[ars]

This article demonstrates a very common mistake: People think health insurance covers health bills.

It doesn't. It covers unexpected health bills, which is a very different thing.

Any type of situation that is expected to happen can not be covered by insurance, it needs to be covered by savings instead.

However many people want insurance premiums to be a type of forced savings plan, which is why there is such a huge argument in the US about health insurance.

Those opposed to government regulation want to handle the savings on their own. Those who like government regulation want it to force people to save for health care costs.

[tptacek]

Without sparking off a huge thread on free markets versus socialized medicine, the idea behind single payer health insurance is that nobody has to worry about "expected health bills", because everyone shares a giant risk pool in which uniformly low premiums end cover everyone by shifting expenses from people who do get sick to the (larger) pool of people who don't.

Part of the philosophical idea behind single payer is that people have minimal control over financially devastating illness and injury, and one thing society can do that individuals can't is allow everyone to share the risk, transforming a small probability of an untenable expense into a certain probability of a manageable expense.

You're right, and usefully so, to point out that private health insurance is treated like a utility instead of an insurance plan; knowing that also allows consumers to select high-deductible plans, and to take advantage of HSAs for tax-advantaged funding of the health care bills they do expect.

But single-payer insurance can handle both problems (routine billing and catastrophic coverage) coherently.

[chernevik]

Individuals can share risk, that's what insurance does.

The transformation of insurance into a savings scheme puts considerable distortion on that model. It becomes impossible to see what payment is for expected treatment, and what is for risk assignment. The model then encourages people to use more ("I've already paid for it") and to pay no attention to cost. And it encourages the attitude that any problem should be paid for. It's hard to exaggerate the impact of these effects on health care's crazy cost structures.

The real problem isn't people who are riskier, it's people who are costlier. Someone with a prior condition isn't a risk, they're a cost. Insisting they should have "access to insurance" is simply insisting on cost redistribution. The circumstances under which that cost redistribution is a good idea socially should be an entirely different question than the efficient structure of health care payments.

These concepts are deliberately obscured by the political rhetoric around "health insurance", precisely to obscure the cost shifting nature of the project and to create a sensibility that the problems is somehow the greed of financiers. (Obscuring the cost drivers is also a goal, it's a very large industry that employs a lot of people, many of whom, at many levels, stand to lose a good deal if the system were ever seriously rationalized.) It's a very effective rhetorical strategy, especially given the abstractions around risk, but it shouldn't be confused with an actual discussion of the economic problem.

[tptacek]

This is a concern that could be addressed by providing guaranteed issue and a mandate for high-deductible health insurance, and then leaving it to the market to resolve the financing of everything below that high deductible.

That system is in fact not too far from what we're trending towards in the US.

[chernevik]

I don't see how you can say that. We're currently headed towards comprehensive insurance whose holders pay very little out of pocket. Consumers will have no incentive to limit consumption or make cost / quality tradeoffs, and none to police providers for cost.

And "guaranteed issue" is never _insurance_, it's cost sharing. Because it takes the known costs of some individuals and spreads them to others. It is a mandated subsidy. Doing it through "insurance" introduces opacity into the system, which obscures from the electorate the costs of the choices they're making, and reduces accountability throughout the entire system.

[tptacek]

Employees at many large companies today already have the option of high-deductible insurance; scaling the new, as-yet-unimplemented guaranteed issue system "back" to require a mandate only for high-deductible insurance (and thus guaranteed issue only for high-deductible insurance) would not be a major change.

You are articulating the "moral hazard" concern with universal health insurance. I am recognizing moral hazard, and saying that it can be addressed in a universal system simply by setting the threshold that the system pays out at a higher number.

[chernevik]

I'm not talking about moral hazard.

[anarchotroll]

Individuals can opt into an insurance plan. That's sharing risk.

What "society" (government) can do is force everyone to share THE SAME risks

single-payer insurance == monopoly

[tptacek]

Part of the notion that suggests people should be forced into sharing those risks is that nobody can rationally rule out future unbounded medical expenses; you can't predict the future, and virtually nobody has enough money to cover every plausible medical expense they might face.

So the freedom we're really talking about is --- notionally --- the freedom to make what basically must be an irresponsible choice.

