• Grateful for health insurance

    I could not have known this would happen at the time, but since the passage of the Affordable Care Act, health insurance has played a large role in the lives of some family and friends. Last year a colleague was diagnosed with cancer. He’s insured through work. Earlier this year, a family member with a serious medical condition requiring many surgeries, was caught — perhaps saved — by Medicaid. Recently the five-year-old daughter of friends was diagnosed with leukemia. They’re insured, I suspect through a non-group plan.

    All of these people and their families now face high medical costs for care, or would if they were not insured. I doubt all of them would receive the same level of care without coverage. All of these people live in Massachusetts. That fact may not be decisive in their insurance status, but it could be, and it certainly is for many others. These people are not so different from me or my children. They are not so different from millions of others in other states with weaker safety nets and a culture less committed to health insurance as a basic necessity. Massachusetts is unique in that it has a coverage mandate.

    I live in Massachusetts. For its safety net, its culture of coverage, its mandate, and its expensive and, yes, wasteful health system, I pay more in taxes. I pay more in premiums. What would otherwise be my wages are helping to care for my sick family members, friends, their loved ones, and many others I don’t even know. Next year they might be paying for me.

    I’m grateful for it. I assure you, I would not voluntarily put aside thousands of dollars to help pay for the care of my friends. I’d likely not do it for anyone outside my nuclear family. I certainly would not do it for strangers. This is not because I’m callous or greedy. It’s because I probably wouldn’t think of it. Even if I did, I might not want to dwell on such unpleasant thoughts. Thankfully, I don’t have to.

    Our society, or at least the one we have crafted in Massachusetts, in its messy, political, imperfect way, has already thought it through. Through decades of struggle, thought, and effort, policymakers have cobbled together a way for me to care for those I love and those just as deserving that I don’t (but someday might!) — and for them to care for me — without each of us having to think it through on our own. Even though we’d each like access to what would otherwise be health care too expensive to afford in the moment, we would likely not provide enough privately to make that possible. I certainly would not trust that my neighbors would pay for all of my chemo with their retirement savings if and when the time comes.

    We have solved a collective action problem. It’s called insurance. Of course it could take many other forms — and many of those would be just fine, if different. Certainly we could reorganize the health system it funds to be more efficient. And we should! But at least we have done something, in Massachusetts, that solves a problem I’d not have solved on my own. Now more than ever, I’m grateful for it.


    • The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselvesin their separate, and individual capacities.

      A. Lincoln

      (Well said, Austin…)

    • Thank you for this, & the work you & your colleagues do to educate people about our healthcare system. Change won’t occur until everyone realizes how much it is needed. As someone with no insurance due to pre-existing conditions (breast cancer for me, seizure disorder for my non-verbal daughter with autism), I know all too well the difficulty in trying to manage on going health issues without insurance. Thankfully, I was insured at my diagnosis, but the rates on our self-pay policy became astronomical quickly after my diagnosis, & we lost the insurance. Although it was a nightmare to deal with the insurance company during my treatment, there is no way we could have afforded the almost $200K for my & my daughters treatments. It is imperative people understand how quickly solidly middle class people can lose everything, and also lose access to quality care, without health insurance.
      Again, thank you very much.

    • I always enjoy your thoughtful posts, but this post struck a particular chord, too often we forget the human side of the healthcare debate. While ACA is not a perfect law, it is a step forward towards the reinvention of the US healthcare system, which – if not reformed- will be an incomprehensible drag on our economy within the next decade. There will be unintended consequences from the ACA, but rational, honest debate and a willingness to improve the law will achieve the interrelated goals of increased coverage and reduced costs.

      Thanks and keep it up.

    • I’ve only come across this blog recently. Thanks for the great posts. I have a lot of interest in this subject, but not much knowledge!

    • Austin,

      I enjoyed the post. Can you explain why insurance is a collective action problem.

      • Health insurance is the solution to the problem that many of us want, the moment we are gravely ill, to have funds provided in an amount that would not otherwise be available. We may want everyone to kick in ample funds from their savings when we are sick, but I seriously doubt we could make that work. That’s a collective action problem that insurance solves. Since insurance purchase is voluntary (even in Massachusetts, the alternative there being a smaller penalty) and is purchased by or on behalf of 85% of Americans, it is clearly something the vast majority of people want. It’s a very popular solution, which does not mean it is perfect or doesn’t itself lead to other challenges.

    • -That’s a useful summary of your priors and would be worth adding to the FAQ’s.

      -The premiums that I paid into my very affordable, high-deductible, catastrophic plans served precisely the same functions. What they didn’t cover were routine, predictable medical expenses and the costs of non-catastrophic care that I could have financed through borrowing or savings if necessary. I can’t help but wonder how many of the persons discussed in the post above would have been unable to get precisely the same care with a combination of catastrophic coverage and savings/borrowing.

      In a world where health care is one of many competing ends – it’s not clear that forcing everyone to pay dramatically more to protect themselves against the financial costs of a medical catastrophe is objectively superior to other ends that the same amount of resources may have been put towards.

