Reasonable Objections to Public Health care insurance

Note: Updated to clarify that I mean health insurance, not health care.

I’ve been chatting with a friend, Caitlin, I met on my Europe about all things political. I’m not really into politics, but I do enjoy informative arguments. Caitlin’s a PoliSci/Environmental Studies major in Canada. So, of course, questions turned to health care. In light of Sarah Palin’s rather ridiculous remark1, Caitlin was hoping I could provide “some more reasonable objections to public healthcare.” Here goes.

So, let’s get the ball rolling on this.

A) Sarah Palin is nuts. All you need to do is watch/read her resignation from a couple months ago.

As for more reasonable objections, here’s what I don’t like about the idea of public health care:

1) How do you provide health care insurance for 300+ millions people? The idea is that by putting everyone under a single health care insurance system, the people as a whole save money. Now, it is a known fact that there are definitive cost advantages to expanding a business; this is called “Economy of Scale.” However, what a lot of people don’t realize (I think) is that Economy of Scales can’t (and don’t) continue to reduce costs. When it starts to cost *more* to provide something (either a service or a good), it’s called Diseconomy of Scale. There are a variety of reasons it starts to cost more, including cost of communication, cost of optimization, slow response times, etc. The point is, there is a magic number where it starts to be detrimental to expand the business. My belief is that having 300+ million people on single health care insurance system would be an administrative nightmare that would cost too much money to manage and would be ineffective.

2) In order for health insurance to work, it has to be positive sum…or at the very least, zero sum. Positive sum means that the aggregate (i.e. everyone covered) gains (money paid into the plan, most likely via taxes) and losses (money paid to the health providers) must be a number greater than zero. Zero sum simply means that gains are exactly equal to the losses. This should probably come as a “no-duh,” but it essentially means that the public health care system needs to be “profitable” (the government would not actually pocket the money, so the profits would most likely be rolled over to the next year or returned to the people in the form of a tax break) or at least break even.

So, under the public health care insurance system, everyone pays a flat rate of X dollars and gets health care insurance. Great. Except for one thing: that’s not the way health care insurance works. Remember, we need at the very least a zero sum system. And if everyone pays in X, they must take out (on average) X (well, actually less than X, but of administrative fees and whatnot). But if that were the case, then why would I bother with health insurance? And that’s the genius of it. Not everyone should pay X. Myself, be a fit young male who doesn’t smoke, eats reasonably well, and works out (on occasion) should probably pay a little bit less than X, perhaps X-1. You, being a fit young female who does smoke should probably pay a little bit more than X, perhaps X+1.

We do this because, on average, you’re statistically more likely to need more medical care than me (due to the smoking). We both get the same access to care, you just have to pay a bit more. And I like this, because I get to pay less.

And this brings me to my third point…

3) Aligning interests. If everyone pays X, no matter what, there is no incentive for people to be healthy! Why would you stop smoking if you know that you can get the same access to care insurance as someone who doesn’t smoke for the same price? Unless you’re super altruistic (which you may be), you probably wouldn’t. Let’s extend this to the rather unfortunate issue of obesity. If I can eat all the junk food I want and in general not take care of my body, but still get the same access to health care insurance and pay the same amount as someone who eats well and exercises often, what incentive is there for me to be healthy (other than my own self interest to be healthy)? There is none.

So what happens? Well, since all the fat people are getting sick and everyone has to pay the same amount, everyone has to put more money into public heath care insurance. In a worse case scenario, this would lead to a positive feedback loop where the healthy people want to “get more for their money” and start using the medical facilities more often. This, of course, throws the system even more out of whack and prices go up even more and the entire universe collapses in on it self….in theory. Not really, but you get the idea.

-30-

So, do you think those are reasonable objections to public health care insurance?


  1. “The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama’s ‘death panel’ so his bureaucrats can decide, based on a subjective judgment of their ‘level of productivity in society,’ whether they are worthy of health care. Such a system is downright evil.” 

11 Replies to “Reasonable Objections to Public Health care insurance

  1. I disagree with you, but that’s what AMERICA is all about; being able to disagree…

    Your “assumption” that all “300+ million” people would be under a single payer plan is ludicrous! There is NOTHING in the reams of paper of the bill indicating that EVERYTHING ELSE GOES AWAY! Please, have you EVER seen ANYTHING truly go away? Corporate THEIVES wouldn’t allow it, after all, how would they get their taxpayer blood money and GOLDEN PARACHUTES???
    As I read further, I will chime in…

  2. First of all, if you enjoy informative arguments so much, how come you ducked out of our drunk driving and self-enforcing protocol discussions? Was it because I had you in the crushing grip of reason and you couldn’t handle the truth? Mwa ha ha.

