Genetic Information, Health Insurance, and "Socialized Medicine

by Maxine Udall
re-posted Maxine Udall Girl Economist with authors permission

Genetic Information, Health Insurance, and “Socialized Medicine”

Brad Delong provides an excellent blog about U Cal’s genetic testing of students and the likely ways in which genetic information would be used by private health insurers, not to manage risk better, but to sort on it better, thereby defeating the ostensible purpose of insurance. Disease prevention and health promotion over the life cycle should and would be the objective of any health insurer likely to bear the costs of all your future illnesses and injuries. Of course, our fragmented US system does not provide the incentives to do this. The system most likely to align short and long term health risk management objectives (and (I would add) to reduce health care costs in the long run) is a single-payer system, which the US is not likely to have any time soon.

The problem with the current system is that if my genes predict a hip fracture at 70, the average private or employer-based plan should have little or no interest in incurring costs to prevent it since they are unlikely to bear those future costs. I will age into Medicare several years before age 70 and the costs will fall to the US (payroll-)tax payer. On the other hand, Medicare and US taxpayers have a real interest in preventing disease and promoting health over the life cycle since many of our (bad health) chickens come home to roost after age 65-67. Those of us who are younger and still working are on the hook for at least some of those costs or will face reduced future Medicare benefits because of their increasing share of national output.

As in the financial sector, private health insurers have offloaded much of the high risk (and costs) in health insurance markets onto US (payroll-) taxpayers, who pay for much of Medicare and Medicaid. These are two programs that became necessary because private markets failed to provide insurance for individuals and families characterized by high risk of medical expenditures: the elderly and the poor (who are often poor because acute and chronic health problems prevent them working). Mercifully, our ethics and our values require them to have access to health care. Hence, we have two government run programs: Medicare for those over 65 and Medicaid for those who are poor children, poor chronically ill adults, poor elderly adults in nursing homes, or poor pregnant women (with some variation in eligibility thresholds across states).

Yet the spectre of “socialized medicine” prevents us moving to single payer, where the incentives for prudent life cycle management of risk across all age and income groups would be better aligned. Why, when we already have what is in effect single payer for the elderly and the poor, do some believe that single payer is “socialized medicine” and why do they fear it so?

I gained some insight into this recently when an elderly relative started complaining about “Obamacare” and how it would lead to “socialized medicine.” Knowing the person had heart surgery courtesy of Medicare and was receiving ongoing monitoring and care, I said, “I didn’t realize you were so unhappy with Medicare.” To which I received the reply: “I’m not talking about Medicare, I’m talking about socialized medicine.”

“How is Medicare different from socialized medicine?” I asked.

“Medicare isn’t socialized,” came the reply. “I pay for it. I pay every month and when I’ve had surgery, I’ve had to pay some of it. Medicare is like any other insurance.”

“Well,” I said, “I know you’re paying a premium for Part B and I know there are copayments and deductibles, but Medicare is a government run health insurance program.”

To which the reply was: “But I’m talking about socialized medicine. You know that whenever the government gets involved in anything, it never does a good job.”

“I had no idea you were having problems with Medicare.” said I. “I always had the impression you were pretty satisfied with it. And with the VA, too. I know you’ve used the VA for some care recently. What problems have you had with Medicare or the VA?”

“Well, none with Medicare or the VA, but I’m not talking about Medicare. I’m talking about socialized medicine.”

“So you’re happy with Medicare?”

“Yes.”

“Would you mind if your [adult] children could buy into it? Your son is unemployed. Would it be OK if he could buy into Medicare?”

“Well, sure. As long as he has to pay like I do.”

You were all wondering how someone could say, “Keep your government hands off my Medicare?” Well, there you have it. Now that I’ve told you, I’m still not sure I understand it. It was one of the most frustrating and at the same time enlightening conversations I have had in a long time. The person with whom I was conversing is intelligent, educated, and not senile.

I’m just not sure how to use the above information. I was unable to persuade my elderly relative. I confess that since the conversation, I have despaired that the national conversation will ever be much better

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