*Catastrophic Care*: Chapter 9

My guess is that if you’ve read other writing by Goldhill, you’ve already come across his proposed, ideal health care financing system. Since I haven’t, or not in years anyway, I didn’t know (or remember) what it was until chapter 9 of Catastrophic Care. In a nutshell, it’s this:

  • From birth to death, each of us gets an annual Health Grant, something like $8,500 per year. (I’m sure the exact figures aren’t as important as the concepts.) 
  • We each get a Health Account into which these funds are deposited and may be carried over if not used to buy, directly, health care services. (It’s not entirely clear from the chapter for what else, if anything, Health Account funds may be used and at what penalty, if any.)
  • We each purchase a TruCat (“True Catastrophic”) insurance product. It has a monstrous deductible, something like $500,000 over a lifetime.
  • All of this is mandatory.

I can imagine some objections to and questions about this approach. I bet you can too. Why don’t you raise them in the comments?

The first that may come to mind is, what happens to someone who hasn’t yet saved enough to address a major health problem and also hasn’t yet exhausted his or her deductible? The answer is, there must be a credit market that takes advantage of the Health Grant guarantee. That’s plausible. If I know you’re going to have a stream of income for life, I am more willing to lend you some money now. Still, will this credit market spring up on its own or require some other support? I don’t know. But it’s a crucial element.

Next, how will the Health Grants and TruCat premiums be financed? The chapter doesn’t say, but my guess is income taxes.

Still, even with these concerns and questions, among others, as a rough draft, Goldhill’s ideal is just fine by me. He admits that it is an ideal and promises to discuss in a subsequent chapter how we could transition to something like it very slowly. He’s up front about the political and cultural constraints to reform.

The sensible approach in proposing an alternative to our current system is to respect what’s called path dependence. This is a fancy way of saying that societies don’t get a chance to genuinely start anything over again—that reforms must be built on top of existing structures, recognizing their established political support and existing ways of doing business as limitations on any changes. It’s what all the smart analysts do, limiting the development of alternatives to those that are considered realistic.

Other posts about the book here.


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