Commentary Magazine


Topic: Helen Levy

Why the Universal Health-Care Insurance Fetish?

Republicans have been tossing out alternatives to government-centric ObamaCare for some time. They have suggested, among other ideas, that we change the tax treatment of individually purchased insurance plans, reform the tort system, and allow interstate insurance sales. But now Jim Prevor raises an interesting and compelling question: if people want to go without insurance and instead self-insure, why is it the government’s job to stop them? Or put differently:

The fact that the national debate has focused on insurance for health care–as opposed to the accessibility of care–is a byproduct of the particular worldview that all “basic needs” should be provided by communal institutions, preferably the government but, alternatively, highly regulated companies that do the government’s bidding.

Prevor suggests that we “give families money or vouchers that they could use to buy health insurance or any other thing they deemed helpful to their family’s future” and urges lawmakers to work on the supply side of care, not insurance, by among other things “wreak[ing] havoc on the American Medical Association’s efforts to restrain the supply of doctors.” Along the lines of Prevor’s argument, one of the more successful ventures in the Bush administration was emphasis on community health centers that expand care for needy Americans, quite apart from the insurance part of the equation. And expansion of medical accounts, which allows individuals to either buy insurance or pay for medical cost directly, would, following Prevor’s argument, maintain personal responsibility, individual choice, and make health-care purchases more accessible by allowing individuals to use pre-tax dollars to pay for their own care.

But what of the “cost shifting” problem caused by uninsured people? Well, now that the Democrats propose to dump millions of people into Medicare, which doesn’t fully compensate doctors and hospitals, it appears as though that argument is going by the wayside. Furthermore, as Mike Tanner of CATO has explained, cost shifting in the current system has been exaggerated and may account for a small portion of health-care costs. He notes that “it is a manageable problem. According to Jack Hadley and John Holahan of the left-leaning Urban Institute, uncompensated care for the uninsured amounts to less than 3% of total healthcare spending — a real cost, no doubt, but hardly a crisis.”

Tanner has also addressed the implied assumption of health-care reformers that universal health-care insurance will improve the nation’s collective health. He says that “in reviewing all the academic literature on the subject, Helen Levy of the University of Michigan’s Economic Research Initiative on the Uninsured, and David Meltzer of the University of Chicago, were unable to establish a ‘causal relationship’ between health insurance and better health. Believe it or not, there is ‘no evidence,’ Levy and Meltzer wrote, that expanding insurance coverage is a cost-effective way to promote health.” A New England Journal of Medicine article in 2006 likewise found that “health insurance status was largely unrelated to the quality of care.” It seems as though even if we force people to self-insure, they may not wind up much healthier.

In sum, Prevor raises a key point: the fixation on universal health-care insurance has distorted the health-care debate. It might, as he suggests, be a good time to take a step back and see whether the quest for universal insurance is really where we should be focusing our attention. Maybe it is time, as he puts it, to remember that “the moral imperative is not making everyone buy insurance. The moral imperative is freedom.”

Republicans have been tossing out alternatives to government-centric ObamaCare for some time. They have suggested, among other ideas, that we change the tax treatment of individually purchased insurance plans, reform the tort system, and allow interstate insurance sales. But now Jim Prevor raises an interesting and compelling question: if people want to go without insurance and instead self-insure, why is it the government’s job to stop them? Or put differently:

The fact that the national debate has focused on insurance for health care–as opposed to the accessibility of care–is a byproduct of the particular worldview that all “basic needs” should be provided by communal institutions, preferably the government but, alternatively, highly regulated companies that do the government’s bidding.

Prevor suggests that we “give families money or vouchers that they could use to buy health insurance or any other thing they deemed helpful to their family’s future” and urges lawmakers to work on the supply side of care, not insurance, by among other things “wreak[ing] havoc on the American Medical Association’s efforts to restrain the supply of doctors.” Along the lines of Prevor’s argument, one of the more successful ventures in the Bush administration was emphasis on community health centers that expand care for needy Americans, quite apart from the insurance part of the equation. And expansion of medical accounts, which allows individuals to either buy insurance or pay for medical cost directly, would, following Prevor’s argument, maintain personal responsibility, individual choice, and make health-care purchases more accessible by allowing individuals to use pre-tax dollars to pay for their own care.

But what of the “cost shifting” problem caused by uninsured people? Well, now that the Democrats propose to dump millions of people into Medicare, which doesn’t fully compensate doctors and hospitals, it appears as though that argument is going by the wayside. Furthermore, as Mike Tanner of CATO has explained, cost shifting in the current system has been exaggerated and may account for a small portion of health-care costs. He notes that “it is a manageable problem. According to Jack Hadley and John Holahan of the left-leaning Urban Institute, uncompensated care for the uninsured amounts to less than 3% of total healthcare spending — a real cost, no doubt, but hardly a crisis.”

Tanner has also addressed the implied assumption of health-care reformers that universal health-care insurance will improve the nation’s collective health. He says that “in reviewing all the academic literature on the subject, Helen Levy of the University of Michigan’s Economic Research Initiative on the Uninsured, and David Meltzer of the University of Chicago, were unable to establish a ‘causal relationship’ between health insurance and better health. Believe it or not, there is ‘no evidence,’ Levy and Meltzer wrote, that expanding insurance coverage is a cost-effective way to promote health.” A New England Journal of Medicine article in 2006 likewise found that “health insurance status was largely unrelated to the quality of care.” It seems as though even if we force people to self-insure, they may not wind up much healthier.

In sum, Prevor raises a key point: the fixation on universal health-care insurance has distorted the health-care debate. It might, as he suggests, be a good time to take a step back and see whether the quest for universal insurance is really where we should be focusing our attention. Maybe it is time, as he puts it, to remember that “the moral imperative is not making everyone buy insurance. The moral imperative is freedom.”

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