Should health insurance remain in the private sector or be provided publically (or something in between)?
Healthcare (or even Health itself) is a scarce resource. How do we distribute the costs and the benefits in such a way that we maximize utility within the constraints of property rights?
Generally, if the conditions of perfect competition are met or when market imperfections are slight, it is better to relegate the production and consumption of a product to the private market with only the general laws against murder, theft, and fraud.
Health insurance, that is the means of paying for healthcare, however suffers several significant imperfections. Any plan to address health insurance policy in the private sector must address these imperfections:
1. Information assymetry: Producers of healthcare, doctors and corporations that develop medicines and medical devices, are at a significant information advantage over consumers of healthcare, the patients. A patient may not be able to decide appropriately whether a particular treatment is worth the cost.
2. Principal/Agent: Patient/Doctor: Worse, most patients don't decide their own treatments. Their doctors do. A doctor may consciously or subconsciously have different incentives than the patient's. (http://roomfordebate.blogs.nytimes.com/2009/06/18/better-medical-care-for-less/?ref=health)
3. Principal/Agent: Patient/Insurer: If the patient seeks excess treatment, the costs are borne by the insurance company. If the insurance company denies treatment, the costs are born by the patient.
4. Sickness Subsidy: The requirement that health insurance premiums should be the same for everyone regardless of health is effectively a subsidy for the sick paid for by the healthy. Those who are chronically ill will enjoy cheaper premiums because those who are generally healthy are paying higher ones. This will lead healthy individuals to seek cheaper and cheaper plans with less coverage so that they can avod paying this subsidy. Ultimately, healthy individuals will eventually choose to remain uninsured or self-insure while the sick end up paying for their own health care anyway.
So far it seems that surmounting these obstacles is impossible for the private health insurnce market to accomplish, and so I would advocate moving towards a minimum basic national insurance. Individuals would still be able to purchase supplemental insurance plans from private providers to enjoy care beyond that which is contracted to the lowest bidder.
National health insurance does not in itself solve all the problems above, but it has the potential to. We must carefuly craft the national health insurance program to solve these issues or else we will do no better than the private market today.
Dead rats and dopamine - a new publication
9 months ago
I will have to post later on this, health insurance is a similar debate as educationn but it more narrowly tailored towards a specific purpose the health of an individual being necessary regardless of economic so its easier to explain a bit although solutions may be very difficult to generate.
ReplyDeleteThere are many countries and models to look at , but there is one thing that is overlooked in the United States.
ReplyDeleteI disagree with author's 4th point a sickness subsidy, depending on how he phrased it. In Forbes conservatives tried to argue that point, saying that staying less healthy and having mandates is unfair to the less healthy , the wrongfulness of this is evident though.
Many people try to be healthy on their own, gyms, health foods , supplements such as regular vitamins, fish oil, etc would not exist then .
However, many people have pre-existing conditions that they cannot do anything about it , same with genetics, it would be foolish for healthy individuals to assume they are healthy and they are subsidizing, how do you know you are not a risk at diabeties, heart disease, cancer,
Did your great great grandfather have the gene, was there a mutation, something in the air or enviroment, many folks are well suprised who are healthy that things can quickly turn for the worse. Also, people smoke cigarettes and don't get sick , its true a documentary showed a 100 year old man who used to smoke until he was 70 I believe and he was healthy , it may have been genetics and metabolism.
In this country , I believe may heridteary conditions and genes may exist , people may not know it , africans may be at risk for high blood pressure, heart disease, and diabetis, asian americans for certain cancers, jews for certain genetic conditions, people of european descent may also be vulnerable to breast cancer for example .
As for health care costs, here is a great article from the new yorker "The Const Condrum"
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
Its an infulential article, but as for the lack of health insurance and solutions, models will be explained later, switzerland has a great model , again no model is perfect such as canada , britians, france, germany but it is often exaggerated by insurance lobbyists using scare tactics, if that was so many citizens of those countries would be up in arms, some are but its not that dire otherwise it may have changed. Its not going to be perfect and there have to be compromises and in certain scenarios. Limiting them and sacrifice which may involve taxes, and paying subsidies may have to be worth it.