The Benefits of Health Benefits

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Ezra asks why, if I think the benefits of health insurance are so minimal, I have health insurance.  Revealed preference!  Gotcha!

But the answer as to why I have health insurance is simple:  my employer pays for it.  If my employer didn't pay for it, I wouldn't have it.  I'd buy a catastrophic policy from a reputable insurer to cover any amount that might bankrupt me, and self-insure for everything else.  That would probably cost me a little more than what I pay The Atlantic for my first-dollar coverage, so I opt for the first-dollar coverage.  It's not like I get the money The Atlantic is spending on my benefits back if I choose to go without.

But do I think I would be noticeably more likely to die if I did give up my policy?  Certainly not for the next twenty years, because I am unlikely to get cancer much before 65, and everything else that might kill me would be treated on an emergent basis, where insurance probably wouldn't affect my outcomes nearly as much as the fact that I am an upper middle class professional with a (soon to be) husband who writes about health care policy for a living and a father who used to work for the New York City health and hospitals corporation, both of whom will no doubt be sitting on top of the doctors and the hospital bureaucracy to make sure I get excellent care.  At 65 I qualify for Medicare, if it hasn't bankrupted the government.

Morbidity?  Maybe.  But we're more likely to take out a second mortgage to cover physical therapy than we are to go without.

I'm pretty sure my life would be, on net, better if I had the cash wages and a catastrophic policy instead of the health benefits.  As someone who's moderately sickly, I've spent a lot of my life worrying over false positives from tests of dubious pertinence, and no time at all treating conditions we caught early.  But the system is not set up to facilitate real insurance; it's set up to hide the cost of medical treatment from as many people as possible, because we have developed a social belief that no one should have to consider the cost of medical care, except maybe your friendly neighborhood bureaucrat.

All of this hints at the problems that plague many of the studies Ezra and others have been citing, showing marvelous results from insurance:  as I said in the beginning, uninsured are not like the rest of us.  Do I think that my risks would shoot up to match those found by the studies Ezra likes?  No I do not, and I doubt that Ezra would try to argue otherwise.  I have immense resources at my disposal, most of them non-monetary.  There are many ways in which I would like to even out those differences, but privilege cannot be transferred into someone else's checking account.  Indeed, as libertarians are fond of pointing out, government systems can frequently end up catering to privilege even more than the private sector; check out which post codes in Britain or Canada get the best medical services, or check out the massive disparities between the educations received by the poor children in New York City public schools, and the educations received by the middle class kids whose parents lightheartedly imagine that by siphoning an excess share of the system's resources into their little darlings, they are somehow supporting the cause of educational equality.

But I digress.

If I suddenly lost my health insurance, I would still be a comfortably middle class person who would pay my doctor's bills out of pocket, and wouldn't miss an important checkup with the pulmonologist or the immunologist.  I would be, well, pretty much like I was during the years that I was uninsured, and spending quite a large portion of my meager earnings on doctors bills.  I might end up bankrupt.  But outside of the kind of fluke that afflicts any system from time to time, I would not end up dead.

Now, bankruptcy is a real problem with the healthcare system, although advocates for a national system tend to attribute them all to medical bills, when lost income seems to be a much larger problem.  Based on what I know about the literature, I doubt that even a very generous national health care system would reduce medical bankruptcies by as much as half.  Households whose expenditures are predicated on having two incomes are simply in a very bad position when one of the two wage earners gets sick.  Nonetheless, I'd like to see us move to a system of government reinsurance of at least basic medical expenses over a certain percentage of income.

But not because I'm sure it would make us all noticeably healthier.  I have rather modest expectations along those lines.  But as fond as I am of easy bankruptcy, I'd still like to see less of it, particularly in cases where no amount of planning could have enabled an individual to avoid it.  Catastrophic medical bills fall into that category--and unfortunately, in many states regulations have made it impossible for people to obtain sensible catastrophic coverage.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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