Health Insurance versus Health Care


In the looming discussion of nationalizing health care, I would like to add a helpful note on jargon: let’s distinguish between health insurance and health care. Too often, those are considered synonyms, and the confusion in language has led to some confusion in policy.

Health care is, clearly, the receipt of medical services, including treatment and prevention. Universal health care is desirable for a host of reasons - humanitarian, economic, epidemiological, etc. I haven't met anyone who wishes health care was flatly denied to someone else. The debate over nationalization typically hinges on how to balance quality against distribution. Both are worthy goals; good people can disagree on the best balance.

Heath insurance, by contrast, is one means of paying for health care. Specifically, it involves pooling risk so that the unforeseen expenses don't bankrupt one's family. As with other kinds of insurance, risk-averse people are willing to pay somewhat more in expectation than if they self-insure; they are also prone to morally hazardous decisions (i.e. overusing the system).

As this country likely decides how to go about providing health care to as many people as possible, we should consider getting away from the insurance model. Most nationalized systems are basically big insurance plans, and the inefficiencies are substantial. The current system in the U.S. has broken down essentially because the inefficiencies associated with private insurance have become ponderous.

Whatever balance the new American health care system strikes, the goal we should all be able to agree on is that inefficiency - whether it comes from bureaucracy, externalities, or moral hazard - ought to be minimized. I and others who care more about the well-being of the American people than about telling them what to do will be favorably disposed toward the plan that offers the most health care with the least inefficiency.

Posted by Chops at December 4, 2008 1:52 PM
Comments
Comment #271462

Chops, that sounds very fine and sensible in theory and I would ask you why that hasn’t worked with our public education system.

Posted by: Jim M at December 4, 2008 3:59 PM
Comment #271468

Chops, your proposal is outrageous and not well thought out.

Your proposal suggests providing health care coverage to some, but, not all. That is playing god, who lives without pain and who suffers and dies for lack of affordable health care. Preposterous on its face.

Universal health care is the goal as you said. And the only way to get there is through universal health funding. There are 3 ways to fund health care:

1) Those with the means get it, and those without don’t. That is our current system.

2) Everyone gets it on demand and everyone pays for it according to their means through taxes.

3) The in between route. Those who can afford maximum private insurance coverage pay for it and in addition they pay taxes to help fund health care for those who cannot afford their own expenses. And those who can’t afford that, pay what they can in tax premiums and the society covers the shortfalls for essential well care and accident or illness requirements.

Option 3 is where we are headed, and compared to the previous two, will be the most affordable to the society as a whole in achieving the goal of universal health care delivery.

You are right to make the very important distinction between health care delivery and health care insurance. Another distinction should be made to far right nutjobs who want to conflate universal health care with Government doctors and nurses delivering the nation’s health care services. NO ONE is proposing that in America.

Health Care delivery in America will remain a private sector industry, except for major military medical care services which has justification for government hired doctors and nurses and government paid for medical facilities. Some of the finest in the world, I might add.

Posted by: David R. Remer at December 4, 2008 5:15 PM
Comment #271469

Chops,

The confusion is intentional.

Posted by: Rhinehold at December 4, 2008 5:16 PM
Comment #271477

DR
Correct. What is being proposed IS the compromise plan. That is one criticism I have of BHO’s approach. It keeps insurance companies involved. As Chops points out,they do not provide healthcare. Seems to me like inviting the local burgler over to discuss home security.

Posted by: bills at December 4, 2008 11:57 PM
Comment #271484

Medical services providers should not have to carry the burden of health care provision for the poor.

The government has no real business providing insurance directly, but contracting with insurance providers as with Medicare, Medicade, Tri-Care, i.e., Centers for Medicare Services (CMS), and Humana, and Wisconsin Physician Services (WPS), etc., has worked out pretty well…

There will always be abuses, of course, but that is another subject, for another day. First, let’s solve this problem, before we move on to the next one.

Posted by: Marysdude at December 5, 2008 3:28 AM
Comment #271487

Marysdude, your proposal adds the layer of corporation private sector profits for shareholders and enormous executive salaries and perks and bonuses to the cost of health care in America. That has got to go.

Direct insurance by the Federal Government gives the government the ability to exercise preferential contracts with NOT FOR PROFIT health care deliverers at substantial savings to tax payers and private insurance holders as well. America must promote not for profit health care delivery as one of the major components of lowering the cost of health care for all Americans.

But, one step at a time. Bills makes the error of asking why not the whole reform at once, instead of a stepped approach whose sequential steps logically follow from previous ones and remaining challenges. Anyone who followed the news in 1992 and 1993 knows what Hillary Clinton learned: A total overhaul of the entire medical care system in one fell swoop spells the death knell for any reform at all.

