{"id":328006,"date":"2010-02-16T11:11:55","date_gmt":"2010-02-16T16:11:55","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.36017"},"modified":"2010-02-16T11:17:40","modified_gmt":"2010-02-16T16:17:40","slug":"the-limited-benefits-of-first-dollar-health-care-coverage","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/328006","title":{"rendered":"The Limited Benefits of First Dollar Health Care Coverage"},"content":{"rendered":"

I hadn’t realized, when I wrote yesterday’s post, how many people are emotionally invested in first dollar coverage.  To the extent that we’re worried about health insurance coverage, I thought that most of us were agreed that we were talking about the benefits of catastrophic coverage, not this insane scheme we have in the US where catastrophic insurance for the kinds of risks most people can’t finance comes bundled with first-dollar coverage for ordinary treatment of the sort that most people used to pay for out of pocket.<\/p>\n

Color me chastened.  So let me expressly stake out some more
\ncontroversial ground on health care policy:  for most people,
\nfirst-dollar coverage is probably not a significant driver of health. 
\nIf most people paid for normal care for everyday ailments out of
\npocket, I don’t think there would be much effect on aggregate national
\nhealth.  What benefit there is from first-dollar coverage comes from
\ncovering low-income people with chronic conditions, at least as I
\nunderstand the literature.  <\/p>\n

Which is not, to me, all that
\nsurprising.  Insulin and checking blood sugar saves the lives of
\ndiabetics, and as a result, most people will find the money they need
\nto pay for supplies, so that compliance problems are driven more by the
\npain-in-the-ass factor than the price.  But if you’re severely income
\nconstrained, you’ll chose eating, rent, or shoes over testing strips. 
\nI don’t think it’s an accident that natural experiments involving
\nMedicaid expansions or terminations tend to find relatively large
\neffects.<\/p>\n

What first dollar coverage for the affluent does is
\ndrive costs.  Take the recent kerfuffle over mammograms. Mammograms are
\nvery uncomfortable, and of course, you don’t want to shoot any more
\nradiation into yourself than necessary, so women should have been
\nexcited by the news that you probably don’t need one until you’re
\nfifty.  Instead they were outraged.  Since this was about spending
\nother peoples’ money, naturally we want the right to spend as much of
\nit as possible, even if it’s not very useful.  <\/p>\n

Now, maybe the
\nrecommendations were wrong–but if that’s the case, in a world without
\nample first-dollar coverage, you’d simply discuss that with your
\ndoctor, not write the damn newspaper.  <\/p>\n

This is hardly the only
\nexample.  I doubt it’s coincidental that the health care markets where
\npeople pay their own way are the ones where there are more real efforts
\nat cost control, like plastic surgery, fertility, and vision care.  (I
\nrecently heard a local fertility clinic on the radio offering a
\nmoney-back guarantee if they take your case!)  With all the layers in
\nbetween consumers and the providers in the ordinary market, the natural
\nbattle between consumers seeking better value and producers seeking
\nhigher prices is terribly distorted in ways that don’t make us
\nhealthier.<\/p>\n

I think that the argument for catastrophic coverage
\nis much stronger for a variety of reasons, which is why I’d like to see
\nthe government pick up the tab for expenses that total more than 15% or
\n20% of annual income.  There’s certainly also a case for providing
\nbasic care and treatment for certain chronic conditions to the poor,
\nthough even in that case, I’d like to see us at least try to handle the
\nproblem with a combination of catastrophic insurance, and better income
\nsupports.  But if that failed–and it might–I’d absolutely support
\npublic provisions of those sorts of treatments to lower income
\nAmericans, along with no-brainers like prenatal and infant care.<\/p>\n

But
\nfor the vast swathes of the middle classes? No, I really don’t think
\nthat having extraordinarily generous benefits that insulate them from
\nalmost all the cost of their medical treatments is improving either our
\nhealth, or the nation’s financial condition. In fact, I think it’s the
\nvery reason that ordinary treatments are so inflated that they’ve
\nbecome “unaffordable”.  Call me cynical, or an ideologue.  But I think
\nwe’d be better off with markets in every day care, and insurance for
\nthe catastrophic stuff that individuals really can’t afford.<\/p>\n

I
\nshould note, however, that very smart health care economists like David
\nCutler disagree with me.  Cutler notes that compliance rates with many
\nchronic diseases are very low.  For example, majority of people given
\nhypertension drugs discontinue them within a year, because the drugs
\nhave side effects, and the hypertension doesn’t . . . until you have a
\nstroke.  His reasonable point is that with compliance so low already,
\nwe should be trying to eliminate any possible difficulties.  This is
\nworth considering, but I’m not sure that this is necessarily the best
\nway to achieve these goals, nor the most cost effective one.  What
\nwould happen if we took all the money we’re plowing into the middle
\nclass, and invested heavily in a visting nurse’s service?  I know that
\nI was a lot more religious about monitoring my peak flows when the nice
\nnurse from the insurance company called to badger me.

\n

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\n\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

I hadn’t realized, when I wrote yesterday’s post, how many people are emotionally invested in first dollar coverage.  To the extent that we’re worried about health insurance coverage, I thought that most of us were agreed that we were talking about the benefits of catastrophic coverage, not this insane scheme we have in the US […]<\/p>\n","protected":false},"author":80,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-328006","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/328006","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/80"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=328006"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/328006\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=328006"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=328006"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=328006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}