Health care isnt free. It has a social cost. Someone has to choose between health care and other uses of moneydeciding, for example, whether a procedure is worth the sacrifice of other goods and services that it would require.
Who should make these decisions? Under what circumstances do we want the decisions to be made by patients? When should they be made by insurance pools? And when should they be made by government?
New York Times columnist Nicholas Kristof implicitly asked these questions recently. Unfortunately, he got every answer wrong. Because many other people think the same way Kristof does, Im going to devote this piece to his column.
Kristof wrote about his friend, Scott Androes, who was suffering at the time from stage four prostate cancer. Although he described his friend as a victim in part of a broken health care system, nothing could be further from the truth. Androes was a middle class professional who decided not to buy health insurance because it was too expensive. As he developed symptoms, he chose not to see doctors and to avoid other expenses in order to save money. By the time he chose to seek care, he was in critical condition.
Kristof believes that ObamaCare would have prevented the tragedy if the new law had been in place. Hes wrong about that too.
Lets start with the decision to be uninsured. I want to correct a few assumptions both Kristof and Androes seem to have made, because they are distracting. They imply that individually purchased insurance is more expensive than group insurance provided by employers. This isnt necessarily the case. For a healthy person, individual insurance is often cheaper. It may seem more expensive because the individual pays the cost directly.
But employer coverage isnt free, as Kristof incorrectly implies. Because Androes worked as a part time consultant, he didnt have the opportunity to obtain employer coverage. Thats understandable. But even if he had it wouldnt have been free. Employer-paid premiums are a substitute for monetary wages. Whether through his work or not, the cost of insurance would have come out of Androes pocketnot someone elses.
What is true is that federal tax law provides generous subsidies to employer-provided insurance, but gives little tax relief for insurance individuals purchase on their own. This policy encourages group insurance and discourages individual coverage. It encourages people like Androes to make the very decision he made. This tax policy is an inequity that my colleagues and I at the National Center for Policy Analysis have campaigned against for many years. But it is an inequity that is notrepeat, is notcorrected by ObamaCare.
Kristof believes that Androes cancer would have been caught earlier and his survival chances would have been greater if everyone were forced to have health insurance. But ObamaCare doesnt force everyone to have health insurance. The penalty for being uninsured is small, relative to the cost of the insurance. There is very little the IRS can do to enforce it. And the IRS has signaled that it doesnt plan on using a lot of resources to enforce the mandate anyway.
Countries like Britain and Canada actually do force people to have health insurance. Basically, its provided to everyone and paid for by taxes that are not optional. But under ObamaCare, people like Androes will have a choice similar to the one they have today: They can obey the mandate and pay a hefty premium or they can save a lot of money by choosing to be uninsured.
Now lets consider some other decisions Androes made:
- When he had difficulty urinating, he decided against going to the doctor in order to avoid the expense.
- When he spotted blood in his urine, he went online to investigate what the cause might be; but again, he opted against seeing a doctor in order to save money.
- When his temperature hit 102, he went to an urgent care clinic and got a prescription for an antibiotic. (The implication is that a specialist would have done more.)
- When he finally saw an urologist, tests were ordered.
- But even before the tests results were in, his health deteriorated and he went to a hospital emergency room; it was there that prostate cancer was discovered.
Now a question for the reader: Do you want people like Androes to be able to make the decisions he made or do you want them made by others? If the latter, how exactly would you get that done?
The reality is that each of us is to be the first line of defense against disease. For the most part, nothing much happens in health care unless patients do something to initiate it. This is not a bad thing. It is a good thing. The trend in medicine is to delegate more decisions to patients and to give them new tools to help them make better decisions.
Even if money is not involved, patients would still have to choose between seeking professional advice and other uses of their time. But why limit the choice to time? As noted, health care has a real cost. Who better to decide (before the fact) whether a doctor visit is worth the cost than patients themselves?
Kristof wants government (through insurers) to encourage cancer screenings for everybody. But increasingly, professional societies are advising against giving lots of routine tests to apparently healthy people. Even a casual reader of newspapers must be aware that there is considerable debate about when and how often people should get mammograms, Pap smear tests, PSA tests, and other cancer screenings. Given so much disagreement, this would seem to be an ideal realm for individual choice.
Of course, some preventive measures pay for themselves. Where they do, health plans will have an economic interest in promoting them. But the measures that pay for themselves are few and far between. PSA tests to screen for prostate cancer do not pay for themselves. The cost of giving the test to thousands of healthy people overwhelms the savings from catching cancer in its early stages in the few patients who have the disease.
What then would be a good health care system? Ironically it would be one that is much closer to what Sen. John McCain proposed during the 2008 presidential campaign, rather than ObamaCare. Here are some elements of what we propose:
- Offer everyone a refundable tax credit of, say, $2,500 per adult and $8,000 for a family of four. This means that the first $2,500 of insurance for someone like Androes explicitly would be financed from general tax revenues.
- Penalize people who dont insure. They would pay higher taxes. For someone like Androes this would be a $2,500 penaltymuch larger than the ObamaCare penalties.
- Send the unclaimed tax credits to local safety net institutions, so if the uninsured cannot pay their medical bills there will be a source of funds to provide indigent care.
- Encourage flexible Health Savings Accounts (HSAs) so that someone making the decisions Androes made will have cash available to pay for care when they decide the cost is worth bearing.
- Otherwise leave the health insurance market free to decide which screenings will be covered and which will not and leave individuals free to make their own choices.
In his Thursday column (Oct. 18), Kristof announced that his friend Scott Androes had passed away. The new column repeats almost every error that was in the original column. It adds this erroneous thought:
Researchers have estimated that one American dies every 20 minutes for lack of health insurance.
Thats an absurd statement that has been completely discredited by scholarly research. See former CBO Director June ONeills PowerPoint slides. Then he gets emotional with this:
To err is human, but so is to forgive. Living in a community means being interconnected in myriad waysincluding by empathy. To feel undiminished by the deaths of those around us isnt heroic Ayn Rand individualism. Its sociopathic. Compassion isnt a sign of weakness, but of civilization...
So Scott, old pal, rest in peace. Lets pray that this presidential election will be a milestone in bringing to an end this squandering of American lives, including your own.
I report. You decide.
|John C. Goodman is a Senior Fellow at the Independent Institute. The Wall Street Journal and the National Journal, among other media, have called him the Father of Health Savings Accounts.|