I am sure that I’m not the only person that’s getting tired of the seemingly endless national conversation on individual medical care: what it is, who should pay for it, how involved government should be, etc., etc. Enough already. Events of the last year have given a pretty clear indication of what the great majority of Americans think about it.
Because this is a forum for my views, I am reprinting a couple of letters that I have written to my elected representatives on the subject. The first is to Gordon H. Smith, U.S. Senator from Oregon, on 7 February 2007:
Dear Senator Smith,
Amid the growing clamor for politicians to ‘do something’ about health insurance, I thought that I would share my thoughts. Some politicians have been mailing out announcements concerning town meetings in which citizens are encouraged to make their views known. The theme for these meetings seems to be ways in which healthcare coverage can be expanded, notably to the very young, the poor, and the uninsured. Much of the political dialogue seems to revolve around these areas.
Perhaps we are getting ahead of ourselves here. If the public at large is going to pay for something, in other words, to have money taken forcibly from them, perhaps we should start with first principles and proceed from there.
First, what is healthcare? A good working definition might be that body of knowledge and technique that is used to repair and maintain human mental and physical health.
Secondly, neither health care nor health insurance is a right. A right, as understood since the time of the Enlightenment, is a natural condition, not bound by human intervention, which is innate in human beings. Life, liberty, the pursuit of happiness: all of these can be freely practiced by humans without the aid or assistance of others and should only be constrained to the extent that their exercise would harm others. It is certainly possible and desirable that a society should ease the fulfillment of a given right, but if one party must depend on another party to provide a given resource, then by definition that resource is not a right.
Third, healthcare is arguably a necessity, but health insurance is not. A necessity, by definition, is something without which it is impossible to live. Items like food, clothing, water, and shelter are all necessities. The fact that millions of people live for years without health insurance demonstrates that it is not a necessity.
Fourth, healthcare is a scarce resource. There is an infinite demand for a finite commodity. It is simply not possible to provide for the all of the healthcare needs for a given population. Moreover, given that this is a limited resource, it is foolish to try. There must be some sort of control and standard where ‘good enough’ is defined.
Fifth, the term ‘health insurance’ is perhaps a bit of a misnomer. Insurance is usually defined as protection against harm. In this case, as with most other forms of insurance, the ‘harm’ is understood to be penury as a result of some foreseen but low probability event. With health insurance, rather than protect against a rare event, we are in fact saying that for a given time period we will not get sick or sustain an injury. This is where health insurance differs from others. The human body can fail in an amazing number of ways and the probability that it will fail increases over time. It is not cogent to speak of insuring against an event that will almost certainly happen.
Sixth, the mortality rate for human beings is 100%. This may seem so obvious as to not need stating, but it goes to the fact that we are dealing with a scarce commodity. Because we are dealing with a publicly funded commodity, it may be more useful to think in terms of lifespan management rather than healthcare provision.
So when we talk about publicly funded healthcare, we should keep in mind just what we are talking about. We are talking about a scarce commodity for which there is an infinite demand and to which there is no natural right and which is apportioned to members of a population with an ever-increasing demand for the resource as they age.
Observations and Proposals
People are, for the most part, lazy and selfish. This is not an indictment of character, but a function of biology. Look across the spectrum of natural organisms and you will find that a given organism functions just well enough to be successful in its biological niche. It is a waste of energy (a finite resource) to do anything else. Any human organization that depends on large numbers of indifferent participants would do well to remember this. No such organization that depends for its success on the better nature of humans is going to be successful. It is useless to say ‘We can be better than that.’ No, we can’t, as any number of experiments in socialism has shown. It is far more productive to deal with people as they are and not as we might wish them to be.
It is a given that any time people are offered something that is free or perceived to be free, they are going to take advantage of it, whether they need to or not. Most studies show that under a socialized health care plan, usage will increase While this may be desirable if the quality of public health is improved, the fact is that a certain percentage of users are going to seek treatment for minor injuries and ailments because they can, not necessarily because they need to. People may also use health care resources out of a sense of entitlement or frustration. The thinking being that if they are already paying for it, why not use it?
In a free market cost acts as a screening device, controlling access to a resource. A large part of the impetus behind socialized medicine is the perception that the price of admission is too high and that people in need of treatment are foregoing it because they can’t afford it. Nonetheless, it is important in a publicly funded organization that everyone who uses the resource pays for it. In practice this means that every person using healthcare resources pay something for the service, no matter how small the price may be. There are three reasons for this:
1. Every one has a stake in the organization. It is not enough to say ‘Well, they’re paying taxes anyway.’ This is not necessarily true. It is not unusual for families and individuals below a certain income level to receive their annual tax bill as a refund. Indeed, some families can get back more than they paid; in effect they are subsidized by society. These folks have no stake in the organization whatsoever, yet consume a disproportionate share of the resources.