Obama is a student of history if he is a student of anything at all.

Posted by: David R. Remer at December 5, 2008 7:20 AM
Comment #271489

DR
Well maybe but keeping the private insureres in there could well be a poison pill. I do like the Obama-Edwards method of setting up competing programs between private (under close regulation) and public. The danger of course is cherry picking.
BHO’s plan also offers incentives and penalties for employers to cover their workers. This will give relief to all the responsible employers out there that have carried the burden of covering the employees of their competition when they get sick. Thats why we wind up paying $8 for a cotton ball. Boy,are they gonna whine. That being said, our system of employer based healthcare is unique and probably not the best way to go. Most western countries accept healthcare as a fundemental task of government like provideing for the common defense.

Posted by: bills at December 5, 2008 7:57 AM
Comment #271490

DRR said “your proposal adds the layer of corporation private sector profits for shareholders and enormous executive salaries and perks and bonuses to the cost of health care in America. That has got to go.”

Couldn’t agree more David. Not only does it add the additional cost, it also allows for the abuses in services by these same insurance companies as well as allowing the insurance companies to dictate therapies to the healthcare providers and the insured that benefit the company instead of the patient. For profit insurance companies have no place in a good healthcare system.

As we continue to move from recession to depression employer provided healthcare can be detrimental to one’s overall health. As I have just joined the ranks of the unemployed I have found out that it will cost me $1800 per month via COBRA to continue my ex-employers insurance plan. Unemployment Insurance will pay me $1900 per month for all expenses. If we are forced to continue down the road of employer provided insurance we should raise the rates paid into UI to continue the coverage while the employee is out of work.

Posted by: j2t2 at December 5, 2008 8:41 AM
Comment #271491

David -

Your criticism of my proposal is outrageous. Why? Because I made no proposal, except that we keep the language clear!

I don’t have a plan, and I see the merits of several sides in this argument.

The antagonism with which you addressed this post is surprising and somewhat disappointing - I was hoping to induce reasoning and a discussion of a very complex industry, not “outrage”.

Posted by: Chops at December 5, 2008 9:34 AM
Comment #271496

Chops. NOT!

You critique national health insurance for inefficiency. You critique the private insurance scheme for inefficiencies. And you close with a hope for a system which does right by American’s well being without inefficiency.

What you propose is nothing, while reserving the right to critique the current system and any nationalization of the system. That position appears to me to be outrageous negative and without any merit.

I thank you for the candor in coming right out in your reply to mine, that you don’t propose a plan. Keeping the language clear is not what you proposed in your article, but, in your current reply to mine.

The antagonism was directed at your article and what it proposed. And appropriately so, I thought.

Posted by: David R. Remer at December 5, 2008 11:26 AM
Comment #271497

bills said: “Well maybe but keeping the private insureres in there could well be a poison pill.”

Proposing a law that bans private insurers would be a poison banquet. The trick is to move forward in such a way that private insurers simply find other profitable pursuits besides the no longer profitable health care insurance business. Voluntary, so to speak. Or, consequentially would be more accurate.

Americans aren’t for government taking over the private sectors. They are for government stepping in with corrective regulation where the private sector fails, or providing that which cannot be provided adequately for by the private sector like national defense or health care affordability and universal accessibility.

Posted by: David R. Remer at December 5, 2008 11:33 AM
Comment #271502

j2t2 writes; “it also allows for the abuses in services by these same insurance companies as well as allowing the insurance companies to dictate therapies to the healthcare providers and the insured that benefit the company instead of the patient.”

I would suggest that j2t2 study the national health care systems of various European countries to better understand that they also place restrictions on both treatment therapies and prescription medications. Anyone who believes that national health care is a panacea and covers all procedures and prescriptions a doctor might want to administer is out of touch with reality.

And, as the financial woes become worse here and in Europe you will find, as Britain’s have, government efforts to increase premiums and reduce coverage for their NHS.

Posted by: Jim M at December 5, 2008 12:41 PM
Comment #271508

David -
I spent the first three paragraphs talking about language, the fourth paragraph discussing why insurance and care could be uncoupled, and the fifth paragraph expressing a preference for efficiency and care. I concluded:

I and others who care more about the well-being of the American people than about telling them what to do will be favorably disposed toward the plan that offers the most health care with the least inefficiency.

Exactly which part of this is “outrageous (sic) negative”?

Posted by: Chops at December 5, 2008 1:32 PM
Comment #271519


Long before the election, I said that Obama’s universal health care plan would not be universal and would be written by the health care insures. I’ll stick by that until I am proven wrong.

