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.
So, do you think those are reasonable objections to public health
“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.” ↩