The poor, as Bill Cosby once noted, are not holding up their end of the social contract. People expect that others help them in time of need but have no sense of responsibility in the use of that help. For many, the welfare state acts as a powerful disincentive to better oneself. Why put yourself in a position to have to pay for what was once free? Requiring everyone to pay something for their health insurance would help to instill a mind-set of responsibility.
2. It mitigates divisiveness among income levels. If people, especially those in the middle class who are paying most of the bill, know that everyone is obligated to pay, there is less likely to be the sort of frustration and ill-will that makes for rousing political speeches but very poor societal relations. Political leaders should be looking for ways to unify people, not divide them.
3. It retains some of the resource control effect of free market pricing. Remember, this is a finite resource with infinite demand. Charging a sliding fee will serve to reduce the number of frivolous medical visits while still allowing those in true need to access the resource.
Cost can also be used as a positive incentive to encourage people to take care of themselves. While everyone should bear the cost of the system, perhaps it would be possible to reward those who do not consume resources by charging them lower premiums than those who use the system more, much the way auto insurance premiums work. If one were to go a year without using healthcare resources, then their assessment for the following year would be lower. It would seem reasonable to place a floor and a ceiling on what an individual would pay in annual premiums.
Let us touch on what may be the biggest objection to publicly provided health insurance, although many people may not know that this is the cause of their uneasiness. Once the public is forced to pay for other’s health care, every health issue, every lifestyle choice, no matter how personal, becomes a public health issue.
A disturbing number of people think that they have the obligation to dictate to others what they may do ‘for their own good’. There is little doubt that these individuals are looking for any excuse to tell people how they should live, and universal healthcare coverage is not just the camels’ nose in the tent, it’s the whole damn herd. Now the individual is answerable to the state. It is a complete reversal of the American ideal of the state being answerable to the individual. Without legal safeguards in place, this system is ripe for abuse, and ten thousand years of recorded history show that it will be abused.
Such safeguards might include the option to forego any health insurance at all. One alternative that has been discussed is the forfeiture of the personal income tax exemption, which is not entirely unfair; another option might be federal assistance in setting up individual medical savings accounts, similar to IRA’s.
I trust that lawmakers will take the time to review studies of the results of programs in places such as Tennessee, Massachusetts, and other places that have implemented some form of universal healthcare coverage. It’s not like this has never been done, and there is a wealth of experience to be gleaned.
The second is to Ron Wyden, U.S. Senator from Oregon, on 3 August 2009:
Dear Seantor Wyden,
As a citizen and a voter with an interest in the political discourse of this nation I thought that I would share my views and opinions on the current health care debate.
I think that it is important to define terms in any debate and there seems to be some confusion among the debate participants about what exactly is being debated. To my knowledge no public official has made the distinction between health insurance and health care plans. There is a qualitative difference between the two with significant policy ramifications.
Insurance, by definition, is a risk-management tool used to mitigate unexpected debilitating events. Thus we buy auto and home insurance to manage low-probability but foreseeable risks such as auto accidents and structural damage to our homes. These types of insurance do not, nor are they designed to, provide financial assistance for routine expenses incurred over the life of the vehicle or structure. Similarly, health insurance should be narrowly defined as a risk-management tool designed to reduce the financial impact of traumatic injury or debilitating illness.
Health care plans, on the other hand, are shared-expense instruments that allow a large group of people to reduce the individual financial burden of routine medical expenses. Health insurance and health care are not interchangeable terms and it would be helpful to the discussion if the participants recognized and emphasized the differences.
Much has been made of the number of people in the U.S. without health care coverage. The number most often cited is 46 million individuals under the age of 65, and while there seems to be a consensus on the validity of that figure, the impact of the various health care proposals on reducing that figure is subject to some debate. There is a tendency for proponents of the various flavors of health care reform to paint these individuals as uniformly sick and urgently in need of some nebulously unobtainable medical care that only a government-run agency can provide. This is simply not true. Significant numbers of people who can afford health care plans choose not to buy them because they have assessed the risks and run the numbers and have decided that the potential benefit is not worth the expense.
What many people have discovered is that if you are between the ages of 25 – 45, don’t engage in high-risk activities such as bungee jumping or smoking, and don’t have a genetic predisposition to serious disease, the odds are very good that you will not incur significant medical expenses. There is a probability that these individuals will suffer a traumatic medical event but again, that is what health insurance is for.
The uncomfortable political reality is that in any health care plan the people least likely to use resources are funding the ones that are most likely to use resources, to wit, the very young and the elderly. Convincing people that it is in their self-interest to pay hundreds of dollars per month for something that they are unlikely to use is rather difficult.
