Thursday, August 13, 2009

Why Care about the Uninsured?

You hear a lot of comments like this one on healthcare:

But the British system is extremely cheap. Uncommonly cheap. Weirdly cheap. About 41 cents for every dollar we spend per capita cheap.

Now it’s definitely true that to an extent the Brits are getting what they pay for here. If you look it up, the research shows that British health care is not especially effective by international standards. That said, the difference is subtle enough that you actually do need to look up the research. It’s not as if people in the UK are just dropping dead of the plague all the time. To the casual observer, it all looks about fine, and the 59 cents on the dollar they’re saving is quite a lot. The fact of the matter is that health care is not an especially important determinant of health outcomes. Genetic predisposition is hugely important, and we can’t do anything about it. The biggest issue is “behavioral patterns” which are hard to change. But even “social circumstances” and “environmental exposure” (which is really a kind of social circumstance) swamp health care as a factor.

So--the British NHS delivers substandard care, but at a much cheaper price. But, since health services don't actually matter that much for "health", we could just cut all sorts of costs, and spend the rest of the money on various paternalistic method to stop people from injuring themselves.

But if you take this data seriously, it's hard to get worked up over the plight of the uninsured. They don't get access to healthcare; but healthcare doesn't matter anyway, and forcing them to pay for insurance may make them worse off. In fact, there's no reason to stop at British-level care. Britain could probably cut bills by half, and not lose too much in terms of life expectancy. What's the problem with that?

The standard liberal rationale for reform is a little bizarre. On one hand, we need to cover the uninsured, because that's a moral necessity. But we also need to cut costs, because medical spending is wasteful and unhelpful--but then why do we want to give it to everyone?

The right liberal approach, I think, would be to expand the sorts of consumer directed care plans that expose people to the costs of their behavior and help generate prices and markets. The vet care/lasik surgery portion of the healthcare market works fine--if we made the rest of the healthcare system look like that, we could lower costs enough to provide catastrophic care for everyone. This is, by the way, what Milton Friedman has been arguing for decades.

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