One thing all Americans can agree on is that it is important for health care to be affordable and accessible to the maximum number of people. Since the Obama Administration and Congress began work on health insurance reform, there has been a vigorous debate about the best way to cover the maximum number of people. Many facts and ideas have been advanced by both sides that have little basis in reality; here I attempt to find the truth about three issues in this important national conversation.
47 million uninsured Americans?
According to the Census Bureau’s 2008 figures, the number of Americans who do not have health insurance is now 47 million(1), an amount that has been steadily rising over the past few decades. Many proponents of reform point to this number as evidence of a serious health problem in this country, but it does not tell the whole story. Over the past ten years, 90% of the growth in the number of uninsured has been among non-citizens, mostly illegal immigrants(2). Furthermore, it has been estimated that 25% of America’s uninsured are already eligible for existing public coverage (ACORN should really work on signing these people up) and 20% are able to afford health insurance but choose not to buy(3).
We cannot assume uninsured noncitizens, who account for 9.7 million of the uninsured(4), do not fall into either of the two above groups. This means that there are really anywhere between 16.2 and 25.9 million uninsured US citizens who do not have access to coverage.
Health insurance is a necessity?
One often repeated fallacy in this debate is that in order to be healthy, one must have health insurance. This is not the case. If a person has enough money to pay for any health issue that arises, he should not have insurance at all. On an infinite timeline, a person will pay more to an insurance company than will be spent on his own health, since the company wants to make a profit. Even the government, which does not work for a profit, will have to spend extra money on administrative costs. We buy insurance because, in the real world, most people do not have that kind of money and only have 78.1 years to live(5). An insurance company spreads the risk of a catastrophic accident among a large group of people so that, instead of a few paying exorbitant sums for chance occurrences, everybody pays a guaranteed smaller sum. Unfortunately, modern health insurance has moved away from that concept and toward total coverage of all health expenses, even routine doctor visits. By definition, an expense that is “routine” should not be covered by an insurance company! This would be like having car insurance that paid for the gas bills.
One real solution to rising health costs would be to encourage plans that only cover catastrophic expenses. A young, healthy student who does not smoke might only be charged $29 per month for such a plan(6). Of course, the plan would have a very high deductible, but it would encourage people to shop for the best deals in primary care and routine visits without having to worry about going bankrupt after being diagnosed with cancer. Indeed, many doctors’ offices give lower rates to people who do not use insurance because they do not have to spend time filing with the insurance companyvand because patients can negotiate for lower rates(7).
Incidentally, the House health reform bill would make all individual, private insurance plans, including high-deductible, catastrophic care plans, illegal(8).
Tort reform will decrease costs?
In conservative circles, the establishment of caps on the award judgments from medical malpractice lawsuits, also known as tort reform, has been advanced as a solution to high health costs. In some ways, this is a good idea. Civil courts exist for the sole purpose of the redress of grievances; to include punitive damages in malpractice judgments unfairly skews the court system in the favor of plantiffs. If a doctor does damage to a person that costs a million dollars to repair, the doctor (or his insurance company) should pay a million dollars to the plantiff, plus court costs. It would be unfair to award the plantiff three million in punitive damages, but it would also be unfair for a law to limit the judgment to $500,000.
While common sense would dictate that low award caps would decrease the cost of medical visits since doctors have to charge more to cover malpractice insurance, experience shows that this is not the case. The cost of medical malpractice suits only comes to half a percent of overall health spending(9). According to the Congressional Budget Office, only 1.5% of cases of negligence even lead to a claim, and there is “no statistically significant difference in per capita health care spending between states with and without limits on malpractice torts”(10). The real problem with torts is the high legal expense. The most effective reform would be a “loser pays” rule: it would discourage people from filing frivolous lawsuits, but decrease awards by allowing lawsuit winners to keep the entirety of their awards.