Posted by: jlw at December 5, 2008 3:10 PM
Comment #271537

Ah, Universal Health Care - my FAVORITE topic.

Hm. We’re #30 on the list of nations by life-expectancy, and the top twenty-seven on that list DO have Universal Health Care…and as far as I’ve seen, NONE of them spend more than about HALF as much in government taxes as we ALREADY do.

So…they spend half as much in taxes as we already do, yet they have higher national life expectancies.

There is NO EXCUSE for America not having Universal Health Care - but here’s the rebuttal to every argument:

Too expensive! - No, because the other countries have better OVERALL health care while paying half as much in taxes to fund it.

It’s Socialist! - Is that why EVERY industrialized democracy on the planet has Universal Health Care…except for America? Is political dogma more important than the health of the general population?

You can only see the doctors the government allows you to see! - That’s a flat lie. If one doctor isn’t good, you go see a different one, same as we do now.

You have to wait in line for years even if you have a life-threatening condition! Another flat lie. In England, you can either wait in line for free treatment…or you can pay through the nose and get it right away. Of course, in America there’s only the pay-through-the-nose option. And BTW, under Universal Health Care, those with life-threatening conditions go to the head of the line.

It’s the illegal aliens who are making America’s health care system go broke! Several European countries (due to their porous borders (especially so in the Mediterranean)) have worse illegal-alien problems than we do…and many of their aliens are Islamic. Israel is a WONDERFUL example, I would think - and they have UHC and a longer life expectancy than Americans.

It’s all because of America’s eating habits! Is that so? Then why does Britain have a longer life expectancy? Do they have a healthier diet than we do?

It can’t work because America’s too corrupt! More corrupt than, say, Italy? The home of the Mafia and porn-star parliamentarians has UHC and a longer life expectancy than we do, too.

It can’t last for long without the country going broke! Hm. Germany started Universal Health Care in something like 1893, kept it through all their national upheavals like hyperinflation, WWII and the Cold War…and they’ve still got it.

So many come to America for treatment they can’t get at home! True, America DOES have the very best health care in the world…for the ten percent of our population who can afford it. For the rest of us, we take what we can afford…or we engage in ‘medical tourism’ as I and my family and some friends have done with very positive results. I think I can safely say many more Americans go outside the country for treatment than there are foreigners who come here for treatment.

We’re #30 on the list, and the top 27 all have Universal Health Care…so what about #’s 28 and 29? Jordan and Bosnia. THOSE - and not our fellow industrialized defenders of democracy and freedom - are the countries we’re emulating….

Posted by: Glenn Contrarian at December 5, 2008 8:35 PM
Comment #271538

Chops, I explained that in my previous reply, in detail.

When you have something positive to put forth that recommends a realistic alternative to the present broken system, I will be very pleased to applaud it. To offer nothing and diminish all other options is outrageous and negative.

Posted by: David R. Remer at December 5, 2008 10:12 PM
Comment #271552

Glenn
Nice post.
DR
Its pretty clear the private sector is incapable of providing healthcare at the level the country needs and deserves. Works fine for the wealthy but is still not sustainable for the long term.Those pesky deseases just have no respect for money. In Canada the government plan provides the basics and individuals and groups can purchase private policies for frills like orthodonture and liposuction. Not a bad way to go.

Posted by: Bills at December 6, 2008 9:06 AM
Comment #271558


Go online and tell Omama what kind of health care plan you prefer.

Posted by: jlw at December 6, 2008 12:19 PM
Comment #271570

>Go online and tell Omama what kind of health care plan you prefer.
Posted by: jlw at December 6, 2008 12:19 PM

jlw,

That much, you CAN do…

Posted by: Marysdude at December 6, 2008 1:31 PM
Comment #271627

BillS, I agree, but, we will have to define tax payer subsidized care in a far more restricted fashion that just not covering orthodonture and liposuction. To afford basic well care, and accident and illness treatment, a vast array of procedures will have to be excluded from the list of coverage. And that is where the battle ground over universal health care insurance coverage is going to be waged.

Business is for a government single payer insurance plan, and the majority of American voters are as well. That makes this a done deal. But, what will be covered and what will not, and whether the plan will break the nation’s economic future or enhance it, is where the war will be fought over implementation. It is going to be a very ugly debate. I say the uglier and faster that debate is had, the sooner implementation can begin, and at least the potential for a cost sustainable universal health care insurance system be put in place.

