Arnold Kling

Downplaying the Uninsured

Arnold Kling
I Coulda Been a Contender... Public Choice Outreach 2007...

My Cato friend Michael Cannon writes,


I may lose my health policy decoder ring for asking this, but should we really be focusing specifically on covering the uninsured?

...there are other approaches that could purchase more health for the money spent. Nor would expanding coverage appear to increase overall longevity. Health economist James Smith of Rand notes that health insurance "is vastly overrated in the policy debate."

Would it improve the quality of care? Evidently not by much. Steven Asch and colleagues found that "health insurance status was largely unrelated to the quality of care." If you show up at a hospital or clinic in the U.S., you generally get the same quality care whether or not you have insurance.


Amy Finkelstein, in her paper that used the Medicare law to estimate the impact of insurance on spending and health outcomes found that the latter was close to zero. However, she did argue that insurance increases consumer well-being by reducing the variation in income that otherwise would come from health spending.

My view of universal health insurance is that it is a policy with very little social benefit, but also very little social cost. Giving people vouchers to buy catastrophic health insurance, and setting up "high-risk pools" for individuals who are uninsurable because of pre-existing conditions, would be fairly inexpensive.

What would be costly would be universal government-run health insurance, which is what many on the Left think of as universal insurance. The Massachusetts plan falls in this category, because the new law there puts so many coverage requirements and deductible restrictions on now-mandated health insurance that it is effectively government-run health insurance. In fact, the new law added to the rolls of the uninsured--the existing health insurance policies of over 150,000 Massachusetts residents no longer meet the regulatory requirements.

Somehow, I think that no matter how many facts Michael and I put out there, the Left will never lose its emotional attachment to government-run health insurance. My guess is that the Left is salivating over Michael's piece, and they will use it as evidence that those of us who oppose single-payer health care are the cold-hearted SOB's that the they always knew we were.



COMMENTS (8 to date)
Ed writes:

I thought "universal" meant government run. What do you maean by "universal"?

Matt writes:

You can achieve universal coverage if the government steps in to cover the uninsured. If you look at the total number of uninsured and net out all the people who can afford heath insurance but simply don't buy it (something the Mass reform was supposed to achieve by forcing people to buy coverage, but added the leftist meddling Arnold mentions), the number of people the government needs to pay for is not unreasonable.

Christina writes:

The point I hear trotted out all the time by Universal Health Care advocates is that poor uninsured people forgo preventative care and end up with serious conditions that require expensive treatment that inevitably is paid by the state anyway. So, their thinking goes, why not lower total health care expenditures by making sure everyone gets the preventative care they need?

As far as I know there already exists a government program to provide no-cost health care to poor people: Medicaid.

I think the Left is trying to create another middle-class entitlement, since they know most Americans are generally pretty hostile to long-term programs aimed specifically at poor people. It's part of the Left's attempts to turn everyone into a ward of the state. Alarm everyone with meaningless statistics about uninsured Americans, and then propose possibly the biggest entitlement progam ever seen.

Matt writes:

Arnold is right here, I am a big doubter of government insurance monoplies of this scale.

The medical industry is not a monolithic whole, it is various industries bound by their affiliation with the AMA.

For example, we have an MD practice in central CA whose main job is to monitor pollen levels and pass out ant allergy drugs. Fundamentally, an environmental monitor and pharmacutical function.

Bob writes:

Does anyone know if there has ever been a serious proposal for a very simple, targeted form of government involvement (I'm thinking of something like a refundable tax credit for health costs that exceed X% of income)? Or is the entire debate driven by rent-seeking and a desire for collective action?

Thomas B. writes:

Health care reform is a huge issue, and suddenly economists are all answering the wrong question. Becker, Cannon and others are all asking "What would be the best way to reform health care?"

This swelling inertia for change that isn't rooted in careful economic study.

The question I'd like to hear economists start answering:
"What policy reform might dissipate the urgency of the issue while doing the least damage?"

Larry writes:

It's not health outcomes, it's financial outcomes. A very significant fraction of personal bankruptcies results from uncovered medical expenses. Must-buy, must-cover private insurance is the only sensible solution I can find.

Justin writes:

The concept and stance is certainly not new to me, having discussed it rather extensively within my circle of friends and family. I am pleased someone with some measurable authority on the matter picked upon the possibility that providing insurance doesn't really address the greater concern we face of availability, in terms of both capacity and affordability. Ancillary concerns about the 45 million uninsured would be easier solved if the larger issue was tackled with more enthusiasm.

When suggesting policy; though, I would be cautious of suggestions on formulating any kind of universal 'catastrophic' coverage. Using the right language can allow one so determined to perfectly place square pegs with seemingly great ease and fit into round holes.

I would also accept that, with respect to transition and wide-spread adoption, any new relationship between health care recipient and heath care provider is going to have great political cost. The insurance companies and supporting groups that provided supposed value-added services to the health care delivery chain would likely lose out greatly, as would the people that benefit from their success: direct owners, and dividend earners.

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