It's true; single payer systems do create a monopoly for health care funding; that monopoly takes its place alongside the monopoly for military force, for air traffic control, for fire prevention, for oceanic weather surveillance, &c.

[anonymoushn]

It is entirely possible for a person to rationally rule out future unbounded medical expenses if he or she has no desire to live in agony and spend hundreds of thousands of dollars to prolong his or her life by weeks or months. Such people are forced to subsidize people who want to live in agony at high cost for small periods of time.

I don't think this is a significant problem, because the people who receive this subsidy vastly outnumber the people who provide it.

Edit: A liver transplant is a procedure with a very high expected value in terms of QALY/USD. Americans in aggregate spend a great deal of money and effort on procedures with very low expected QALY/USD. Some people, myself included, would prefer not to purchase a procedure with very low expected QALY/USD.

There was a good discussion on a similar subject earlier: http://news.ycombinator.com/item?id=3313570

[tptacek]

This argument basically says that people can avoid the expense of, say, a liver transplant by opting to die instead.

That's true, but it's not a winning argument.

[true_religion]

He's not arguing against liver transplants so you've just thrown a redherring into the discussion.

I believe his argument is that expensive end-of-life care is unnecessary because death at that point is inevitable in the immediate future. You can gain months on average, but those months aren't economically invaluable.

With limited resources, its better to spend on treatments with the greatest quality of life to cost ratio.

[anarchotroll]

I am sorry but the logic above could be applied to anything.

"Part of the notion that suggests people should be forced into sharing those risks is that nobody can rationally rule out future unbounded <whatever> expenses; you can't predict the future, and virtually nobody has enough money to cover every plausible <whatever> expense they might face."

Meet socialism.

[anonymoushn]

I came here to say just this. In the United States, though, we use "Insurance" to refer to a very expensive form of prepaid health plan. We keep costs up by making laws that prevent employees from knowing how much their prepaid health plan costs. Just in case people might want to react to the high costs by not purchasing a plan, in the near future everyone in the U.S. will be required by law to purchase a prepaid health plan.

[tptacek]

It's the nature of the social contract that we give up certain freedoms to gain the benefits of society; that's what contracts do: they bind us.

It's not hard to make a list of "freedoms" we're mostly happy that people give up: the "freedom" to drive 100mph through school zones, the "freedom" to sell patent medicines with Pfizer branding on it, the "freedom" to set tire fires on our lawns. Those "freedoms" are respectively outweighed by the cost of collisions, of medical fraud, and of toxic and repulsive clouds of smoke.

When societies adopt single-payer health care systems, they're expressing a judgement that the "freedom" to take individual control over how to finance health care at the lowest possible price is outweighed by the cost to society of the uncertainty of health care costs.

And, setting aside principle for a moment, your health & well being is in fact one of the most important uncertainties in your life. You could be hit by a bus tomorrow, or stricken with a disease that outstrips your ability to pay for care. With the exception of a tiny, tiny fraction of people in society, nobody can truly provide an assurance of their ability to provide for their own care. So, to bring the principle back into the picture: if you're ideologically opposed to single-payer or socialized or mandated health insurance, it would seem that you must also support the idea that people who can't pay for their care must be denied care.

There's a wide variety of pragmatic objections to single-payer insurance, many of which are probably valid. But if we're going to bring "freedom" and "choice" into the picture --- ideology, in other words --- we should be clear about what the tradeoffs are.

[bunderbunder]

I think what the grandparent was actually referring to was the system in the USA where people get group insurance through their employer.

Setting aside the question of market vs. socialized health care, it doesn't take much observation to realize that this is a very bad system. It both sweeps costs under the carpet and removes consumer choice from the equation, thereby severely reducing the extent to which health insurance companies must compete on both cost and quality of service.

Think your company's group plan is too expensive? Well, you're free to drop out of it if you want. Of course, the money they were spending on your health insurance won't get added to your salary when you do, so ultimately whatever you find will end up being even more expensive.

Pissed off because your health insurance company screwed you over? Well, you've got pretty much the same "my way or the highway" option.

What a lot of folks fail to realize is, just because we don't have a socialized system doesn't mean we have a market system. What we actually have is a bastard system that offers the benefits of neither, plus some downsides that are uniquely its own.