      People value many things in this life – everything from making donations to charity to paying a last minute visit to a dying relative to funding their children’s education, to being able to fix their car and get to work so that they can afford to feed and clothe loved ones, to simply being able to accumulate savings to insulate themselves from the consequences of any number of financial hardships.

      Every penny in excess of the sum necessary to secure their desired level of financial protection from the risks of health insurance is money that can no longer be used to satisfy other priorities that they may value much more than being able to get care for routine or relatively minor medical care with little or no out of pocket payment. It’s not clear that they or society are better off under such an arrangement, or that such a policy regime is more ethical than many alternatives.

      -The financial consequences of disability resulting from a medical catastrophe can be far more devastating than the costs of the medical care. One could make the same argument for making comprehensive private disability coverage mandatory? If not – why not?

      • “-The premiums that I paid into my very affordable, high-deductible, catastrophic plans served precisely the same functions. What they didn’t cover were routine, predictable medical expenses and the costs of non-catastrophic care that I could have financed through borrowing or savings if necessary.”

        Those arent really the costs driving our care to be so expensive. Remember that 50% of people account for 3% of spending. That is the kind of spending to which you refer, and while it could probably be decreased some, it wont make a big difference.

        The limits on catastrophic matter a lot. If you are out of work and carrying catastrophic coverage as some above have noted, you are going to go over any reasonable deductible, so you are not going to be watching your costs. You will also be faced with deductible costs that you cannot afford.


      • “That’s a useful summary of your priors”

        And your comment is precisely the same of yours.

        “it’s not clear that forcing everyone to pay dramatically more to protect themselves … is objectively superior to other ends”

        Somehow people are dismayed that so many in Massachusetts have revealed their preference to be insured rather than pay the lower penalty. Might we just presume it’s how they’d prefer to use their money? If not, why not?

        I wonder if you noticed this line in the post: “Of course it [insurance] could take many other forms — and many of those would be just fine, if different.” I wrote it for a reason. You completely missed it.

    • This topic also reminded me of one of my favorite essays from Frederic Bastiat, the great (classical) liberal 19th century French economist (not a combination of words that one encounters often).

      “In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause – it is seen. The others unfold in succession – they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference – the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee”

      Worth reading in full.


    • You are grateful for health insurance?

      I wonder why you are not grateful to all of those who paid taxes and premiums to in turn pay the bills associated with the events you describe.

      Compelling “others” to pay for our expenses is pretty attractive – unless you are one of the “others”.

      My wife and I will be writing checks for on the order of $30,000 in the the next several weeks [I will be happy to provide you evidence].

      We needed, used and are happy that we can pay for ambulance, ER, ICU and several days of hospital care.

      We are happy that her problem was diagnosed and treated and that she is back home recovering.

      WE are happy that we live in a country that allows us to work hard and earn enough to pay our own way.


      I know I am not as informed and smart as you – but I also know we have two very different “world views”.

      I do think we share a similar goal – everyone living to a ripe old age and having the best possible life they can.

      We differ in the how/…

      You feel this happens when everyone is insured

      I on the other hand think it happens when no one needs insurance.

      Given how wide the gap is between these two “world views” I have decided to ban myself from further posts on your site..

      I will continue to read – and learn and at times despair.

      • Best of luck to you. I did not intend my personal post to be a challenge to others’ world views. Everyone is entitled to their own path. Everyone is entitled to articulate their own story. None has a unique purchase on legitimacy. So long.

      • “I wonder why you are not grateful to all of those who paid taxes and premiums to in turn pay the bills associated with the events you describe.

        Compelling “others” to pay for our expenses is pretty attractive – unless you are one of the “others”.”

        I am grateful that there are enough other people who would like to pool their money into health insurance that I can afford it. (I’m not clear on the taxes part – unless you’re talking about the taxpayer money that helps support hospitals, etc.)

        Not everyone is capable of earning sufficient amounts of money that they could have enough on-hand for a significant sudden medical expense. That’s the whole point of insurance, isn’t it? That you all pool your money, a little at a time, and then there’s a large amount in the pool if and when someone needs that?

        But what of those who can’t stash away 30k+ for a sudden expense? Shall we just supply them the minimal amount of emergent care necessary? In my world view, it makes sense to give them a helping hand to join one of these insurance pools.

        (Of course, in my world view, everyone would just be covered from birth by some sort of universal health care, but that’s not anywhere close to what we are talking about.)

        I think it’s great that a smart, resourceful couple is able to self-insure. But very few people can do this, and to think that they can is just folly. Not everyone is born with the resources to live that sort of life – and by “resources” I mean any combination of: inherited money, intelligence, good genes, ability, temperament, and luck. And as a society I do think we should help take care of those who can’t take care of themselves.

        • “My wife and I will be writing checks for on the order of $30,000 in the the next several weeks [I will be happy to provide you evidence]. We needed, used and are happy that we can pay for ambulance, ER, ICU and several days of hospital care.”

