By Kevin D. Williamson
Monday, December
09, 2024
Reactions to the murder of UnitedHealthcare CEO Brian
Thompson have ranged from the insipid to the
illiterate to the
despicable. The neurotic need to imbue health insurance—an ordinary
financial services product—with some kind of grand moral significance is, of
course, part of the problem: If you treat a financial tool as a matter of good
and evil—and if the most powerful people in the country insist that the evil
predominates—then you should not be surprised when people start to take the
idea seriously and act accordingly.
A little bit of understanding would do a great deal to
lower the emotional temperature of the health insurance discussion. But, of
course, Washington is packed to the rafters with people who are rich and
powerful only because they have a gift for raising the emotional temperature of
a situation. Witness the unseemly spectacle of Sen. Ted Cruz, who sleeps at
night on a mattress stuffed with Goldman Sachs money, getting
woke with Robert F. Kennedy Jr. about evil corporations desiring to
“poison” our children’s food. Nobody wants to calm down, which is one way you
know that everybody needs to calm down.
A bit of context.
Writing in that ghastly corpse that still insists on
calling itself The New Republic, Matt
Ford writes: “The majority of adults in this country are legally required
to pay health insurers each month under the theory that their payments will
help defray future medical expenses.” I may be missing something, but, as far
as I can tell, every asserted fact in that sentence is untrue. There was a time
when the majority of Americans were legally required, in theory, to purchase
health insurance—that was the so-called individual mandate under the grievously
misnamed Affordable Care Act. The mandate was never enforced, and it was
effectively repealed in 2017, when the penalty for noncompliance was removed.
Some adults in this country, but far from a majority of them, “are legally
required to pay health insurers each month,” those being residents of
California, New Jersey, Rhode Island, Massachusetts, and the District of
Columbia. As with the defunct federal mandate under ACA, these state-level
mandates are not very strictly enforced in most cases. California, for example,
has been successful in reducing the share of its population that is uninsured,
but it still has a higher uninsured rate than does, say, Iowa. For comparison,
the uninsured rate in Texas is 2.5 times the rate in California.
Why was there a mandate under ACA?
Short answer: Because a lot of people who were smart
enough to notice that Switzerland has a very good health care system were not
smart enough to appreciate that Switzerland is full of Swiss people, while the
United States is full of ungovernable maniacs.
The ACA was an attempt to graft the basics of the Swiss
system onto the American system—but, of course, it was designed by Americans,
which meant that the authors tried to do it on the cheap and without the hard
and unpopular parts. In spite of the entirely fictitious nonsense one hears
from a great many progressives and nonpolitical Americans, there isn’t a lot of
“free” health care in Europe or anywhere else in the world. Single-payer
systems are, in reality, pretty rare, found mostly in the United Kingdom and
its cultural satellites, such as Canada. What most European countries have is
what we have in the United States: health insurance that is heavily regulated
and partly subsidized, complemented by public offerings for the very poor, the
elderly, and the otherwise uninsurable. California has reduced its uninsured
rate not through rigorously enforcing its mandate but by putting a lot of money
into its public program, Medi-Cal, which insures about 15 million people.
(California’s uninsured rate probably would be lower if the state did not have
an unusually large population of illegal aliens, who are not famous for
complying with loosely enforced government mandates of any kind.) There are
better and worse ways to do that.
One can see the attraction of the Swiss system, which
offers a little bit of something for almost everyone across the political
spectrum. For libertarian and free-market types, there is the fact that there
is no government-funded or government-provided health care or health
insurance in Switzerland at all. Switzerland has an individual mandate, and it
is ruthlessly enforced: If you fail to sign up for an insurance plan, then the
government will assign you to an insurer, to which you then owe money for the
premiums you would have paid during the period when you were in noncompliance.
As a result of the Swiss commitment to following through on the unpopular and
difficult part of the mandate policy, compliance is practically universal. And
that matters a great deal: If insurers are required to accept all applicants
without financial consideration for pre-existing conditions, then insurance is
simply not an economically viable financial product. (And I’ll get back to why
it is important to remember that it is a financial product rather than a
medical one.)
