I’ve been thinking about national health care for a while now, and am happy to see the Obama administration attempting to address the problem.
I’m not sure that I agree with the approach they’re proposing, but then I’m not sure anyone else has offered a workable alternative.
(To be honest, I’m not sure that I genuinely understand the details of the various approaches which are being proposed, and I don’t think I’m alone).
I do think that the system is broken, and by sharing one observation I hope to add to the conversation in a constructive way.
My thought starts with the concept of capital. Capital is stuff (land, machines, buildings, money, people etc.), which is used by both public and private entities to make other stuff, which is then consumed.
In principle, our free-market system allocates capital to its most efficient use and this is a good thing.
In fact, the markets are pretty good at moving capital from inefficient uses (making videocassette players) to more efficient ones (making Blu-ray DVD players). There are lots of examples of efficient capital transfer by markets, but you get the idea.
Now the key problem as I see it, is this:
National health care, as it exists today, inappropriately constrains the efficient movement of human capital within our markets.
Human capital is arguably the most important kind of capital. Constraining it leads to all sorts of problems, on both the supply and demand sides of the equation.
Today, if someone has health insurance through an employer, that person is often afraid to change jobs simply because they cannot afford to risk their health insurance coverage.
Period. End of story.
The pay at the new job might be better.
The new job might be a closer fit to the person’s interests and abilities.
The market which seeks them has quite probably figured out a better way to leverage their talents. That’s it’s only job, after all.
But, because of the way our national health care system is currently architected (largely ad hoc, in my street guy’s opinion) people can’t afford to take the chance that their health care might be negatively impacted as a result of moving. And so they stay at their old job.
They’re stuck. Inefficiently allocated, if you will.
My evidence is strictly anecdotal, but my gut tells me I’m right. There are very few people in my circle who can afford to treat any non-trivial medical condition on their own. A couple of days in the hospital at our own expense and most of us would be bankrupt. Do not pass Go. Do not collect 200.00. Game over.
As a simple example, I offer the relatively recent births of my three children (all within the past 5 years). The births were uncomplicated and the hospital services were not extraordinary. The average cost per baby was about 25,000.00. Just paying for one would have wiped us out. Paying for all three would have been completely impossible.
The 75,000.00 in avoided expense doesn’t include the collective 27 months of prenatal care, nor the collective years of routine pediatric care which have been ongoing since.
Excellent health insurance is a significant part of the reason I stay with my current employer, and I don’t think I’m alone. (I happen to greatly enjoy my job, but that’s beside the point as far as this argument goes).
As I discuss this thought with friends, I find that they have a similar interpretation. This suggests to me that people, arguably the most valuable capital asset in the economy, are very likely inefficiently allocated throughout our nation based solely on a constraint built of fear.
What’s strikes me is that because this inefficiency is based on fear of the unknown, it’s not just inefficient, it’s actually cruel. Cruel because it is certainly avoidable, albeit with some cost to all of us. But remember the guess – we’re going to get more out of this machine we call a society because, for some strange reason, humans need to trust before they can really excel. Mazlow was right.
I think it’s a simple mathematical ratio thing. I just don’t know what the gearing is.
But I’m guessing that when we free up a human by making sure a couple of dollars (on average) are set aside in case there’s a pickle, we will end up earning more than we spent. This will occur through any number of social mechanisms, many oriented around values which are real. But being real doesn’t always include being easily measurable.
The whole proposition is unnerving because it’s unprovable in advance. Agreed.
Nonetheless, we ought to remove this basic fear-based need, as we did with water, shelter, food or pick-your-largely-eradicated-need, because doing so has just got to be good business. It was for those examples. It will be for this, too.
Thanks for reading.