    Now that I’ve gotten that out of my system, on with the show.

    A) Sarah Palin is nuts, but I don’t think it’s completely out of the question to assume that bureaucrats will get involved in end of life decision-making with a public health care system. And that’s something that is downright scary.

    1) Ronald G puts words in your mouth when he argues against everyone being under a single payer plan, but his point is valid that you’re assuming the nationalization of all health care providers, which is a significant leap.

    I also disagree with the next assertion of this section, that “The idea is… save money”. When did the idea become about saving money? The idea was always that everyone should have health care, not that it would cost less for everyone to have health care. In fact, when everyone gets health care, the idea IS that everyone includes people who can’t pay for it, so those that can pay more, do pay more.

    The last sentence of this section is certainly a valid and compelling point, but you got there through some rather incredible logical leaps that require a great deal of filling in.

    2) You switched in this section from health care to health insurance. I don’t have a problem discussing health insurance, but as these are supposedly objections to public health care, you should probably signal the change.

    Private health insurance does indeed need to be a hugely positive-sum game, otherwise you can’t make a living providing health insurance and the whole industry goes under. But the government doesn’t need to make anything a positive- or even a zero-sum game. Ever. We can just rack up more debt or print more money or, more likely, both. The public health care system does not need to be profitable, period.

    Then, you make two mistakes. First, you move back to discussing health care without showing how it relates to the insurance system you just laid out. Second, you jump to the idea that a “flat tax” will be in play . This appears to me to be another incredible leap (not to mention the fact that you misunderstand the concept of the flat tax), but I could be wrong. I don’t watch much any news, so maybe a flat “x amount of dollars per person” tax has already been proposed to pay for universal health care, but I doubt it. Because we never EVER charge everyone the same amount of dollars. We could theoretically charge people the same percent of their income (which is what is commonly referred to as a flat tax), but never the same amount of money. Because some people couldn’t pay it, and the idea is to get health care to people who CAN’T pay for it.

    Next you just assume the system must be incentivized in the form of lower payments for potentially healthier individuals and higher payments for potentially less healthy individuals. Why must it? Has that legislation been seriously discussed? If so, where?

    3) Now you’re assuming that the system will NOT be incentivized in the form of lower payments for healthier individuals. Where does this assumption come from?

    Granted, you’ve come to this point based on the idea that health care/health insurance needs to be at least a zero-sum game, when it doesn’t. But it is unclear to me how you got so interested in incentives when you’ve left so much else unresolved.

    To be sure, I’m all for incentivizing insurance (car, health, whatever) in the private sector where competition amongst providers ensures that people don’t get forced to live the way their insurance providers think they should (they can always opt out, as well). What I am against is being forced to pay the government for the way I choose to live my life, even if the way I choose to live my life is detrimental to my health. Freedom isn’t freedom unless it includes the freedom to be stupid… right up to the point that the stupidity injures others.

    I’m actually against being forced to pay for anything, ever, but that’s another debate.

    To sum up, I think that you have made at least one reasonable objection to public health care: it certainly would be “an administrative nightmare that would cost too much money to manage and would be ineffective”.

    My objection to public health care is that those with resources are FORCED to pay for those without. I object to the use of aggressive force in all its incarnations. It’s such a simple principle that has so many applications. God, I love being a libertarian! Please don’t misunderstand me: I’m all in favor of loving your neighbor, and I know that might sometimes mean paying for his needs (like the Good Samaritan). But if you’re forced to do it, it changes from “loving your neighbor” to “paying for your neighbor’s health care so as to avoid fines, incarceration, and potentially death”. That’s my objection to health care. Do you find it reasonable, Mr. Ferguson?

    1. Yes, I realize in retrospect that I did confuse health care with health insurance quite a bit. I think I really meant insurance for the entire thing, and I’ve gone back and corrected that in the post.

      As for my assumption about a flat rate, yes, that’s mostly likely incorrect. In fact, I’m honestly not entirely sure how this entire thing is going to be funded at all. I’m going to assume that it will be funded using tax dollars, and I’ll be paying that tax whether I’m on government insurance or not. Also, I never used the word “flat tax,” I said “flat rate.”

      “Next you just assume the system must be incentivized in the form of lower payments for potentially healthier individuals and higher payments for potentially less healthy individuals. Why must it?” On average, healthier people will need less care, which means that health insurance will pay out less. Less money being paid out (in claims) should translate to less money being in (in premiums).

      “Has that legislation been seriously discussed? If so, where?” Not that I’m aware of, but I don’t ‘follow politics.’ (I’ll keep my eye on them and speak up when I disagree, but I’m not going to get intimately involved with every aspect of politics…I just don’t have the time or the inclination)

      In my third point, I was giving an example of what happens when there is no incentive to point out why having an incentive is important. Sorry if I didn’t make that clear.

