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Life Health > Health Insurance

Health care will always be a business not a right

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(Bloomberg View) — “The health of Americans should not be a profit center. Health care is a right. Full stop.”

That comes from the Twitter feed of personal finance writer Helaine Olen. But it could have issued straight from the heart of any progressive in the land. Subjecting health care to the sordid whims of the marketplace strikes many people as simply immoral. Nor is this feeling confined to the left. Conservatives may be less enthusiastic about socialized medicine, but talk to one about the health care system, and there’s a good chance you’ll get a rant about greedy insurers nickel-and-diming hardworking consumers when they’re sick. Almost everyone feels that there is something fundamentally wrong about making money off of someone else’s illness.

Related: Obamacare public option proposal is no longer defensible

Why do we feel this way? No, don’t sputter and tell me that it’s obvious, that people need health care. People need a lot of things. You’ll die without food long before you’ll die without health care, and yet few people say we need to “take the profit motive out of farming”. (There are some, to be sure, but this was never a widespread sentiment even when food was a lot scarcer and more expensive). Why is health care special?

About 10 years ago, economist Robin Hanson suggested something that solves a lot of the mysteries of our health care system — not just why we hate the idea of people taking profits, but many other fascinating quandaries, such as why people have such a strong preference for insurance that covers routine expenses, even though this means they’re just prepaying for their care in the form of higher premiums. We are evolved, he suggested, to provide costly forms of care to members of our community when they get sick, not just in the interests of making them better, but to demonstrate loyalty.

Anthropologists tell us that there are two different economic systems by which members of groups obtain what they need to live. One kind, market exchange, is the form that we’re all familiar with. You go to the store, you give the clerk money, and you get to take goods away with you. Market exchange is impersonal, explicit, and limited: I know exactly what I’m getting, and once we walk away, we have no further obligations to each other. Market exchange is what modern societies use for most of their economies, but what foragers use for dealing with strangers.

The second form of exchange is “reciprocal altruism,” and you’re also familiar with it, though you may never have given it a name. It is a system of mutual obligation: I do a favor for you now, and you do a favor for me at some unspecified point in the future. Reciprocal altruism is not explicit, and it is not limited in the same way that market exchange is. It is what you do in families: your sister comes over to help you clean your house, and at some point in the future, when she asks for help mulching the yard, you’ll have a hard time saying no unless you can point to some other obligation that you’ve already taken on.

Hanson is suggesting that we have a strong intuitive preference for altruistic health care — for an enormous, practically unlimited amount of altruistic health care — because health care is a way to demonstrate loyalty and caring to people you love. But the thing about reciprocal altruism is that it’s not supposed to be an explicit quid pro quo. That may explain why we like insurance that covers as much as possible and dislike any suggestion that the people who provide our health care are calculating what it will cost them to provide it. Bringing money into an altruistic exchange taints it (as you’ll quickly find if you try offering your spouse cash to get romantic when they say they’re not in the mood).

The issue, in other words, is not necessarily profit — health insurers are not particularly profitable as industries go, and hospitals and other care organizations are often nonprofit. The issue is making decisions based on money.

Unfortunately, this leaves us with something of a problem. Reciprocal altruism is fine if all you need is for Mom to sit with you and brew you some herbal tea. But in a modern society, you need to procure health care from strangers — which is to say, through the transactional system of market exchange. Nationalizing the health care system does not fix this fundamental disconnect between our evolved instincts and the inevitable necessities of a modern economy.

National health care systems, in other words, must make exactly the same sort of decisions that private insurers and individuals do: what is worth paying for and how much to pay.

A few years ago, around the time that Obamacare passed, I was invited on a British radio show to represent the anti-national-health-care point of view. Needless to say, I knew going in that I was in hostile territory; this is, after all, a nation that featured its National Health Service in a dance number at the opening of the London Olympics. Brits tend to have a very strong attachment to the NHS, and very strong objections to anyone who speaks ill of it in any way.

 In view of this, I took the coward’s way out; rather than making a full-throated defense of the marvels of free-market health care, I stuck to describing differences between the two systems, rather than advocating for one kind or another. I can’t now find the clip, so you’ll have to take my word for it that my tone was “blandly inarguable” rather than “stacking the deck in favor of my argument”.

At one point I found myself discussing NICE, the British agency that issues treatment guidelines for the NHS. NICE looks at how many quality-adjusted-life-years a treatment provides, and compares it to the cost. If it costs too much per year — at the time, they were leery of treatments that were above the 20,000 pound to 30,000 pound range — then NICE will generally not recommend it.

America, I said, could never do something like that; our fractured political system, and public sentiment, make it very difficult. Britain had achieved cost-effective treatment for everyone, at the cost of some people missing very expensive treatments that might help them. I was rather congratulating myself on this answer, because NICE is beloved of health wonks everywhere; the Affordable Care Act’s Independent Payment Advisory Board is an attempt to sort of replicate it. Pointing out something the British health system can do that the American system can’t, and doing so in dryly factual tones, seemed like a good way to endear myself to the British audience.

The other guest, a British health official, interrupted to basically accuse me of lying; the British health system, he said, did no such thing.

Related: Howard Dean: PPACA’s payment board won’t work

Now I reiterate: I had not called NICE a death panel, or said that it was bad; I had simply described what NICE does, which is keep the NHS from blowing its budget on very expensive treatments that deliver relatively little value per pound spent. You can read NICE describing what NICE does on its website; the description is not significantly different from the one I gave. Being told that this was flat out wrong was surreal. Things got even more surreal when I began again to explain what NICE does, thinking that perhaps I had been unclear, and the host interrupted me and said something like “As you know, that’s false.”

Why such a strong emotional reaction to a boring factual statement? My conclusion, having read Hanson, was that people don’t want to think their health care system might let them die because it’s too expensive to keep them alive. They don’t like it any better when the government does it than when an insurer does — and so the government is at pains to suggest that cost is not a factor in their calculations. And I had made this remark at a time when those sorts of decisions were becoming more public, and more controversial.

Before the internet, most people had no way of knowing whether there were other treatments than the ones their doctors recommended, so as long as doctors only prescribed treatments that were approved, the government could maintain the fiction that there was no calculation going on.

America has never really had that comfort, because most doctors take a lot of different kind of insurance, and they don’t know what will be covered until after they’ve discussed treatment options. So Americans could hear about a treatment, find out it wasn’t covered, get outraged, and call their congressman. This may be one reason that our system is so expensive.

But it’s getting harder for everyone to conceal the calculations; information travels faster, and patients are better organized. Both New Zealand and Britain, for example, had big controversies over the cancer drug Herceptin, which cost a lot of money, but could be life-saving for people with certain forms of early-stage breast cancer. Health authorities made decisions that minimized cost, rather than erring on the side of eradicating the cancer. And in both cases, they were forced to back off those decisions.

A true national health care system, along the lines of Britain or Canada, would have advantages and disadvantages over what we have now. But one advantage that it doesn’t offer is to free us from the need to think about our health care in the cold logic of dollars and cents, rather than warm and fuzzy altruistic ideals. Health care cannot be a right, full stop; it has to stop before we run out of wallet. Which means that no matter how much it horrifies, we have to stop hoping for a system that will make those hard decisions and unhappy trade-offs go away.


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