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Davis, California

Tuesday, November 30, 2021

The Reckoning

Editor’s note: Rather than taking potshots at each other in separate columns, this week, Rob and KC decided to debate mano-a-mano.

 

Olson: All right Cody, I’m tired of the little jabs back and forth, while we dance around the ring. It’s go time.

A few months ago, you wrote a column in which a central argument for universal health care was the oft-cited figure of 47 million Americans without health care in the present system. You never bother to explain, however, just who is in this category.

According to the U.S. Census Bureau, 37 percent of those 47 million have incomes of more than $50,000 a year, with 19 percent having incomes over $75,000 – not wealthy by any means, but certainly enough to purchase health insurance before the taxpayer foots the bill, especially in cheaper parts of the country. A third of those without health insurance could be enrolled in existing government medical programs, but they, too, choose not to do so. 20 percent aren’t even citizens, apparently with some actually illegal immigrants.

Worse, you never admit that there is a difference between having health insurance and having access to medical treatment. Many of the above people no doubt do receive medical treatment, but for whatever reason, they decide not to buy health insurance, and they instead just pay for care directly.

And for that choice, they become a statistic in countless arguments that “government knows best,” and if people disagree, “the suffering and death of their fellow Americans just doesn’t trouble them all that much,” as you so dramatically charged in your column.

Cody: Go time indeed. I’ll skip the pleasantries (not that there would be many) and jump right in.

People making under $75,000 a year would actually benefit from having socialized health insurance; under a progressive system, if their taxes went up at all, they would go up by less than what they currently pay. Businesses and wealthy households would front the vast majority of any new taxes.

It’s important to remember that the point of insurance is to pool risk, thereby reducing the likelihood of catastrophic individual costs, which fall most heavily on the poor. So when healthy and wealthy people exclude themselves from that pool, it drives up the cost of insurance for everyone else. This puts insurance out of reach for many people; the average yearly premium to cover a family of four in 2005 was $11,500, a full 24 percent of the median income for a family of four.

And while there is a distinction between being uninsured and unable to access care in theory, in practice, that doesn’t play out. According to the Kaiser Commission on Medicaid and the Uninsured, 47 percent of those without insurance in 2003 postponed seeking medical care, 35 percent simply didn’t get care and a full 42 percent had no regular source of care, all due to costs. And going to the ER for “access”, as most uninsured people do, costs 4.6 times more on average than an office visit and hardly equates to the sustained health benefits of the regular, preventative and therapeutic treatment that socialized health insurance would provide.

Olson: Right, there are people who are not in the statistics I named above who cannot afford health insurance, and that’s not acceptable. But the major reason health insurance has gotten so expensive is not because of the relatively minor effect of some healthy or wealthy people not buying in, but instead because the basic laws of economics are so often ignored.

When health insurance is provided by employers and the government with little or no co-pay, patients are inclined to get any and all services that have a slight chance of helping. I’d wager most UC Davis students have had health insurance all their lives, and yet they virtually never ask what the tests and procedures they are getting actually cost. Why should they? It makes no difference to them.

When these costs are hidden, demand explodes. But someone still has to pay, and it ends up being principally the insurance companies.

To simply cover expenses, these companies then increase the cost of their plans, which makes it more expensive for everyone: individuals, businesses and the government. This is where the poor are really hit hard. The solution to cheaper and more accessible health insurance is for patients to actually care how much something costs, to avoid artificially inflating the demand.

Cody: While this is a fine supply and demand argument to make about hair cuts and ice cream cones, when we’re talking about people’s health, I don’t think it’s a fair discussion. The point here is not to reduce the “artificially inflated” demand for care but to make sure we meet people’s needs.

Now, exposing people to the costs of health care does reduce how much care they receive, on this we agree; the uninsured consume 83 percent less care annually than the insured. But while the obtuse economist might declare that the uninsured therefore have the true demand for health care and that the insured “artificially inflate” their demand, he would be mistaken. Instead, what this figure means is that when people are exposed to costs, they forgo needed medical care. This results in more advanced stages of disease, mortality rates 25 percent higher than the insured and a higher imposed cost on society as a whole.

That being said, reducing the demand for care associated with preventable health problems is something everyone (except insurance companies, which make billions off them) can get behind. Triple bypass, type II diabetes, substance abuse, lung cancer, etc. are all huge burdens on the society, and under a universal health care system emphasizing preventative and therapeutic care, they would all be reduced due to the incentives to keep the overall costs of the program down.

Olson: So it’s not that the laws of supply and demand don’t apply to health care, it’s that you think they aren’t “fair.” This is a typical weakness in liberalism – you oppose something not on factual grounds but because it personally offends you.

Yet economic principles do not differentiate according to your feelings, Cody. The fact remains that you just “feel” that it’s better to have a big soft fuzzy government fix health care, regardless of whether expenses skyrocket. Your disregard for the immutable laws of economics creates that artificial inflation you so callously dismiss, and that’s the real attack on the poor.

Cody: You’re right, Rob, but I think applying free market capitalism to health care unfair only because of its results. This is indeed a matter of principle versus outcome, but I think it’s you who’s confused your priorities. Rather than accept what works in other industrialized nations, you cling to free market ideology, convinced its principles will see us through.

One, if not the, essential market principle is failure; if someone doesn’t do “X,” they don’t get “Y.” But when “Y” is health, the market has declared a person too incompetent to live comfortably, if at all, in their own body. And that’s not a result I’m willing to accept.

Olson: As far as the follies of other industrialized nations with universal health care are concerned, they are too numerous to address in the space we have left. But your last point – that some people are left behind by the market – is not entirely accurate. The market has been thrown out of order by disguising costs with inefficient third parties. An actual free market has not left these people behind, since an actual free market is not what we have.

To get more inexpensive health care and to get more widespread preventative medicine, we must move away from government intervention, not toward it. A healthy population comes from a healthy free market.

Cody: We’ve heard this argument before. We heard it about California’s energy markets (PG&E and rolling black outs), accounting (Arthur Anderson) and now the finance industry (final list pending). It’s not shocking that health care gets the same treatment.

What is shocking is the notion that greed will produce social, political and economic justice; greed seems preoccupied with producing collateralized debt obligations and labor arbitrage instead. So forgive me if I’d rather that the health of the American people be entrusted to a program which answers not to the almighty dollar but to the very people it is charged to serve.

 

ROB OLSON and K.C. CODY don’t agree on much, but they do agree that this discussion was incomplete. To continue it, e-mail them at rwolson@ucdavis.edu and kccody@ucdavis.edu.XXX

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