I know from personal experience that it is possible to save a significant amount of money on health care expenses by not purchasing a health care plan. The company I work for self-insures and offers a health care plan for about $100/month. I have worked there for two years and so would have spent about $2400 in that time if I had elected to purchase the plan. In May of this year I went to the emergency room at St. Vincent’s with severe abdominal pain. Fortunately my condition was not life-threatening and the emergency room visit, tests, CT scan, and prescription drugs came to about $3500. The uninsured patient (cash) discount offered by the hospital and the radiologist was 30%. This made my total bill nearly equal to what I would have paid in premiums for two years.
Let us look at this further. With the exception of a visit to a cardiologist five years ago I have not had to see a medical professional in over fifteen years and there are millions of Americans that can make the same claim. If I had put $100/month in a savings account for medical expenses I would have saved $18,000, and would still enjoy a 30% discount on my medical expenses, thereby making my effective savings over $23,000.
I am opposed to what I consider to be an ill-conceived effort to give government control over such a significant part of our lives and economy. There is an unseemly effort by the political leadership to instill fear in people that if We Don’t Do Something Right Now! then life as we know it will end and millions will die an untimely death. How is this year different from next year? Or the year before? Or the year before that? There is a sense that public officials are being much less than truthful about the implications of health care reform legislation.
The fact is that all of the proposed plans include some form of tax increase. Whether it comes in the form of mandatory purchase of a health plan or a penalty for not buying one, it is still a tax increase. It is not helpful to the debate when public officials from the President on down continually claim that there will not be a tax increase when quite clearly there will be.
Rationing under a government health plan is, I think, a bit of a red herring. There is rationing now, in the form of price and cost, just as there is in any other private-sector enterprise. The prevalence of health care plans and the idea extant in government and the medical industry that everyone is ‘supposed’ to have some sort of health plan has distorted the usual market checks and balances beyond all recognition. Consider what the cost of tune-up might be if a large number of people had a car-repair plan. A good case can be made that health care plans are part of the problem: consider my experience earlier.
It is not unconceivable that public officials will use a public-sector health plan to gain an uncomfortable degree of control over people’s lives. I have looked at public health plans in Tennessee and Massachusetts and both of those plans charge higher premiums for smokers and the obese. But where do you draw the line? What is to prevent a bureaucrat, a person not accountable to the citizens, from issuing an edict raising premiums for gun-owners, or private pilots, or people who engage in any number of higher-risk activities or activities that a government functionary doesn’t personally agree with? As we have seen, any group or individual can cast their pet argument as a ‘public health problem’. Once health care becomes the province of the government, then regulation and legislation of behavior becomes much easier. There need to be real safeguards in place to prevent a public health program from becoming an autocracy.
I do not think that any party on the government side of the debate has given any real thought to the implications and long-term effects of a public-sector health program. If even a portion of the current uninsured population gains health care coverage, it will create millions of new health care customers. Where is the infrastructure going to come from to deal with this increase? How much excess capacity is there in the health care system right now and how do legislators plan on providing additional capacity?
There is another, more invidious effect of a public-sector health plan; the further infantilizing of America. State and Federal government have done a fairly good job to date of conditioning people to turn to government for help when the least little thing goes wrong in their lives. Calls to 911 over a fast food order are an example of just how far this has gone. Consider how people have been divorced from taking responsibility for major parts of their lives such as child care and education. Do we really need to further the nanny state by taking away personal responsibility for health care too?
If Congress is dead-set on passing some form of health care legislation, then here is what I would like to see:
- Portability of health care plans.
Plans with a given insurance provider in a state are portable to other states where that provider does business.
- Everybody pays something
Most of the plans I have looked at provide for government subsidy of premiums for families and individuals that fall within some multiplier of the Federal Poverty Level. It is unclear whether some people would qualify for no-cost premiums but I’m willing to bet there are. This would be a mistake. In order for an organization to be effective everybody needs to have a stake in the system. I understand that some people would want to use resources because they feel ‘entitled’ to them because they are paying but rationing and annual limits should prevent much of this. Public officials at all levels need to send the message that everything costs something for everyone.
- Mandatory Insurance
I am personally opposed to government mandating anything without compelling reason but for the reasons developed earlier people who are in good health are not likely to voluntarily subsidize those who aren’t.
- Medical Savings Accounts
Some of the Federal employee health plans I looked at provide for something very like a Medical Savings Account. I would like to see the same option for anyone enrolled in a public health plan. I would even go so far as to suggest that people who don’t want to buy insurance be allowed an exemption if they contribute to an MSA in a government account so that government has use of the money for health care and the citizen is paid market interest rates. The money could only be used for defined health care expenses and some minimum, perhaps a percentage of income, would be required to be on deposit.