Posted by: David R. Remer at December 7, 2008 11:31 PM
Comment #271635

DR
“That makes it a done deal.” Hope you are right.The great achievement will be the fundemental introduction. There will,no doubt, be constant arguements about quality and coverage. The Norwegians are an example. They enjoy the longest average lifespans in history but consistantly complain about their healthcare providers. Seems human nature to do so at least until medicine can insure eternal life. Heck, we would probably still bitch.

Posted by: bills at December 8, 2008 12:54 AM
Comment #271642

Glenn, could you please offer a rebuttal for those of us with the “individual right/pro-choice” excuse?
Thank you.

Posted by: kctim at December 8, 2008 9:49 AM
Comment #271668

“I would suggest that j2t2 study the national health care systems of various European countries to better understand that they also place restrictions on both treatment therapies and prescription medications.”

That may be true Jim M but not according to the article I have linked to below. Perhaps you should also do some studying on various European health care systems yourself as they do it at roughly half the per-capita cost that we do it for. They don’t bankrupt people in the process either.


“Their freedoms of diagnosis and therapy are protected in ways that would make their managed-care-controlled US counterparts envious.”

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/08/11/frances_model_healthcare_system/

Posted by: j2t2 at December 8, 2008 7:44 PM
Comment #271686

j2t2, you can’t pluck France’s healthcare system out of the rest of its society and expect it to work in the U.S.

Mal practice claims are handled by a single judge. We get juries with no caps.

France’s doctors are paid according to scale. Try to get ours to accept that.

Higher education (including med school) is free in France. If you are a doctor in the U.S. then you will need to recover significant education costs throughout your career.

Coverage in France is Compulsory for all citizens and visitors over 90 days. Compulsory coverage has killed universal proposals here politically.

France’s healthcare system should be studied for its best practices but in the end you can’t just model it here. Maybe at a State level it might work but not at a national level of 300m+ people, 40m+ of them uninsured, and 12m+ sans papiers it is politically unobtainable.

Posted by: George at December 9, 2008 11:26 AM
Comment #271688

“France’s healthcare system should be studied for its best practices but in the end you can’t just model it here. Maybe at a State level it might work but not at a national level of 300m+ people, 40m+ of them uninsured, and 12m+ sans papiers it is politically unobtainable.”

George I don’t disagree with your statement. I like the French health insurance system myself (and don’t have a problem with free higher education for Doctors, BTW) but I also would be willing to support other plans and ideas that would solve the problem. I don’t see for profit insurance working today and will not support it as an answer to the health insurance problem we face in this country.

You are not the first to bring up the differences in the size of the population between France and the United States but why is it a negative when economy of scale should kick in at some point and benefit a larger population at a lower cost?

Posted by: j2t2 at December 9, 2008 11:58 AM
Comment #271808

George -

I DO disagree with your statement, because the problem you point out about illegal immigrants is not a matter of total numbers, but of proportion…and countries around the Mediterranean historically have a significant problem with illegal immigrants. I think I can safely say that Israel has a higher proportion of illegal immigrants than we do.

Of course no program that works for country A will not work exactly the same for country B…but there is NO reason that Universal Health Care - adjusted necessarily for American legalities and culture - can’t be used here. If you want, I can dig up from my blog references showing polls of nurses, doctors, and the American population that support UHC…and the only ones who really don’t want it are HMO’s, big pharmaceuticals, and the Republican party.

And if you’re wondering why doctors would go for UHC even though they make less money, try asking them how much they spend on malpractice insurance. What happens with UHC is if a doctor commits egregious malpractice, the government no longer contracts with him (or they take his license). There’s no “take this money and be quiet about the malpractice that harmed you” stuff.

Posted by: Glenn Contrarian at December 10, 2008 7:41 PM
Comment #271832

glenn writes; “If you want, I can dig up from my blog references showing polls of nurses, doctors, and the American population that support UHC…and the only ones who really don’t want it are HMO’s, big pharmaceuticals, and the Republican party.”

Gosh glenn, I recall how miserably the Hillary-Care plan for UHC failed and was soundly rejected by the vast majority of Americans. What’s changed besides who will occupy the WH?

Posted by: Jim M at December 11, 2008 12:47 PM
Comment #271846


Jim M.: I am hopeful that the advocates of NHC are prepared to counter the industry’s massive propaganda campaign that foiled the attempt during the Clinton Administration. The people are far more concerned about the costs of health care now than they were then. Perhaps we can have a real debate with real data rather than propaganda this time.

If the Senate confirms Tom Daschle to head HHS, NHC is not likely going to become reality.

Posted by: jlw at December 11, 2008 3:08 PM
Comment #271852

j2-

Every NHC model that I have seen (including France) generates less in revenue (premiums and taxes) than it does in delivery costs. Therefore, the more people you put in to the system the more outside revenue you need to sustain it.

