Saturday, January 30, 2016

One Asshole's (Informed) Opinion: The Rules Don't Apply, Part I

Back to the ongoing series.

In my last Asshole's Opinion post, I laid out the basic possible structures of health insurance schemes (there were 3, plus the option of full state ownership). In this post, I'd like to explain why normal rules of economics don't work when it comes to health insurance and health care, from the patient's point of view. I'll address the doctor's point of view in another post.

In traditional market economics, the greater your financial resources, the greater your ability to participate in a market. Suppose I have $10,000 more than my neighbor. I can spend $10,000 more than him on my next car, or buy the same car and take a $10,000 vacation.

So why shouldn't I be able to spend my extra money on my health?

It's not so much that you shouldn't, but rather you probably won't need to. From a society-wide, "macro" point of view, the people that use the most health care are least able to afford it. This is borne out in countless papers, anecdotal experience, and is patently obvious to anyone strolling through a hospital. The biggest users of health care resources are poor, elderly, mentally ill, disabled, or any combination thereof. This is irrefutable fact, and constitutes the opposite rules under which market economics normally operates.

On an individual, "micro" level, we need to switch gears and look at things from the insurance point of view.

When you insure your house or your car, there's a ceiling on the payout. The ceiling is not only part of the actuarial math that goes into your policy. A payout ceiling also reflects the fact that past a certain point, it's less costly and less trouble to write off the loss and move on. Who pays for $20k in damages to a car? Just get a new car. Even in the case of dental insurance, past a certain point, you might just forego pricey, protracted dental work, and opt for extraction and dentures.

Needless to say, you can't do that with your life. Well you can, but unless the condition is terminal most people try to avoid calling it a day with life. Investigations are ordered, treatments are administered, and the best is hoped for. As a consequence, there's no practical dollar ceiling to what we're willing to see done for our personal well-being. Really, nor should there be, considering the many forms of idiocy we see tax dollars directed towards.

From the patient's perspective, this is the driver behind the (purported) unsustainability of health care expenditures--there's simply no point at which we just write ourselves off.

That's only part of the story, however. Next time, the doctors. 

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