Susan Sered/Rushika Fernandopulle: Uninsured in America

Malcolm Gladwell wrote a very good piece on the health care system in the U.S. It is called "The Moral-Hazard Myth," and appeared in the Aug. 29 issue of The New Yorker. Moral hazard is an economics concept, mostly used in regard to insurance. The argument is that if one is insured against costs or adverse consequences of some act, one has no interest in preventing the act from happening. For instance, if you're insured against your house burning down, why bother to work to keep a fire from starting? Moral hazard argues that insurance causes fires. With regard to health, moral hazard argues that if one has insurance, one will use health care resources without any regard to cost. Hence, with more/better insurance, costs will rise as resources are overused. Hence, a way to limit health care costs is to transfer costs back to the "insured" through deductibles, co-payments, etc. Of course, the only way to eliminate moral hazard from health care is to eliminate insurance.

Economic dogma says that if everyone paid for their own health care, they'd spend their money optimally, buying only what services they need, and skipping any services they don't need. That this is a myth isn't a big surprise. One need only fill in a few blanks -- little things that the theory assumes but doesn't spell out. For starters, patients would have to understand medicine better than their doctors do. Otherwise, how can you know when you need a procedure and when you don't? Second, how do you know when one doctor is competent enough and another isn't? Another important factor is that different people value money differently, mostly because some have more than others. What one pays for health care comes out of some other budget (assuming the money exists at all). It's much harder to rationally spend food or rent money than it is to spend money that otherwise might go to a second Porsche. So even as a theory moral hazard doesn't provide much insight into health care economics.

The data is as clear as the theory is dubious. People without health insurance don't get adequate health care. They put it off until it becomes unavoidable, and often too late. Gladwell's first example is dental care, and the stories are harrowing. I mentioned this story to a periodontist I was seeing, and he told me: "Tell me about it. I've seen people wait so long I can't help them. I tell them they have to go to the hospital, and if they don't they could be dead in two weeks."

I want to quote two paragraphs from Gladwell's piece. The first summarizes what happens to uninsured people in America. The second is the single best description of America's "system" I've read.

The U.S. health-care system, according to Uninsured in America, has created a group of people who increasingly look different from others and suffer in ways that others do not. The leading cause of personal bankruptcy in the United States is unpaid medical bills. Half of the uninsured owe money to hospitals, and a third are being pursued by collection agencies. Children without health insurance are less likely to receive medical attention for serious injuries, for recurrent ear infections, or for asthma. Lung-cancer patienrs without insurance are less likely to receive surgery, chemotherapy, or radiation treatment. Heart-attack victims without health insurance are less likely to receive angioplasty. People with pneumonia who don't have health insurance are less likely to receive X rays or consultations. The death rate in any given year for someone without health insurance is twenty-five per cent higher than for someone with insurance. Because the uninsured are sicker than the rest of us, they can't get better jobs, and because they can't get better jobs they can't afford health insurance, and because they can't afford health insurance they get even sicker. John, the manager of a bar in Idaho, tells Sered and Fernandopulle that as a result of various workplace injuries over the years he takes eight ibuprofen, waits two hours, then takes eight more--and tries to cadge as much prescription pain medication as he can from friends. "There are times when I should've gone to the doctor, but I couldn't afford to go because I don't have insurance," he says. "Like when my back messed up, I should've gone. If I had insurance, I would've went, because I know I could get treatment, but when you can't afford it you don't go. Because the harder the hole you get into in terms of bills, then you'll never get out. So you just say, 'I can deal with the pain.'"

One of the great mysteries of political life in the United States is why Americans are so devoted to their health-care system. Six times in the past century -- during the First World War, during the Depression, during the Truman and Johnson Administrations, in the Senate in the nineteen-seventies, and during the Clinton years -- efforts have been made to introduce some kind of universal health insurance, and each time the efforts have been rejected. Instead, the United States has opted for a makeshift system of increasing complexity and dysfunction. Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world's median of $2,193; the extra spending comes to hundreds of billions of dollars a year. What does that extra spending buy us? Americans have fewer doctors per capita than most Western countries. We go to the doctor less than people in other Western countries. We get admitted to the hospital less frequently than people in other Western countries. We are less satisfied with our health care than our counterparts in other countries. American life expectancy is lower than the Western average. Childhood-immunization rates in the United States are lower than average. Infant-mortality rates are in the nineteenth percentile of industrialized nations. Doctors here perform more high-end medical procedures, such as coronary angioplasties, than in other countries, but most of the wealthier Western countries have more CT scanners than the United States does, and Switzerland, Japan, Austria, and Finland have more MRI machines per capita. Nor is our system more efficient. The United States spends more than a thousand dollars per capita per year -- or close to four hundred billion dollars -- on health-care-related paperwork and administration, whereas Canada, for example, spends only about three hundred dollars per capita. And, of course, every other country in the industrialized world insures all its citizens; despite those extra hundreds of billions of dollars we spend each year, we leave forty-five million people without any insurance. A country that displays an almost ruthless commitment to efficiency and performance in every aspect of its economy -- a country that switched to Japanese cars the moment they were more reliable, and to Chinese T-shirts the moment they were five cents cheaper -- has loyally stuck with a health-care system that leaves its citizenry pulling out their teeth with pliers.

In the last week most of us have discovered that New Orleans was a disaster waiting to happen. Even those of us who knew that much now know it in ways that were inconceivable before the fact. While the topography was critical in New Orleans, the region's poverty and its unrepresentative, uncaring government has also been exposed. The area is quickly becoming a public health disaster as well as a physical and economic wreck. The immediate response will be to suspend the rules: to provide emergency health care support to victims of the storm regardless of ability to pay. But the real problem goes a lot deeper and is much broader. The real moral hazard would be if the only way to get quality health care to poor people is in the wake of a hurricane.

posted 2005-09-07