Glenn, I’m glad that Obama will be interjecting liberal ideas back into the political process; it’s been a while since we’ve seen them (1994 or so) coming from the Whitehouse. There are a lot of good ones out there and it time to move them out of the opinion pages, the blogs, special interest group white papers, the polls, etc. and put them back into the legislative forum.

Posted by: George at December 11, 2008 4:39 PM
Comment #271938

Jim M,

The Clinton health care plan failed because Hillary held too much of the preparation close to her chest, held meetings behind closed doors and corporate medicine hired a pair of very convincing actors to lie to America…you know how gullible America is to a good TV commercial…oh, well…

Posted by: Marysdude at December 13, 2008 1:53 PM
Comment #271951

Thanks marysdude for setting me straight as to why NHC failed under Hillary. It wasn’t a God-awful plan, hated by a majority of American’s…it was just poor marketing. We can be certain that with the Obama teams flair for marketing things will be different this time.

Posted by: Jim M at December 13, 2008 6:57 PM
Comment #272043

Jim M -

Yeah, marketing. It’s not what you sell, it’s how you sell it. That’s why VHS beat Betamax, Microsoft beat Apple (but Apple’s coming back)…and how EVERY political campaign in EVERY party is run.

Unfortunately, voters who can’t see through the marketing sometimes outnumber those who can - sometimes. On 11/04/08, the majority of voters DID see through the marketing of the all-Ayers-all-the-time fearFearFEAR-mongering Republican marketing plan.

Posted by: Glenn Contrarian at December 14, 2008 10:51 PM
Comment #272077

Sorry Glenn, but you’re analysis is just too feeble for me to buy.

Posted by: Jim M at December 15, 2008 2:40 PM
Comment #272100

Sorry, Jim M, but your analysis of Glenns analysis is just too feeble for me to buy…

Posted by: Marysdude at December 15, 2008 6:57 PM
Comment #272199

George,

France’s doctors are paid according to scale. Try to get ours to accept that.

Higher education (including med school) is free in France. If you are a doctor in the U.S. then you will need to recover significant education costs throughout your career.

Change the later and the former may become far more easier to accept…

Every NHC model that I have seen (including France) generates less in revenue (premiums and taxes) than it does in delivery costs. Therefore, the more people you put in to the system the more outside revenue you need to sustain it.

It have everything to do with age pyramid. Put only but every young adult under an universal health care even with a minimal tax and you will see that revenue will be way enough.
But add far more people but unhealthy - statiscally it means older - and you got eventually deficit.

Health care funding should not be managed on short term. You can’t avoid having more unhealthy - so more costs - than revenue because you can’t really control the age pyramid. A HC system must handle it, aka accept being in debt for a period until the democraphical numbers will mathematically reverse the balance the other side. A critical error, and unfortunatly one too many often made, is to not save that extra revenue to face the next debt period but or cut taxes or use it for something else.

Being strongly tied to age pyramid, no long-term HC can be substainable without an effective natality rate around 2.0. In our individualist societies, it means effective natality policy.

And AFAIK US have an even stronger one than France. On long term, a substainable UHC *is* possible (since 1945 here), but only if extra saving are saved for hard times. This require a strong not-for-profit not-governmental body to manage it. Ideally, revenue should be collected directly by this body.

In France case, saldy, it’s governement who collect HC taxes and sometimes, on political purpose even, don’t pay all collected taxes back. As it was the case since 2002 in France. But that’s another story…

(Sorry for broken english, it has been a very tired month at work…)
This needs a strongly not-for-profit

Posted by: Philippe Houdoin at December 17, 2008 12:12 PM
Comment #272221

Philippe, I enjoyed reading your post and there is a lot of truth in it. While reading your post I was reminded of our Social Security system here in the US. There is no one who can say that this program, as currently structured, is sustainable. There is no money in the trust fund. There are huge numbers of retirees expected soon. And, there is no political will to address this enormous problem we will soon face.

Still, we have many folks who promote UHC while failing to recognize the truths you outline or the failed history of our current huge entitlement programs.

“Just do it and to hell with the consequences” seems to be the battle cry of those proponents of UHC. It’s good for the party and good fodder for the reelection of our politicians. Much like the public bail-outs we are seeing mushroom here, there seems to be no sense of the cost now, and later. If it feels good it must be good.

As an insurance agent I use a tag line in all my correspondence which reads; “Today’s decisions are Tomorrow’s reality”. That seems appropriate with this discussion.

Posted by: Jim M at December 17, 2008 3:18 PM
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