      “Freedom isn?t freedom unless it includes the freedom to be stupid? right up to the point that the stupidity injures others.” I’m going to say something that will either make me look very smart of very stupid, and I’m not quite sure yet: You can never have 100% freedom. You never will. Nor should you. You may think that you can have 100% freedom, but it can’t be obtained.

      “I?m all in favor of loving your neighbor, and I know that might sometimes mean paying for his needs (like the Good Samaritan). But if you?re forced to do it, it changes from ?loving your neighbor? to ?paying for your neighbor?s health care so as to avoid fines, incarceration, and potentially death?. That?s my objection to health care. Do you find it reasonable, Mr. Ferguson?” Mostly yes.

      1. I’m responding to your response paragraph by paragraph, using numbers.

        1. Cool.

        2. Fair enough.

        3. You use the word “should”. Why does that translate into “will” or “will not”, as assumed in your post? Additionally, you never address the notion that public health insurance can’t and won’t be a zero-sum game, which wrecks your entire argument.

        4. Good, me either.

        5. OK, but to argue for or against incentivization in public health care, you still have to assume that public health care either will be incentivized or that it won’t, which hasn’t been decided. So while that can be a reasonable objection to one possible way of providing public health insurance, it can’t be a reasonable objection to public health care OR insurance in and of themselves.

        6. I’m not sure I know what you mean by “100% freedom”, but I’ll assume you mean freedom to do literally anything within the confines of physics. That’s not what I argue for, which is why I use the qualifier, “right up to the point that the stupidity injures others”. I should have said “right up to the point where the stupidity includes aggression against others”. Either way, you misunderstand me, so please clarify… unless I misunderstand you. If my definition of freedom to be stupid is covered by your definition of “100% freedom”, then why shouldn’t that freedom exist? And why can’t it?

        7. Great. Why don’t you apply it to everything else, as I do?

        1. Using your previous numbering system…

          3) “Should” was a qualifier. It’s a habit I think I picked up from University. I don’t have empirical proof that it will happen, but based on what I know and what I believe, I have every reason to believe that less money being paid out (in claims) will translate to less money being in (in premiums).

          6) I was taking the definition of freedom to the extreme. My point about 100% freedom was that there are always things that will prohibit you from doing somethine. These “things” could be physics, religion, morality, other people, or even yourself.

          7) Health insurance is not a public good, as defined by economics. In fact, it’s the direct opposite: it’s a private good. It’s both rivalrous (your consumption affects my ability to consume) and it’s excludable (it is possible to prevent people who have not paid for it from enjoying its benefits). Becuase it is not a public good and it is a private good, I do not believe that the government should be involved.

          However, national defense is a public good. Especially (in my mind) because it’s non-exclusive. So I think we should all pay for it. How much we should pay for it and what level of coverage we want is another issue.

          1. 6. Physics prohibits you from doing things like jumping to the moon. Other people might physically restrain you from doing something, but that’s rare. Religion, and morality have nothing to do with freedom. They simply inform decisions. When you choose to follow a set of religious practices, you don’t stop being free. Religion and morality do not “prohibit” you from doing anything. You just make a decision to live a certain way. You may stop at any time. Your freedom is intact. Not so in the scenario we’ve been discussing. Government restricts freedom (through taxation and the like), rather than just calling on people to make good choices. That’s why I have a problem with it.

            7. You’re implying that you believe that the government should only pay for public goods (goods that are both rivalrous and and excludable), which I happen to know for a fact is false (you like NASA). Either you’re implying something that you don’t mean, or you’re being deliberately disingenuous.

          2. 7) NASA could be considered my guilty pleasure. I know it’s wrong but I fund it anyway.

            I may also make a very limited argument that parts of what NASA do are really national defense issues (obviously not human space flight). But rockets and satellites and such. And in fact, the Air Force, et al., does pay for lots of stuff to be developed and launched.

  3. I think the idea that a flat tax is going to be used to pay for health care is not the right idea.

    Currently, the health care bill proposes to pay for nearly half of the $1 trillion in costs by the top 1.2% of the wealth (source), those making over $350,000 per year.

    Sounds very progressive if you ask me.

    1. @Mike

      Yea, that sounds very progressive. And I disagree with it completely. Why should someone proven to be successful in life, someone whom I’m going to assume is making good decisions (such as getting an education, not going into debt unnecessarily, saving money, etc,) have to bail out someone who isn’t making good decisions? This isn’t about luck of the draw, this is about making good life choices early on.

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