Heath Insurance as a Social Program

In a capitalistic society, we realize and accept that one’s means for enjoying material things which can be purchased in the marketplace is going to depend primarily on one’s financial capacity, with those of greater means having greater access to things.

Modern day developed societies are not purely capitalistic though, although some are more so than others, but we still rely substantially on social programs which are designed to assist those who do not have the means to access life’s basic necessities such as a minimal amount of food and some sort of shelter.

Heath Insurance as a Social ProgramWe could rely on the charity of others to accomplish this, but success in overcoming these severe financial needs will depend upon the generosity of others, which can vary and is very often not sufficient to maintain these minimum standards that we set.

In some countries, people are simply left to die, but developed countries both have the capacity and the will to create social programs which will act as a safety net of sorts, to allow even people with no money and no means of earning it to be able to obtain the bare necessities of life.

We have welfare programs which allow those in sufficient need to be given funds to help them manage things, and although this is not without criticism and problems, and is often subject to abuse, we generally agree that we should have some sort of system like this in place, and therefore the idea of this is accepted even though the means of delivering it may be subject to dispute and modifications.

We also have set up social programs to benefit the elderly, which generally involves a managed and often subsidized annuity program where people pay into it and collect payments after a certain age. We may also convey certain benefits upon those who may have never paid into the program, as a means of assisting those in financial need who may otherwise be left without sufficient means.

How Health Insurance Fits into This

We have also classified health care as one of our basic needs, at least a certain type of health care anyway, and it’s not surprising that we would want to assist people with major medical events lest their lives be cut well short or perhaps ended if they were not able to get the care needed to preserve their health.

We could see this as an extension of the welfare system, to provide assistance with health care expenses, especially major ones, for those who may not be able to provide for this on their own, either out of their own pockets or by buying adequate coverage.

While we normally would only want to cover health care expenses that we cannot afford, those whose incomes are low enough and can’t afford insurance aren’t generally going to be able to manage to pay for even smaller health care expenses, even a routine trip to the doctor.

If we decide as a society that we want to help these people, as we do in many countries, that’s not unreasonable. Libertarians will argue that all of this should be left up to charity, but this leaves open the possibility that this may not be sufficient and people may be left to die.

Social programs are a form of forced charity, where we contribute to this according to our means through taxation. Whether or not we may feel that this is an affront upon our personal liberty, this is how governments work, and they appropriate funds in a similar way and by way of a similar rationale for all the projects and expenses they undertake.

When we do this though, we at least need to be focused on the right things, and public health care goes way beyond this and looks to serve and assist everyone regardless of their ability to pay. Whether or not this is appropriate or efficient is an open question and one that we need to consider.

The Disconnects with Public Health Care

Perhaps the biggest obstacle to confining public health care to what all social programs should be focused on, to provide for those who otherwise cannot provide for themselves, is the view that public health care is a pure benefit without costs to users.

It is as if the funds for this grow on trees, and this leaves a lot of people with the view that they want it to pay for everything and want as much coverage and access to health care as possible. They will push their governments to spend more on health care and this often becomes a major political issue in fact, with those who are more generous toward it more easily gaining public support and becoming elected.

Any time there is a disconnect with reality like we have with the perception of public health care insurance, this will have us overspending on it, even though governments usually take it upon themselves to exercise restraint in spite of their clamoring constituents to do the opposite.

The other major issue with this is that we need to be seriously wondering why those without the need for social assistance end up receiving it, even those fabulously wealthy. On the other hand, these people may argue that since they have to pay for the health care of many people through their much higher taxes, they should at least get the benefit of this coverage as well.

In addition, in some countries, all the money in the world cannot buy you better health care than that provided to the general public, and people even have to travel to other countries such as the United States to get what they want. Many people see a multi-tiered system as extremely undesirable and unfair, and even though others may be heavily subsidizing their health care coverage, they do not want these people using this additional wealth to obtain higher cost services than they are provided themselves.

How We May Address These Problems

The first step we need to take if we want to strive for a more sensible and reasonable public health care system is to better inform participants of the true costs of the program, and simply making the per capita costs known would be a good start.

We also need to ask ourselves why those who do not have a financial need for an aspect of a social program would be included in it, and the majority of people who are can manage at least everyday expenses on their own, although hiding the costs through taxation does seem better if we are only looking at this superficially and do not understand that we end up paying for these things anyway.

If it turned out that these expenses would cost less if we just paid out of pocket instead of having the government pay for them, then that should be pretty convincing, and we do know that all insurance schemes involve significant administrative costs which would be avoided if these smaller incidents were left up to the public to pay out of pocket.

This is all at least worthy of a proper analysis but even with one and even if it did show significant savings, the problem of people perceiving and actually even receiving the savings through lower tax rates is a matter of dispute and concern.

With the extremely high debt loads that governments bear, it would actually be more fiscally responsible for them to use whatever savings emerged and pay down debt, which may take the load off of future generations but may not benefit current taxpayers much at all.

Governments could also just spend the money on something else, and there is always something else to spend government funds on, and all of these scenarios may likely leave people with higher net costs, money being spent from their own resources on these things without a corresponding savings in tax paid.

Such a solution would therefore require these corresponding tax savings to be passed on, not only to make these changes more palatable, but to make them manageable as well, as well as popular enough to survive the longer-term political process. Without this, a government that takes on such a contentious issue without enough public support will just end up being replaced by a new government with a mandate to undo these changes.

We may also object to public health care only covering certain things, which may leave people who choose alternative methods of managing their health with having to pay for the insurance but not reap many of the benefits.

This all only really addresses more incidental health care expenses, but if someone chooses to have functional physicians manage their health for instance, instead of conventional doctors, they are paying for the visits to doctors that they don’t use and not receiving any reimbursement for the visits and care they do receive.

This is a problem with health insurance in general these days and is certainly not limited to public health insurance, but as we gradually move away from conventional medicine and toward more holistic approaches, this will become more and more of an issue, and the time to be considering this more properly is now.

We can argue that none of these expenses should ever be covered by any insurance, whether public or private, conventional or so-called alternative treatments and consultations, but public health care and third-party funded private health care have grown into such massive beasts that reform will be difficult.

This is not unlike a situation where someone has become addicted to something, and it’s actually pretty fair to say that we as a society have become addicted to comprehensive health care insurance, as we see all this as benefits being bestowed upon us and we are reluctant to give up these perceived benefits even if they just serve to increase our health care costs overall.

If we truly want to use public health insurance as a social program, the outcome should be to provide for those who cannot. This will include protecting everyone to some degree, such as against major or devastating financial costs and ensuring that everyone can receive this sort of care when needed, but it certainly does not have to be anywhere near as inclusive as it is.

When we make it too inclusive, we simply turn this into a state-run health care insurance monopoly where participation is mandatory, as well as a tool for income redistribution that goes well beyond the scope of normal socialist standards in modern day democracies.

In this inclusive environment, public health insurance becomes more like buying everyone a good car and having the public pay for it, where just about everyone can afford to buy their own cars. For those who cannot, it may make sense to use public money to buy one for them, but for the rest, it makes far less sense.

While public health insurance is not only widely accepted in countries that offer it but even well loved, this does not mean that we cannot improve it, and in doing so, we do need to seek to strip away whatever false perceptions people have about it, because the first step in fixing something is understanding what the issues that need to be addressed actually are.


Editor, MarketReview.com

Robert really stands out in the way that he is able to clarify things through the application of simple economic principles which he also makes easy to understand.

Contact Robert: [email protected]

Topics of interest: News & updates from the Federal Deposit Insurance Corporation, Retirement, Insurance, Mortgage & more.