Where health insurance is the primary means of
funding routine medical services (which is itself a big part of the
problem; again, more on that below), you need a pretty good ratio of healthy
young people to sick and old people in the system to make it economically
sustainable. (That is, it is worth keeping in mind, at least as true of
monopoly single-payer public systems as it is of private insurance, which is
why everywhere in the developed world from
Japan to the
European Union is facing demographic Armageddon in their benefits system.)
There are two ways to solve that problem: One is to allow insurers to refuse
sick people, or people who are statistically likely to get sick, or to charge
them a great deal more money for insurance—and that has proved to be
politically difficult. The other way is to tell insurers that they cannot take
age or health into economic account and then require everybody to buy
insurance—otherwise, the incentives practically ensure that people will forgo insurance
while they are young and healthy and demand it when they are old or sick.
Having lightly insured young people and heavily insured old people isn’t
actually a terrible idea, provided everybody is willing to pay what that
costs—which, of course, basically nobody is.
If the Swiss system sounds like a great free-market
alternative, it is—up to a point. But it’s not all Milton Friedman. There is a
minimum plan that all insurers are required to offer—and required to administer
on a nonprofit basis. There are lots of subsidies and lots of price controls
and tons of regulation. But filling out forms is the national pastime in
Switzerland, more so even than shooting or skiing. (Culture matters: Our Second
Amendment speaks of a “well-regulated militia,” but it is the self-regulating
Swiss who have a militia-based national defense system, a nation full of guns
and a vigorous “gun culture,” and a homicide rate that is about one-half
that of the United Kingdom and one-11th that of the United
States.) As with U.S. health insurance, there are deductibles and co-pays (10
percent above a certain threshold up to a cap) to discourage over-consumption
of medical services.
The United States is governed by cowards, and so the
dirty work—putting downward pressure on consumption—is jobbed out to the health
insurance companies, which, in turn, are run by the kind of finance weenies who
weren’t smart enough to make it on Wall Street, abetted by bottom-shelf middle
managers, and overseen by the class of businessmen who are not creative enough
to start businesses and too lazy to sell real estate. Dealing with health
insurance companies is, along with the humiliations of commercial air travel
and trying to cancel a gym membership or an online subscription, the leading
cause of anti-capitalism in the United States; insurance companies have created
more de facto socialists than every English-language edition of the
works of Karl Marx put together.
And so the U.S. system is a mess. We have notionally
private insurance, but the government decides who gets covered, the terms of
coverage, how prices are set, etc. There is no individual mandate, but insurers
still have to take everybody and are not allowed to reject sick people or those
likely to get sick, nor are they allowed to charge such beneficiaries
economically appropriate rates. Men generally have lower lifetime medical costs
than women, but insurers are forbidden to take account of that fact. (Because
we all care so much about facts!) The government even penalizes insurers
for excessive … efficiency, forcing them to pay out rebates if they fail
to meet the government’s required medical loss ratios (the share of premium
revenue paid out in benefits and quality improvement). Insurance companies
cannot use prices to organize their business activities, and so they create
ersatz prices for consumers in the form of absurdly complex and cumbrous
procedures for reimbursement and approval, wearing the consumer down until he
accepts a higher real cost or a lower real benefit. Transparency is out,
opacity is in. Another way of saying this is that we have intentionally created
an insurance system in which exhaustion and frustration are literally monetized
(i.e., they are used in lieu of money). Any time you have a system in which
prices are not permitted to do their work—coordinating scarce resources—then
you end up with a system in which something else is used to try to get at the
same result. Using the wrong tool for the job is always and everywhere the
short route to failure.
Like any other business, medical practices and hospitals
and clinics and laboratories and all the rest of the firms that make up the
health care industry know who their customer is. And it is not the patient, but
rather the party that pays them. Ideally, the party that consumes the service
and the party that pays for the service would be the same party—that simplifies
things and makes sure that the incentives of the provider are more closely
aligned with the incentives of the consumer. In a better health care system,
consumers would simply pay for routine, foreseeable services the same way they
pay for cars or cheeseburgers or trips to Disneyland or mobile phone services
or anything else. Where consumers have choices—and I can hear your objections
before you’ve even voiced them, so hold your horses; I’ve been down this road
before—then competition among providers puts appropriate downward pressure on
prices, encourages investment, improvement, innovation, etc. The mobile phone
in your pocket is hardly even the same category of thing as that Motorola brick
Gordon Gekko was carrying around back in the 1980s, and competition is the
reason such devices have grown better (Gordon Gekko couldn’t use his phone to
order sushi or get directions or watch a video) and cheaper (that Reagan-era
phone cost 1.35 times the price of a Rolex Submariner, or more than $12,000 in
2024 dollars) while American public schools … have not improved on the price or
quality fronts, to say the least.
