Home > duty, economics, health > >Responsibility and costs for healthcare

>Responsibility and costs for healthcare

> There is much in the news about healthcare due to the current political tinkerings in the US. I have my ideas about structuring a health system, somewhat based on my experience and what I have learnt about the Singaporean system.

There are probably several reasons why costs are so high in the US (and elsewhere). One significant reason is litigation. Until the legislators are willing to cap “compensation” payable then things are unlikely to get cheaper. The argument that someone is entitled to such extreme amounts of money because he suffered harm neglects that these costs will be recovered from future patients. Indemnity insurance in Western, non-US health is significantly less. Consider perhaps $NZ 1000–2000 per annum in New Zealand to > $US 100,000 in the United States.

This aside, if one is to judge healthcare proposals there are several issues around health and economics that need consideration.

Who pays?

I care little if you wish to spend your money on Kopi Luwak? I am content with the brew at the local cafe, or even instant coffee. But I care a lot if you spend my money on such. It doesn’t matter if nationalising health is cost neutral. If that cost is now paid by government and not individuals, then the government obtains that money from individuals via tax. Thus I am forced to cover your health costs, even if I made health choices intended to save me money long term. But the government payment of costs is even more complicated. There is no fixed amount of money. Individual payments to healthcare have different effects on the economy to government payments. Government removal of money from the economy decreases productivity; thus even a cost neutral program will leave the economy poorer in production, thus individuals worse off.

Who gets sick?

It is said that 75% of health expenditure is spent in the last 5 years of people’s lives. Now that is not every person, but it is a lot of them. We don’t know when we are going to die, and the increased medicalisation of our lives means that much is spent as we age and become increasingly infirm and near the end of our life.

This may be money well spent. It may maintain people’s independence. And if it is your own money then do as you will. But as one becomes increasingly unwell he should be assessing his life and making plans for when he dies. And increasing medical possibilities potentially means increased costs. Yes you can spend the last 15 days of your life half conscious hooked up to a respirator in the Intensive Therapy Unit (ITU) with metastatic cancer that has failed 3 previous therapies, but I am not certain this is a gain over symptom control at home or in a hospice. Don’t get me wrong, these things can be hard to predict, and ITU is often appropriate, even if ultimately unsuccessful. And these are decisions for individuals, and we all weigh different options differently. But people need to think about their own mortality.

How many people have high costs?

Following on from costs occurring at the end of life, it needs to be remembered that this is a cost that a high proportion of people will face. Rare expensive events can be covered by spreading the risk, that is how insurance works. But if events become common then every person has to cover their own cost. If we are spending $400,000 over the final years of life for say every second person (the other dying in their sleep after a long healthy life incurring minimal costs), that means we need to collect ~$200,000 per person to cover end of life expenses. People in countries with socialised medicine talk of how they have paid their taxes all their life, and this is true (though some goes to education and roading, and some is frivolously wasted), but I think they are unaware of how quickly the tax that they have paid is used up.

Personal responsibility

Our own health should be something we take responsibility for. It is true that many things happen that we have no control over: accidents, infections, diseases, poor genetics. But much is known about healthy lifestyle. Debates around increased risks of the order of 10–100% are difficult to confirm. But it is clear, for example, that smoking tobacco, morbid obesity, and base jumping do not usually improve one’s health. Healthcare provision should take into account personal responsibility. (Though I think this intrinsically, I am aware that it can become politicised with claims that “politically incorrect behaviour” is “unhealthy”).

The problem with this is people often don’t take responsibility. And when they subsequently get unwell it seems unkind to leave them to suffer the consequences of their decision. Mercy is toward the undeserving.

Isn’t health provision caring for those who are suffering?

