Why Universal Healthcare is the Great Moral Dilemma of Our Time

HEALTH IS WEALTH

The wise person who once said that “health is wealth” surely was on to something. Nothing is as foundational to individual well-being as good health. Sharp eyes, sturdy limbs, and a healthy heart convey a great quantum of utility, perhaps immeasurable in exact economic terms but nonetheless eminently tangible. Similarly, wealth also conveys a certain utility. And therefore the two are, in a way, fungible. However, health does not literally translate to wealth, health does not cause wealth.

The directionality of the causation in this statement is more accurately stated in reverse, in that “wealth is health”. What do we mean by this? Does wealth cause health? We explore this notion below. We suggest that, so stated, this is an accurate reflection of the current state of the world and holds great significance for the moral fabric of our day.

 

CAUSATION

To be precise, we do acknowledge that there is indeed some causation in both directions. Health and wealth truly are entangled correlates, in that one implies the other. Or more accurately, the lack of one implies the lack of the other. To wit:

NOT Health => NOT Wealth
That is, if a person is not healthy enough to work, he may not be able to earn a living.

And secondly,
NOT Wealth => NOT Health
That is, if a person does not earn enough, he may not be able to afford healthcare.

These two causal relationships present two formidable moral dilemmas. One of which is our current cause célèbre!

 

SLINGS AND ARROWS

The moral dimensions of the first dilemma are fairly obvious. As a society, we might wish to provide some measure of protection to the individual against random exogenous forces. Sickness or disability can truly be outside of an individual’s control, and they truly can strike anyone. Every walk in the woods holds the unwelcome specter of Lyme disease, every day in the quarry brings unwanted exposure to carcinogens, even an innocuous bike ride is not without its mortal risks (we speak from experience on this one). Illness, particularly chronic illness, can be devastating to an individual’s ability to work, and thus the disutility of ill-health is then compounded by the loss of livelihood.

But through the pooling of its resources, society can function as an insurer of last resort against such misfortune, providing an offset to this double-jeopardy. There is very little moral hazard in such a scheme. These misfortunes are akin to Shakespeare’s slings and arrows of outrageous fortune, and there is no reason that collectively we shouldn’t attempt to counter them.

 

DILEMMA DEUX

The second of the two dilemmas is more complex in its moral nuance: what does it mean for a person to not be able to afford healthcare. If lack of health is an exogenous misfortune, as we argue above, can the same be said of a lack of income? Is someone who does not earn enough to afford healthcare simply the victim of outrageous fortune (with its slings and arrows), or is there something else going on here that qualitatively distinguishes Dilemma 2 from Dilemma 1?

The first point to note here is that Dilemma 2 is a dilemma at all because healthcare is expensive. If healthcare was cheap, if it was comfortably within the means of each & every one of us, then there would be no problem to solve. Indeed that is the likely state of affairs at some point in the future, when medicine will have progressed technologically to such an extent that it will be as readily available as air. This is within the realm of possibility, because the marginal cost of manufacturing medicine is low and falling further. Put a different way, once the initial cost of research & capital has been sunk, every incremental pill is essentially costless (the same is true to a lesser degree of medical procedures). However, we have clearly not reached this state of technological nirvana yet. The World Health Organization estimates that ‘total health expenditure’ per capita in the United States is $9,403 (2014 figure), one of the highest in the world. The US Census Bureau estimates per capita income of $28,930 (2015 figure). The math is daunting for any household, particularly for those at or below the mean, for they barely have the means for just food & shelter – therefore expenditure on healthcare is a luxury. In economic parlance, the cost of healthcare is non-trivial, very much so.

The second point to note here is that healthcare does feel like a moral imperative, like an inalienable right akin to freedom. Or at the very least like a humanitarian obligation. There is nothing more wrenching than seeing a person suffer in bad health, particularly when the remedy is known & available. To not save a life, when it can be saved, is inexcusable.

And therein lies the rub. For how do we satisfy the moral imperative of saving life, every life, when the cost of doing so is non-trivial? What of those who cannot afford that cost, of whom there are many? In other words, what does it mean when wealth becomes a necessary (though not sufficient) condition for health?