[sunsu]

Freedom and choice cannot be broadly lumped into "ideology". Freedom and choice are integral parts of how markets function. To completely remove freedom and choice from the healthcare debate means that there should be ONE BEST solution. The reason why I value my freedom to make my own decisions about health care is because I do not think that a universal single payer system is the ONE BEST solution.

[tptacek]

That's a pragmatic objection and probably a valid one, but note that the concern is explicitly mitigated by the idea of a market for private health insurance with "guaranteed issue"; the catch with guaranteed issue is that it requires a mandate to work.

[anonymoushn]

A single-payer health care system would be excellent. I eagerly await its implementation in the United States.

[yuhong]

They did limit the profit of the health care providers which happened to reduced lobbying.

[yuhong]

Sorry, health insurance providers.

[onemoreact]

In the US the insurance companies also negotiate the costs with various heath care providers. It's possible to pay 6,000$ / year in premiums, never hit your deductible so the insurance company does not pay anything out of pocket and still save money.

[bunderbunder]

Last time I saw a hard figure on it, which was admittedly a long time ago, was while I was working at an immediate care clinic. Uninsured folks were getting billed roughly 170% what insured folks were thanks to these negotiated rates.

[tptacek]

As someone who has paid out-of-pocket for an MRI (it needed to get done ASAP for logistical reasons and there was a bookkeeping screwup with my insurance): the markup for out-of-coverage services can be way way more than 170%.

[anarchotroll]

That's cause most of the people are insured and there is no pressure for lowering rates for the uninsured.

[tptacek]

Virtually everyone is insured as a side effect of being an employee at a company that provides access to a group health insurance plan as a benefit. This has the side effect of coupling people's jobs to their health insurance, which drastically reduces labor mobility.

[bunderbunder]

83% is certainly a large majority, but it is not "virtually everyone".

[tptacek]

The remainder in this statistic are covered by what? Medicare/medicaid? Private insurance? Co-op plans? Nothing at all?

[jberryman]

> It doesn't. It covers unexpected health bills, which is a very different thing.

I see conservatives (not trying to label you) make this argument a lot, and I think it is a mischaracterization of 1) what most people mean by health insurance, and 2) what health insurance and health plans are really about: pooling risk and creating groups that can negotiate for lower prices.

Re. 1: just skim the wikipedia article for health insurance (http://en.wikipedia.org/wiki/Health_insurance); the distinction between health plans vs. what you mean by "health insurance" all gets rather confused.

[tptacek]

The conservative objection to single payer health insurance is that single payer may be a terrible way to achieve cost negotiation. In a system of guaranteed issue private insurance, people could tune their exposure to risk by selecting plans with greater or lower deductibles, and then use HSAs to set up a rolling facility for paying their day-to-day coverage costs.

The fundamentals of the system we're moving towards in the US is actually a conservative plan from the '90s: an exchange-based market for private health insurance coupled with guaranteed issue and a mandate for coverage. That plan was itself a response to the original liberal vision of universal health insurance: nationwide government-run single payer insurance.

[crag]

"Any type of situation that is expected to happen can not be covered by insurance, it needs to be covered by savings instead."

Yeah right. Until you run out of money. Then what?

In your world, you die. Good for everyone, until it's you or someone you care about. Then, like everyone else, you off running to the SS office to apply for (Medicare) disability.

The whole point of insurance is to protect against risk. Else why have it at all?

[anonymoushn]

Insurance is for unexpected events. Paying for expected events using insurance is not a worthwhile thing to do because you must pay for the cost of care plus the cost of running the insurance company, which is more expensive than just paying for the cost of care. So, if someone is worried about running out of money due to foreseeable medical expenses, buying insurance to cover those foreseeable medical expenses will cause him or her to run out of money earlier.

[joedev]

I agree. You hear the phrase "I don't have healthcare" too often used when what the person really means is "I don't have insurance." If you live in a developed country, believe me, you have health care.

Not to be pedantic but I will stand on a soapbox for a moment: I'd also point out that we all have the ability to care for our health. Health care is a daily activity which requires no insurance, and often no cost.