Yes, and no. It is true that we should think of caring for those who suffer, at least from a Christian perspective. But previously this has been about providing food and shelter, giving clothes, comforting people in pain. This is something that most individuals can give to another. But modern health care is more extensive. We can diagnose and treat many illnesses, often at significant monetary cost. It is not something that most individuals can do, and it is hard for many individuals to cover the cost of doing so for others. I applaud hospital and charity work in the third world. I think these are excellent endeavours, frequently they do much good for minimal cost. But I am cautious when people say that everyone is entitled to healthcare irrespective of cost. Someone does have to pay and there are competing claims to money. The statement that no cost is too great for good health is just not true.

Health insurance?

People need to rethink this. Healthcare costs are somewhat foreseeable. We can budget for routine doctor visits, prescription costs, spectacles, regular dental care. It should be possible to assess approximately how often people and families need to attend to their health, and budget for this, with a moderate margin. Insurance is not about these costs.

You don’t get insurance to cover the cost of your mortgage each month. If you did, the company would pay your mortgage, and your premiums would cover that plus an overhead. It would be more expensive. Health insurance should be insurance. It is to cover that which you do not expect to use it for. Insurance should have a high excess (save up the excess in discounted premiums and keep it in a bank account) and cover rare (and expensive) events that do not happen to most people. That way you have cheap insurance as an insurance, and you don’t pay overheads for costs that you know are going to be regular.

Categories: duty, economics, health
  1. 2009 August 24 at 16:22

    Overall I would say this set of observations is a fairly clear listing of critical points. I can see where they will rub some the wrong way, but I think that is unavoidable.
    Here are the places where I would want clarification:

    Individual payments to healthcare have different effects on the economy to government payments. Government removal of money from the economy decreases productivity; thus even a cost neutral program will leave the economy poorer in production, thus individuals worse off.

    This presupposes a particular economic theory, I’m sure, but I am not educated enough to apply it. When reading statements like this, I wonder exactly what kind of economic activity the writer is privileging and why; they seem to imply that money is either coming from nowhere or going to nowhere. The money in this situation is neither being created nor destroyed, thus it is benefiting some part of the economy. Why is government spending on health care worse than individual spending, from a macroeconomic standpoint?
    Vox’s post on Medicaid fraud is another example. Again, the money supply is being conserved, so what is the problem from a macroeconomic standpoint?

    (Though I think this intrinsically, I am aware that it can become politicised with claims that “politically incorrect behaviour” is “unhealthy”).

    This is too vague. It forces me to think of personal anecdotes where my doctors have digressed from professional medical opinions into amateur psychology and amateur social work. Perhaps this is your intent, but some people assign doctors so much authority that they will never get the point from a vague reference.

    The problem with this is people often don’t take responsibility. And when they subsequently get unwell it seems unkind to leave them to suffer the consequences of their decision. Mercy is toward the undeserving.

    I may be delusional, but this seems to have a deeper meaning. I will have to think about it more.
    For a Christian, your sixth (next to last) point seems crucial. My answer is to look to the gospels. Jesus spent his time helping the individuals that he came in contact with directly. Sometimes he helped them with miraculous healing and forgiveness, and sometimes with teaching or rebukes. Nowhere does he suggest that the Roman or Jewish governments need to start doing this work for Him. So, for me, the question of what the government should do is pragmatic and has nothing to do with the compassion of any individual living under the government.

  2. 2009 August 24 at 20:17

    People in countries with socialised medicine talk of how they have paid their taxes all their life, and this is true (though some goes to education and roading, and some is frivolously wasted), but I think they are unaware of how quickly the tax that they have paid is used up.
    I hear this crap all the time in support of making my generation (I am 26) pay for the Social Security of the boomers. The argument is that they have paid taxes and thus “society” has an obligation to them.
    Rubbish.
    “Society” is just a strawman to avoid dealing with the fact that the system has been totally borked. Once you peel away the “society” and look at it as individuals and factions, the human picture comes into focus and it is no longer one nebulous group, but a minority of society that is increasingly burdened.

  3. 2009 August 24 at 21:07

    It is a delusion for anyone to believe that a society owes them anything other than what is specified by law, and in the case of the US that starts with our state and national constitutions.