 

OPINION NOT FACT

At this point we would like to make an ideological claim, and this is something that perhaps on another day we would disagree with ourselves on. While we would not argue that those who cannot afford them should drive Audis, we do wish to suggest that those who cannot afford it should have healthcare (at least some basic version of it). And this is a point that different schools of philosophy will render different opinions on, because the justification for societal intervention is not as clear as it was with our Dilemma 1.

In other words, we cannot definitively say that the individual who cannot afford healthcare is entirely the helpless victim of external forces. Perhaps this individual is prioritizing leisure over work leading to lower income, or perhaps he is frittering away his earnings on gratuitous consumption. There are several conceivable scenarios where the individual might bear the blame for his particular situation.

But, let us ignore our hypotheticals and put aside this ideological debate for a moment. Let us be idealists and ask instead: What can be done to bring healthcare to all in the land?

 

SOLUTIONS

The simplest way to pay for healthcare is on an individual transactional basis – if you need a Tylenol you shell out $5 at the pharmacy, if you need a heart transplant, then you can surely have that as well but it’s just going to cost you a little bit more. In fact, this is the system that exists in much of the world, particularly in the emerging markets. If you need medical attention, you go to a practitioner just like you would go to a hair dresser for a haircut.

However, this transactional system is ultimately untenable – morally untenable – because it does not provide for the thin-tail necessity of extremely expensive medical procedures. For instance, the likelihood that an individual will need a heart transplant is low, but the likelihood that he will be able to afford it is even lower. Heart transplants are abominably expensive, and one surely does not budget for them, ex ante, in the household ledger. Therefore any good healthcare system must have an embedded insurance component.

Therefore, our quest for universal healthcare is transmuted into a quest for universal health insurance. How can we devise a health insurance system for all? We suggest that there are two necessary rules or, more aptly stated, two necessary trade-offs, on the path to the promised land.

 

RULE 1:   FROM THE YOUNG TO THE OLD

The Achilles Heel of any insurance pool is adverse selection, and for healthcare the problem of adverse selection is particularly acute. If you are a young man of 21 years, the chances that you’ll need medical care are low. Whereas if you are an aged woman of 71 years, the chances of the same are essentially one hundred percent. If insurance was priced the same for both individuals, only one of the two would buy it. But, if we price discriminated on the basis of actuarial probabilities, then insurance for the old would in all likelihood be prohibitively expensive.

Hence, the first rule of universal healthcare is that: We need the young to subsidize the old. We need the young to pay more than they will consume, so that the old may consume more than they will pay.

 

RULE 2:   FROM THE RICH TO THE POOR

Assuming that we were somehow able to persuade the young to voluntarily cough-up (pun intended) for the old, we have still not fully satisfied our humane obligation. We have subsidized insurance for the old by leaning on the young, but we have still left out in the cold those who cannot afford insurance at all, even subsidized insurance. What of those who simply have not the means for it, at any price on offer? And herein lies the second rule of universal healthcare: That it necessarily entails a transfer of wealth from the rich to the poor.

 

INTELLECTUAL HONESTY

We at The Neanderthal posit that a functioning and consensual universal healthcare system cannot be built, until & unless we societally acknowledge these two fundamental rules. To provide healthcare to All, we must ask the young & the rich to come to the aid of the old & the destitute. Without these twin pillars, no edifice of universal healthcare can stand.

There is much ongoing debate in Washington that is grasping for some mid-point between the humane imperative of providing healthcare for all and the substantial wealth transfer that that would necessarily entail. The Republicans wish to limit the latter, and the Democrats prefer to emphasize the former. However instead of invoking the structural twin-pillars that we have articulated, most of the debate has descended into anarchy.

The only way out of this quagmire is to do the math, honestly and accurately, on how much it would cost to provide health insurance for all. And then to do the math on what kind of wealth transfer that would require, from the young and from the rich. The partisan tug-of-war on underlying variables – such as the inclusion or exclusion of pre-existing conditions, or assistance thresholds based on multiples of the Federal Poverty Level – is merely an exercise in ideological warfare. And it is a war that is being fought blind, without unbiased data and analysis.

Washington DC, and America more broadly, would be much better served by an acknowledgement of, and a fact-based discussion on, the inherent trade-off between maximizing coverage and minimizing transfer. Americans deserve nothing less from their elected officials.

 

FOOTNOTES

  1. http://apps.who.int/nha/database
  2. https://www.census.gov/quickfacts/meta/long_INC910215.htm

 

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