          I doubt your $30,000 payment sufficiently covers the amount of care you received; the cost of the care you describe is dramatically higher. The hospital probably wrote off a lot of your bill because (I assume from your post) you are considered “uninsured,” and they likely didn’t benefit from this write-off because of all the other uncompensated care they provide. The hospital can do this only because of the higher rates they receive from insurers. Thus, you also were subsidized by the taxes and premiums of the insured population, and in fact you contributed to higher insurance rates for the rest of us. You may say this is a central reason for the elimination of the insurance system, but 1. too much has been built on the system to completely eliminate it, practically and theoretically, and 2. I agree with PattyP that we need some type of insurance to protect people who have less.

    • I’ve followed this blog since Dr. Carroll came on board and I find it to be a smart, fair-minded and reasonable source of evidence based information about the subject of health care policy. I don’t always agree with some of the conclusions on these pages, but I do appreciate the expertise and accessibility Austin & Aaron offer.

      Fortunately, we don’t see much in the way of thinly veiled insults aimed at these guys, but in the comment from JayB above, that’s exactly how it came across. It wasn’t smart. It wasn’t clever. It wasn’t called for.

      Its certainly not my place to speak on behalf of TIE community, but as a long standing member I hope that element doesn’t become a regular ingredient. There are plenty of other homes on the web where that sort of participation is welcomed and even encouraged.

      In my opinion, its not what Austin and Aaron or the rest of us do here…

      • I agree. One of the delights of this Blog is the high quality of the comment stream. Most add value to the discussion — insights, perspectives, evidence. The proportion of insults and flames is very low.

        It would disappoint me greatly if this cannot be sustained. I am hopeful that it can.

    • Mass. has had the courage to create a system of personal responsibility coupled with reasonable measures for hard-working people to get medical insurance. And now they are tackling medical costs (as I understand from my reading).

      I tried to get an interview with a woman from Mass. for my art project. She lost her high-paying job and eventually her insurance. She told me she “hated” living in that liberal state. She didn’t support Obamacare.

      Then she came down with cancer as an uninsured person in Mass. I asked her how she got care. She told me she could get treatment because the state made provisions for someone at her income level (now very very low).

      I asked her why she took the treatment when the state’s move to universal healthcare was very against her politics.

      She really was shaken. She started telling me, “Well, her sister wanted…etc.” I said “But you chose to save your own life in a state that has a system that enabled you to access care?”

      I told her that her story embodies the entire debate over Obamacare. I so wanted to paint her portrait to have her story be part of my art project. I told her that I would even paint her from behind, anonymously. I would tell her story just as she wished to be understood. But, alas, she declined.

      This woman’s story IS the whole point of Obamacare. Until it happens to us personally, the crisis of trying to access healthcare isn’t real.

    • Thank you for this eloquent post.

    • Thank you for your eloquent post.

    • I just got insured after 5 years with no insurance. My pre-existing conditions will be covered because it is a group health plan. Over the next 6 months, I will be getting a new hip and 2 new knees, plus treatment for my thyroid condition that has left me so tired – I sleep 15 hrs a day. I had great insurance – but lost my job and faced $2000 a month insurance bills. When you are unemployed, $2000 a month for health insurance is out of the question. That being said – insurance should have nothing to do with your health. We need health care…not health insurance. Insurance companies employ quants (quantitative analysts) who use super computers to figure out how to not pay and dump you when you become to costly. We don’t need this layer in the health system that sucks 40% out of every health dollar for their profits.

      (ed. note: The portion of the comment that has been lined out is an unsubstantiated claim that requires evidence per the comments policy.)

    • “Grateful for health insurance” — that is what some core Republican constituencies may feel if Democrats succeed with the Affordable Care Act. Consider the groups the ACA will benefit the most: lower-income working people without reliable employer-based coverage, and small businesses without a simple, affordable alternative for making health coverage available to their workers. These groups are essential to the Republican coalition in rural areas and red states. If they experience the security that the ACA should provide for workers, and the improved labor market environment that the ACA should provide for small businesses, then those groups may reconsider their Republican allegiance.

      That prospect explains Republicans’ desperate, alarmist, panic-striken opposition to “Obamacare.” Why else would they be so fixated on total invalidation or repeal of the ACA? Their opposition could hardly be rooted in policy, given that the ACA is directly descended from policy work of a conservative think tank (the Heritage Foundation) and legislation of a Republican governor.

      It may seem churlish to offer this purely political analysis in response to Austin Frakt’s eloquent statement. He reminds us of how much is at stake for vulnerable human beings. But a political analysis is not out of place. Political positioning distorts the policy debates and hinders pursuit of fundamental reform.

      Fundamental reform would involve a novel hybrid of market and regulatory approaches. Creating this hybrid approach would require not only crossing political boundaries but also changing some basic cultural assumptions. Neither political party seems open to these moves.

      This is not the place to explain the hybrid approach to which I refer. Let’s just say that it falls outside mainstream policy discussions, and will not satisfy ideologues, left or right. For readers who wish to learn more, see the references cited in http://theincidentaleconomist.com/wordpress/more-on-standards/#comment-17864. See also http://www.thepermanentejournal.org/files/MedicineInDenial.pdf.