  4. 2009 August 25 at 11:45

    Individual payments to healthcare have different effects on the economy to government payments. Government removal of money from the economy decreases productivity; thus even a cost neutral program will leave the economy poorer in production, thus individuals worse off.
    Yes it is true these presupposes my economic theory. Wealth (as in goods) is created through productivity. If money is removed from productive resources to less productive resources then wealth will decrease, even if the money spent is the same. This is how I see things, I concede it is a premise of mine, and do not intend to defend it here, but your questioning of me is appropriate. Thus I think that money will be taken by the government and spent, but that in doing so it will remove capital for productivity. The unproductive will spend money on health because of necessity and thus less money on frivolous spending, but money taken from the productive will limit productivity, at least that is how I see it. I think if the government taxed less, it would have more money anyway, they just would have to wait a few years for the economy to expand. I think it really matters who and how money is spent. In general government is less productive with cash.

  5. 2009 August 25 at 12:10

    Debates around increased risks of the order of 10–100% are difficult to confirm. But it is clear, for example, that smoking tobacco, morbid obesity, and base jumping do not usually improve one’s health. Healthcare provision should take into account personal responsibility. (Though I think this intrinsically, I am aware that it can become politicised with claims that “politically incorrect behaviour” is “unhealthy”).
    My parenthetical statement was meant to qualify the prior statement.
    Let’s say that healthcare provision takes into account personal responsibility as related to tobacco. It may say that smokers cannot receive state sponsored radiotherapy if they develop lung cancer, or coronary bipasses if they get heart disease. Or if one pays into healthcare it may charge smokers more to offset costs. This may be reasonable because the case for smoking causing lung cancer is strong, and the risk is high (about 14 ×).
    With smaller risks of the order of 10–100% higher than normal (ie. risk 1.1 to 2 ×) the strength of association is usually less clear, and the risk for any individual is minor. If we attach healthcare to this type of responsibility, we will have a heap of studies coming out showing that salt is bad, or trans fat in donuts, or gambling, or living by power lines, or voting conservative, or not driving a Prius, or not cycling to work, or whatever the current thinking on “right” behaviour is. This is because statistics can more easily be manipulated to show minor increases in risk. (Some of these activities may actually be risky)
    I am concerned that unhealthy living is considered “sinful” rather than what is sin. So I am aware that responsible living, while important, can be manipulated.
    If we insist on real risks that are reasonable on an individual level, the responsible living concept is less likely to be abused.
    I am not certain I have fully made myself clear, hopefully you get the gist.

  6. 2009 August 25 at 12:19

    Hi Mike, by saying this is true about tax, I am saying that this is what was promised, or commenting where the money is currently spent. I am not suggesting I approve (or don’t approve of it). But it is worth making the point that even if one accepts this argument I think people have probably paid in much less than they think. I haven’t done the figures, but when we consider that people work from say 20 to 65 and then live another 20 years!
    Perhaps the potential investment is more than I realise (with compound interest), but the cost of retirement benefits and healthcare is also very high.
    This is apart from the fact that the money was never invested by government, just used on their pet projects.

  7. 2009 August 25 at 16:17

    “This is because statistics can more easily be manipulated to show minor increases in risk. (Some of these activities may actually be risky)”
    This clarifies it for me, I think. You don’t want personal responsibility to be used as the justification for idealistic social engineering programs, as is now common in the “climate change” arguments.
    This is part of a general problem in modern society, insofar as some people take advantage of popular ignorance and superstition regarding statistical risk. To that extent, it can be resolved by forcing public health officials to justify their technical arguments to a panel of impartial experts, or by forcing them to provide examples of practical benefits to a panel of average citizens.
    That is different from the kind of moralizing I am mostly concerned about, in which doctors utilize their specialized training to claim a broad authority over the life of the patient, who is presumed to be incompetent, delusional, lazy, and illiterate.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: