Health-Reform Traps: Universal What?

THE rush to remake the 17 percent of America’s economy known as its health-care system is matched only by the muddle of the motivations driving it. Above all else, consider the confusion of health insurance with access to actual health care.

The reality is that having insurance is not the equivalent of having access to care. In America and abroad, people with coverage (government or private) can lack access to timely care — while those without insurance in the United States may in fact receive timely care while paying little for it.

Official counts place uninsured Americans at roughly 46 million, an alarming 15 percent of the population. Yet a closer look paints a less scary picture. Of the 46 million, one in three, or 17 million, live in a household with an income greater than $50,000. Four in 10 are 18 to 34 years old — an age range where health spending averages less than $1,000 a year out of pocket.

As many as 14 million — including many children — are already eligible for taxpayer-funded health insurance via Medicaid or SCHIP, but simply haven’t signed up. One in five, or 9.7 million are noncitizen immigrants, a portion of whom are here illegally. Seven in 10 people are uninsured for a year or less.

Then, too, health insurance often doesn’t make financial sense for people with few assets, good health and limited income. They can pay out of pocket for routine care — and rely on the social safety net for large, unexpected and unlikely events.

In the United States, that safety net includes: federally funded health centers, open-door policies at hospital emergency rooms, extra payments to hospitals that treat large numbers of uninsured, and charity care. Together, these work to insulate Americans from catastrophic medical bills.

In 2008, uninsured Americans consumed an estimated $86 billion in health care, or $1,686 per person. This was (predictably) less than Americans with insurance, yet evidence suggests the system functions as an informal insurer.

The uninsured reached into their pockets for only $536 of the care, less than the $681 that privately insured patients paid out of pocket. The other 65 percent of that care was paid for by either existing government transfers or absorbed by the institutions providing care. In short, anyone living in America — citizen, immigrant, documented or undocumented — has access to health care on multiple levels. The same is not always true under “universal coverage.”

In Canada, the country of my birth, a person needing non- urgent care faces long waits — last year, it averaged 17.3 weeks — between seeing a general practitioner and getting treatment by a specialist, according to the Fraser Institute.

And diagnostic technology is severely controlled. Dr. Brian Day, the immediate past president of the Canadian Medical Association, notes that Canada is a country in which a dog can get a hip replaced in under a week but a human waits two to three years.

In Great Britain, everyone enjoys free health care — in theory. But the rationing is explicit and out in the open. The National Institute for Health and Clinical Excellence denies the latest drugs and biologics to patients if the agency deems them not cost effective — even though they may be medically effective. So while Americans have access to Orencia for rheumatoid arthritis, NICE has denied the care to Britons.

Massachusetts’ ongoing reform experience illustrates that insurance doesn’t equal access. The Bay State’s bipartisan reform imposed an individual mandate, built a quasi-public insurance regulator and greatly expanded taxpayer-subsidized health care — and the result has been a warning on the quest to achieve universal coverage.

After three years, it has succeeded in cutting the percent of uninsured in half to 2.5 percent, the lowest in the nation. But the taxpayers have paid most of the price: The majority of the formerly uninsured were either added to Medicaid or to heavily subsidized plans. A mere 41,000 — less than 10 percent of the once uninsured — have purchased individual plans. And, 60,000 have been exempted by the government from having to purchase insurance.

Costs are rising and many promised savings aren’t materializing. Bay State residents use emergency rooms at the pre- reform rate of 23 percent. Today, 20 percent of residents are having trouble securing a doctor. The Health Safety Net fund, which pays hospitals to care for the uninsured, still spent $410 million in 2008.

Most startlingly, to control costs, the state is considering “payment reform” that resembles a giant HMO. Price controls and explicit rationing will surely follow.

Americans need to think through Washington’s rush to reform. The last thing we want is what we’ll likely get. Trade a system that provides excellent, responsive care to the fully insured, uses taxpayer money to cover seniors and low-income families and children, and highly subsidized care to those without insurance, for one where everyone pays more for less.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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