Now, to take the stupid and obvious hypothetical that
somebody who hasn’t read this far already has emailed me or written in the
comments: It is true that if you are hit by a gravel truck or that if you have
lung cancer, then you are not in a great negotiating position. You aren’t going
to take out your (remarkably innovative and surprisingly affordable!) iPhone
and call an Uber to haul you to the next hospital in search of a better price.
I’ll get to those scenarios presently, but, to reiterate: We have lots and lots
and lots of ordinary, routine, foreseeable medical expenses that we should be
paying for as though they were a cup of coffee or a Honda Civic, and we would
almost certainly have radically better and more affordable care in those areas
if we did. If your complaint is that people can’t afford to do that, then you
have a tricky question to answer: If Americans as individuals and families
cannot afford to pay for routine health care, then how the hell are Americans
as one big indiscriminate national lump supposed to afford paying for routine
health care? If nobody can afford it, then how can everybody afford
it? Even if you deduct private profit and corporate administrative costs and
such from the equation (which is nonsense, but, arguendo), the math
doesn’t get a lot better. If your answer is “My nurse practitioner is too
greedy—she drives a Lexus!—and rich people don’t pay enough taxes!” then you
are a very silly person who doesn’t deserve to be taken seriously.
Now, about those gravel trucks.
Properly understood, health insurance is—repeat it one
more time!—a financial product, not a medical product. It is not a club, nor is
it, as that dope from The New Republic seems to think, some sort of
pre-paid medical-fee scheme. Insurance is a hedge. Which is to say, it is a way
of transferring a specific (very specific! Read the paperwork!) kind of
financial risk from yourself to another party, which charges you a fee for
assuming the risk. Having health insurance is no more an invitation to consume
medical services than having mortgage insurance is an invitation for someone to
default on a mortgage. But we live in a fallen world, and these things happen.
Insurance is prospective, not retrospective: You can no more meaningfully
insure someone against a pre-existing condition than you can meaningfully place
a bet on last year’s Super Bowl. The odds of things that have happened having
happened are 100 percent. Nor does it make very much economic sense to insure
against ordinary things that are certain or nearly certain to happen. I don’t
know whether my insurance covers the price of (cover your eyes, RFK Jr.!)
vaccinating my children, but I’m going to get them vaccinated and assume that
it will cost me a few bucks.
When my first son was in utero, there was a little
something that turned up on a scan that was worrisome. (Turned out to be
nothing.) The doctor said we could get a fetal MRI and possibly learn
something, but it was unlikely that insurance would cover it. “Fetal MRI”
sounds really expensive, but we live in an age of wonders, and it ended up
costing a couple of hundred bucks. Yes, that’s a heavier lift for people who
make less money than my family does, but forcing insurance to cover it wouldn’t
make it any less heavy a lift—the underlying expense would stay the same, but
it would be laundered through the insurance system, adding complexity (and
probably cost) to the procedure. A couple of hundred bucks in the long-term
expense of having a child is not a very big deal. One could imagine a financial
product intended to sort of smooth out medical expenses so that, say, a $1,500
procedure could be paid out in small increments over a year rather than all at
once, which would be a convenience (with a price attached!) for families
on tight budgets. Some people imagine that this is what health insurance is—but
it isn’t. You don’t pay health insurance premiums in order to offset medical
expenses—you pay premiums for the benefit of offloading the financial risk
associated with sickness or injury, which is why you get something for your
insurance premiums even if you go through life never generating a doctor’s
bill.
Conflating the financial benefit with access to medical
services is at the heart of our misunderstanding of what insurance is and
is for.
