to help people who are born through no fault of their own with poor medical health. They fail to understand that the idea behind insurance is spreading risk and that insurance systems needs wide participation so that you don't end up with only the sick and the unhealthy willing to participate. A market system tends to encourage insurance firms to only insure the healthy. Which is of course why government regulation is unversal in the developed countries in the field of medicine.

Sometimes, these people claim to be religious. I suspect they have forgotten the biblical imperative of "Do unto others as you would they would unto you." not a bad way of talking about medical insurance coverage.

Alistair Davidson

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