Tuesday, August 03, 2004

Failing to provide health insurance for every American impedes economic growth.

Why you’re right:

1. The government already pays for health care for the uninsured. Annually, the government spends approximately $30 billion on health services for the uninsured. This number includes Medicare and Medicaid disproportionate share payments, state and local appropriations to public hospitals, and federal grants to community health centers, among other programs. (Kaiser Family Foundation)

2. The value of health lost due to uninsurance has been estimated at $65 - $130 billion. While a complicated and imprecise process, monetizing the value of life and health is a project policymakers and regulatory agencies must engage in constantly. The estimate’s wide range demonstrates the thorniness of ascribing a dollar value to quality of life, but it is imperative that this, the most important cost of uninsurance, not be ignored in dialogue because it is difficult to express. (Health Affairs)

3. The uninsured are less economically productive. One survey found that an uninsured employee is twice as likely to be absent from work due to a dental problem than a coworker with health insurance. Poor health causes increased absenteeism and worker turnover, as well as lower productivity for workers on the job. (The Commonwealth Fund)

Why they’re wrong:

Die-hard advocates of the free market claim that, were universal coverage really the most economically efficient outcome, we would reach it via the invisible hand, and that no policy change is therefore necessary. However, this analysis is flawed for several reasons.

1. It fails to take into account the role of information failure. The uninsured may not choose to invest in insurance because they do not fully understand the risks and costs associated with uninsurance.

2. Costs to productivity due to ill health are irrelevant to employers if those declines occur after retirement or among short-term workers, so the employer may be acting rationally in failing to provide insurance.

3. Overall, the aggregated costs of uninsurance are not absorbed by one group or another, so that, while it may make sense for each group (individuals, employers) to decline to provide coverage, universal coverage would create the best outcomes for society as a whole. (Health Affairs)