About every third trip to the gun range, I’ll see a guy
trying to use a knife as a screwdriver. Guys who go to gun ranges tend to be
the sort of guys who carry knives—and you’d think that they’d carry appropriate
tools, too, or at least have a few needful things in the truck (guys who go to
run ranges tend to be the sort of guys who drive trucks), but, nope. There’s
that one guy, trying to use a Benchmade Saddle Mountain hunting knife (you
know: in case you unexpectedly have to skin a buck) to turn a flathead
screw on a scope mount or something like that. It is, as the wise men say, the
most expensive and least effective screwdriver you will ever use. And using
health insurance for a routine $400 trip to the pediatrician is more or less
that: the wrong tool for the job, and an expensive one.
If you want to fix the problem, you need the right tool.
And moral hysteria isn’t it.
And Furthermore …
“Adopting
a pet shouldn’t be this hard,” says the Salon headline. I always
enjoy it when progressives discover things like burdensome regulation and
unintended consequences.
Try starting a business, kids!
Words About Words
Ye gods. I’m not exactly Mr. Feminist Ally or Mr. High
Levels of Sensitivity, but I don’t think I would write “Her first date felt off”
as a headline description of an encounter in which a woman says she was drugged
and raped.
But, yeah: off. I guess so, Slate.
Foundered, not floundered,
New York Times: “As Their Business Flourished, the Marriage
Floundered.” To flounder is to flop around, fishlike; to founder is
to run aground on the rocky shoals of marital alienation and then sink.
Economics for English Majors
DOGE discourse is giving me a headache. It has been
suggested to me that the thing to do is basically fire the entire federal
workforce and then hire people back one at a time as the need for them can be
documented. Here’s an even better idea: Why not fire the entire civilian
workforce and replace them with … nobody? I’m sure an AI or whatever could do
the job. Surely that would balance the budget?
No, of course not. The entire civilian workforce accounts
for only about 4 percent of federal spending, and that’s all-in: salaries,
benefits, retirement, etc. Cut half the military personnel on top of that (and
most of those civilian workers you’ve already cut are in DoD, Homeland
Security, and other defense and security jobs) and you still barely make a dent
in federal expenditures. That’s because the U.S. government is not like a
private business, and most of its expenses are not payments to federal workers—they
are payments to your grandma, with Social Security, Medicare, Medicaid, and
interest on the debt eating up the biggest chunks of spending. (National
security all-in is just under 20 percent.) There are places where the federal
payroll can and should be reduced, but that is not going to amount to very much
when it comes to the main fiscal problem, which is the deficit. As with the
conversations around health insurance, moral hysteria is no substitute for
doing the g——–d math.
And Furtherermore …
Congratulations
to the New York Times and W. J. Hennigan for this fascinating and
terrifying piece. This is what newspapers are for.
U.S. military personnel at Space
Command, in Colorado Springs, have kept a close eye on Cosmos 2553 ever since
it reached orbit. Bathed in the bluish glow of their computer screens, they sit
and watch what’s going across all of space day after day, tracking the latest
information on satellite constellations, coming rocket launches and the daily
operation of the space-based systems that shape modern life.
But Cosmos 2553 is different. It
circles Earth every two hours in a region called a graveyard orbit. Only 10
other satellites are out there, and all of them have been dead for years. The
area is rarely used in part because it’s inside the Van Allen belts, zones of
high radiation that encircle the planet.
That’s why Moscow claims Cosmos
2553 is there — to test out “newly developed onboard instruments and systems”
against radiation. But what it’s really doing, U.S. officials say, is testing
components for a Russian weapon under development that could obliterate
hundreds, if not thousands, of critical satellites. Cosmos 2553 isn’t armed,
but it does carry a dummy warhead, one of several details being reported here
for the first time. So while the orbiting satellite poses no imminent danger,
the officials caution it does serve as a forerunner to an unprecedented weapon.
Idiocracy
isn’t the only satire that’s starting to look like prophecy.
In Conclusion
Of all the things that Pete Hegseth should be embarrassed
of, this
Wall Street Journal headline ought to be near the top of the list:
“I’ve Faced Fire Before. I Won’t Back Down.” Hegseth served honorably in the
military, by every account I’ve heard. And that is nothing like being accused
of the sorts of things Hegseth is accused of—or the things that are obviously
more than mere accusations. There are very few things more pathetic than a
veteran trying to hide behind his service when facing criticism for behavior
utterly unconnected to that service. That is some shameful stuff. A man with
any real self-respect wouldn’t have permitted it to be published over his
name.
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