Monday, July 09, 2007

Poof! Goes Health Insurance

Equality through system failure is the future of health-care insurance foretold by Stephen Cecchetti, professor of global finance at Brandeis. If he's right, medical technology and related economics will force a single-payer system.

Here, I have had my laments. There's the mug 'em, drug 'em and empty their pockets health-care and insurance we have, which is the world's most expensive per capita, while our longevity and general health are well down the list. Then for the recent first step at universal insurance in Massachusetts, there's a strong likelihood that many employers will simply shift any financial burden back on workers by trimming wage increase and benefits at least as much as their minimum payments into the fund.

Well, Cecchetti is the former director of research and the New York Federal Reserve Bank. He has the long view and the numbers to support it.

He concurs in the lack of efficacy in our health-care delivery:

The US spends nearly 15½% percent of our GDP on medical care, roughly 50% more than countries like France, Germany and the Netherlands. And, as measured by life expectancy and infant mortality, Americans’ health outcomes are worse than those in much of the industrialised world. Something has to change. But change is politically and socially difficult, so in designing the new system we should make changes that are likely to last.

Yet, he has hopes and expectations based on scientific and cultural grounds. For science, he see genetic advances as busting the consumer insurance robbery disguised as free-market economics. He contends:

  • We're not far from inexpensive tests that will accurately forecast proclivity to disease.
  • Those likely to remain healthy will not buy expensive insurance.
  • Private insurance companies won't mess with the others.
  • There'll be no choice but for government to step in.

As he writes, "(w)hen either the insurer or the insured can forecast future events, and accurately distinguish one person from another, the rationale for insurance disappears. " In addition, Americans generally do not share Europeans' intolerance of disparity between rich and poor — except in one area.

Cecchetti puts it that:
Granted, Americans accept greater inequality than the citizens of many other countries do. Not so for health care. Members of wealthy societies share the view that their members are entitled to high quality medical care. Social justice demands that the rich and poor among all of us receive roughly comparable treatment.

We can muse here about our willingness to allow huge differences in income, education, housing and on and on. We like to pretend that all can live the American dream, if only they try. We are bobble-headed enough to pretend that birth, inheritance, connections and sheer luck have nothing to do with obvious success.

On this one subject though, we'd like even the least privileged of us not to sicken and die prematurely. Perhaps our sensibilities will eventually expand to other areas, but we can work with this one.

Cecchetti predicts that as private health insurers go away, the societal pressures for equal care will remain at the same levels. "This makes it inevitable that health care systems everywhere will provide universal coverage and be publicly run. "Governments will replace markets, insuring that the poor and uninsurable receive medical treatment at the same time that the healthy are forced to participate in a comprehensive system."

He adds that the most expensive treatments will go to only a tiny subset, as they do now, "but even so, everyone is going to receive adequate health care."

I confess that I am so wound up in the knots and nits of our baby-step health-care initiative this year that it took this article to make me step back for a more Newtonian view. The scenery is pretty good from there.


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