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Healthcare reform op-ed

The current uptick in ‘medical inflation’ in private sector health industry is worth a separate post. The Standard and Poor Healthcare Economic Indices can be found here.
Lifted from a note from Run 75441 on the link I sent on healthcare reform.

Recently, Matt Stoller claimed Obama had a 61 vote majority in the Senate and enough to secure either Universal or Single Payer Healthcare. We all forget the one Senator from Aetna stand which killed any other options an Medicare for those starting at 55. President Obama did not have a filibuter proof 61 votes in the Senate for any other healthcare options muchless the ACA. The Blue Dogs (Nelson(s), Bacus, Bayh, Cantwell, Feinstein, Lincoln, Pryor, Widen, Conrad, etc) wouldn’t move for any healthcare plan unless they brought home the bacon as Nelson attempted to do for Nebraska. Just plain ordinary obstructionism to block whatever this President would attempt to do. Senator Lieberman killed anything beyond the ACA. 

Former Editor of the New England Journal of Medicine and others should be sorry if the entire ACA is struck down or dismembered as we will go another decade before a President and a Congress take up the issue again and heathcare costs (for which healthacre insurance is a reflection) will again rise faster than inflation. Because of the power of Medicare, it has been able to rein in rising healthcare costs so far at less than 3% than that of the commercial market at about 9% %. Standard and Poors Healthcare Economic Indices .

The last time healthcare reform was attempted was under Clinton and costs have increased multiple times. A failure to allow the ACA to go forward will allow the overall Healthcare Industry to again implement inflationary costs in a market which has no restraints. Certainly, I can not conjur up what SCOTUS will do. The kings in black robes will decide what is best for us as Congress lacks the will power to represent those who placed them there with the exception of ALEC, Koch(s), and Norquist.

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Insurance and Birth Control

In this Forbes article, Tim Worstall says he agrees with generally available birth control, but questions why health insurance should pay for it.    Specifically he says:  “But I really cannot see the point of trying to have health care insurance which then covers a multitude of treatments that aren’t really insurable matters, contraception being just one of these (regular shots, ‘flu vaccines, general everyday low level treatments in fact).”  This is after he points out that, per Wikipedia, “Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

The first question this prompts in my mind regarding insuring against (unwanted) pregnancy is what loss does that pregnancy entail?  The answer is large measures of personal freedom, hundreds of thousands of dollars in unplanned child-rearing expenses, and quality of life for the potential child resulting from the pregnancy.  These are significant risks, with ramifications for society at large, involving the employability and  productivity (in a purely economic sense) of the involved woman, and her uses of discretionary income.  Furthermore, unwanted children, particularly if the mother is single, are more liable to live in poverty and neglect, suffer from illness and abuse, become delinquent, and develop into adults that are psychologically disturbed, draw welfare, and commit crimes.

So, there are significant personal hardships and costly negative externalities that result form unwanted pregnancies. 

Is it ironic that in the past right-wingers have proposed the forced sterilization of welfare mothers

Also, the hormone therapy we call “birth control” has many other preventive medial uses, including controlling endometriosis.  So a focus in the merely contraceptive attributes is misplaced.

Currently, more than half the states mandate that hormonal birth control be included in prescription coverage, and since 1998, this coverage has been included for all federal employees.  There is ample precedent for this coverage, and insurance companies are well equipped to handle it.

Worstall conducts this thought experiment.

 Just to make up some numbers, say that the preferred method costs $30 a month. But that having the contraception covered by insurance will raise the premium by $50 a month. The insurance company does, after all, have certain costs associated with taking the premium then paying it straight back out again to buy the pill. Why would anyone do this? Why not purchase the pill for $30, stiff the insurance company bureaucrats the $20 and spend it on a couple of cocktails at a place where you might meet someone who thinks that your being a contraceptive user is a good idea?

Of course, when you’re just making up numbers, its easy to have them suit whatever fell purpose you have in mind.  Suppose a much more realistic $16 per month, and the whole make-believe argument  collapses.

Besides, in terms of brute economics, the insurance company is better off paying for decades of contraception in $30 increments than one avoidable pregnancy at many thousands of dollars, if everything goes smoothly.   Let’s just say you can’t count on that. 

So far, this has been a basically economic argument.  Now let’s look at an issue of fairness and parity.  More than half of the prescription programs cover Viagra.   Need I say more?

Worstall’s argument has some logical consistency – he seems opposed to insurance coverage of other types of preventive care.  But this is ignorant and short-sighted.  A flu-shot is less than $25.  An office call is $90 and up.  Prevention, in general,  is cheap, and treatment is expensive.  If cost minimization is your goal, then the clear focus should be on prevention.

Worstall’s problem, I think, is in relating contraception to a free-market business model, though, as I have indicated, he isn’t even understanding that properly.  The proper focus also includes the high costs of the externalities that he conveniently ignores.

The real root problem though, is in trying to force-fit any health insurance system into a for-profit model.  There is simply no way to reconcile the conflicting goals of profit maximization and providing the needed services.  In fact, there are only three avenues to profit maximization: raise premiums, deny coverage, or emphasize prevention.

Whether this leads to the conclusion that a single payer, government mandated program is the best overall approach is left as an exercise for the interested reader.

UPDATE: I forgot the great positive externality of contraception – it prevents hundreds of thousands of abortions every year.

Cross posed at Retirement Blues.

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