Health care is one of those services like police protection – it’s so fundamental to our society that no one should have to go without it. And yet, as you’re no doubt tired of hearing, 43 million Americans are currently uninsured (that’s roughly one out of every seven).
One result of this is that about 18,000 deaths annually are attributed to insufficient health coverage, which most people can agree is a bad thing. A more controversial question is what to do about it. The answer to that question is to let the government pay for it.
Now, for the record, I’m not talking about Obama’s current health care bill. I’m talking about the idea of a universal health care system. Based on the experiences of every other industrialized nation in the world (all of which have it in some form), it’s an idea that works pretty well.
Our current system is centered on the health insurance company, which takes your money and uses that money to pay your medical bills (and by “pay your medical bills,” I mean “pay some portion of medical bills, but only the ones it feels like paying for”).
The problem in this system is that an insurance company, like virtually any company, is ultimately trying to make a profit. And thus, we have a conflict of interests. On the one hand, there are customers who desperately need to have their medical costs covered. And on the other, there are shareholders who expect to see profits.And at the heart of this conflict, making many of the day-to-day decisions over which treatments are covered and which are not, is the bureaucrat – the one who’s standing between you and your doctor. Unlike the faceless government bureaucrat who stands in the same place, the corporate bureaucrat has a vested interest in denying you coverage whenever possible. It’s not quite analogous to treating human lives as if they were market commodities, but it’s close.
On top of that, health insurance companies typically use all sorts of financial sleight of hand to separate you from as much of your money as possible before actually having to pay any of your medical expenses. This includes co-payments, deductibles, percentage participation and all sorts of other out-of-pocket expenses. Some of these have mixed effects. Co-payments, for instance, are designed to prevent people from running to their doctor over every insignificant headache they experience. This is supposed to prevent undue strain on the health industry, which sounds great on paper.
Another effect of co-payments, though, is that they prevent people from seeking help when there’s a genuine reason to do so. Often the disincentive to visit a doctor is so strong that an individual will wait to get treatment for a condition until it is way out of hand, to the point that treatment is substantially more expensive and unpleasant than prevention would have been. Situations like this are all too frequent in our society, and the cold truth is most of the health insurance industry’s financial devices create more strain on the health industry than they relieve.
One other issue regarding a universal health care system is the quality of health care. It has been suggested that making health care government-run will decrease quality. But there simply isn’t any evidence to suggest quality would go down. Even heuristically, that doesn’t make much sense. No one is talking about firing all the doctors and replacing them with accountants. The purpose of universal health care is to have the government finance medical bills. That’s it. If anything, that should result in an increase of quality because preventative treatments (something insurance companies tend not to cover) are more readily accessible.
Some would raise the argument that for all its flaws, the health insurance industry is at least efficient with its money, whereas the government is notoriously inefficient. There is one major problem with this logic. Namely, it’s ridiculous.
If you look up the percentage of every premium dollar that insurance companies spend on health care (it’s called the medical loss ratio, and it’s pretty easy to find for most companies), you’ll see that it typically hovers around 78 percent. The remaining 22 percent of what you’re paying for your insurance goes towards marketing expenses, administrative costs, executive salaries, shareholder dividends and profits. Lately, a large portion of it has also gone toward political campaigns. Most of these costs are not applicable to the government, meaning it can theoretically operate with substantially less overhead.
True, the government has its share of inefficiencies (I’m looking at you, MDOT), but it actually does quite well when it comes to certain programs, like health care. Take Medicare; it operates at about a 3 percent overhead cost (some estimates peg it as low as 1 percent), compared to the free market’s 22 percent. Not only is it less wasteful, it’s over seven times less wasteful.
So that begs the question: Can the industry compete with the government when it comes to health care? Maybe. Two decades ago, most medical loss ratios were close to 95 percent, and that sounds pretty competitive to me. But more importantly, who cares? If the government’s coverage is so much better than the free market’s that people start switching in droves, that says something about the concept of health insurance in the first place.
McNeill Williford is a senior majoring in industrial engineering. He can be contacted at [email protected].