Thursday, February 28, 2008

Possible Turning Point

A recent ruling in California on rescinding health insurance will hopefully have a industry wide impact on the way health insurance cases are managed. As the article notes the woman was diagnosed with breast cancer and was undergoing treatment for it. Midway through treatment, the company, Health Net Inc., canceled her policy leaving her with hundreds of thousands of dollars in debt. The reason given was that there was some weight discrepancies on her application and possibly missing information about a heart condition. This type of health care is deplorable and just another example of the dangers of for-profit health care.

The current system has Americans paying the most per capita for health care by a wide margin. (see table below). This massive discrepancy between what is spent in the U.S. and the level of health that is attained is a fundamental contradiction of our system. The fact that 50 million Americans go without health insurance (which often means going without health care) helped to increase this discrepancy. When people without insurance go for care they pay up to four times as much as those with insurance.


Administrative costs are also a significant reason for this vast discrepancy in spending. The bloated insurance company system makes health care less efficient as opposed to the "common sense" notions that are typically expressed around issues of public versus private. Using simplistic theories from economics may give particular policy prescriptions, but the empirical data often indicates something much different.

Many recent polls indicate contradictory factors in people's perceptions of health care. While approximately two-thirds of Americans support the idea that the government is responsible for providing health care to everyone, only forty percent would like to see the system changed to a single payer system.

The thing that I fail to understand is how Americans don't make the connection between the per capita spending and the cost of a single payer system. When we are paying significantly more for health care and receiving less benefits, it is hard to justify the current system. Due to the cultural fear of taxes present in the U.S., it is difficult to imagine an increase in taxes being a possible method of funding health care. It must shown that an increase in taxes would actually save Americans money. What they pay to insurers as well as the decreased direct pay that they receive due to the cost of company provided health care likely exceeds the tax increases that would be required to fund this system. Overall the expenditures of Americans on health care would decrease under a single payer system for a variety of factors including the ones mentioned above, but also other factors (ability to practice preventative medicine, decreased cost for prescription drugs, and increased risk sharing to name a few).

While the road to a single-payer system is neither simple or clear, it stands as the most likely and successful measure. While many countries are repealing aspects of their health care system, it is largely at the behest of those who stand to make profit. Those who require health care are often the first to decry these cut-backs. Though a single-payer health system would impose problems of its own, it is hard to imagine that it could be anywhere near as bad as the current system for the fifty million Americans without insurance and the tens of millions who are underinsured or likely to be dropped if they do get sick.

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