- Think before you act
We didn’t get where we are today in one fell swoop and we aren’t going to make effective changes to such a complex and entrenched entity as the government-industrial health care complex overnight, nor do we need to. Anything that requires a 1,000 page bill that many legislators say they haven’t read is just too damn complicated to work, much less work well. Has anyone in government, or for that matter the private sector, broken down the problems in the health care sector and done an analysis of solutions, preferably solutions that work with existing legislation and resources? If not, then why are proposing such sweeping legislation without knowing what we’re doing? And if so, why aren’t we implementing a few changes that will have the largest impact and then observing their effects over a period of time?
 DeNavas-Walt, C.B. Proctor, and J. Smith. Income, Poverty, and Health Insurance Coverage in the United States: 2007. U.S. Census Bureau., August 2008.
 Carl Bialik “Unhealthy Accounting of Uninsured Americans”, The Wall Street Journal, 24 June 2009
 See Carmen DeNavas-Walt, Bernadette D. Proctor and Cheryl Hill Lee, “Income, Poverty, and Health Insurance Coverage in the United States: 2005,” U.S. Census Bureau, Department of Commerce, P60-231, August 2006, Table 8 (sub heading Household Income), page 22 ( http://www.census.gov/prod/2006pubs/p60-231.pdf)
 Kaiser Family Foundation ‘Side-by-Side Comparison of Major Health Care Proposals’
 See Appendix I
And here are the appendices that were attached to the letter:
In the course of researching this missive I looked at several health care plans including public plans offered by Tennessee and Massachusetts, several Federal employee plans, and private health plans in my area. This is for comparison purposes only and not meant to be comprehensive. Coverage is for a single male age 45 with no prior conditions. For the Federal plans the data is for a non-postal worker paid biweekly.
|Federal Employee – Aetna Health Fund||$87.71/mo||$750||10% copay on covered servicesRx drug $10 – $50 copay||Plan specific to OregonTotal premium is $350.83, gov’t pays $263.12 or 75%|
|Federal Employee – Blue Cross Blue Shield||$92.44/mo||None||$25 – $100 copay depending on service$500 max. copay for inpatient stay$10 – $35 Rx drug copay||Total premium is $369.76, gov’t pays $277.32 or 75%|
|Massachusetts – Neighborhood Health Plan||$269.72/mo||$2000||$25 copay for most servicesLab work 20% after deductible$100 Rx deductible||Used Boston Zip Code for comparisonMA allows use of pre-tax dollars for premium paymentLeast expensive plan available for my income range|
|Tennessee – Cover TN||$62.09/mo||None||$15 – $100 copay depending on serviceRx $10 copay, $750 limit/quarter||Plan ATN allows use of pre-tax dollars for premiums|
|Providence Health Plans – Value 2500||$244/mo||$2500||$20 – 30% copay for covered servicesRx 50%||Private insurer.Includes some vision coverage|
While researching health plan coverage I decided to check into the numbers of the public health plans of Tennessee and Massachusetts. I also looked at Sen. Kennedy’s proposal.
Massachusetts is a state of 6.5 million people and a health care budget of $13 billion for FY 2009. As of 2007 about 7% of the state’s population was uninsured. This translates to about 455,000 people without a health care plan in the state. Massachusetts is paying about $2000 per resident per year to provide health care coverage or about $2200 per covered resident. The actual cost per covered resident is significantly higher as some percentage use Medicaid/Medicare, are covered by private health insurance, or are a government employee.
Tennessee has a population of about 6.3 million and a health care budget for FY 2009 – 2010 of $13.2 billion. As of 2007 about 16.2% of the states residents or about 1 million did not have a health care plan. Tennessee is spending about $2100 per person per year on health care or nearly $2500 per person per year for covered individuals. The actual cost per covered person is significantly higher for the reasons stated for Massachusetts.
Kennedy Plan –
Reduce those without a health care plan to about 35 million nationally in 2019. The Congressional Budget Office (CBO) estimated that this plan would cost $1 trillion (that’s trillion with a ‘T’) over the next ten years. The CBO also estimated that if no changes are made the ranks of the uninsured would rise to about 55 million by 2019 for a net reduction under the Kennedy plan of about 20 million at a cost of $500,000 per person or $420 per person per month. I would venture to say that you can buy better health coverage from a private vendor for this amount than the government would provide.
 U.S. Census Bureau
 Massachusetts Budget & Policy Center www.massbudget.org
 U.S. Census Bureau
 Kaiser Family Foundation http://www.statehealthfacts.org/profileind.jsp?sub=39&rgn=44&cat=3
 Carl Bialik “Unhealthy Accounting of Uninsured Americans”, The Wall Street Journal, 24 June 2009