International Politics

Discussion of health insurance has shown up on this forum again recently, specifically in regards to US government policy and social benefits. Mostly people are divided into two camps, those who think that the government should pay all health benefits for everyone, damn the costs, and those who think that the costs for such a plan are too high, damn the benefits.

Population vs. Uninsured numbers. Source: US Census Bureau

If I can be forgiven for using the dirty ‘c’ word, I’d like to propose a compromise that has not seen much play around here. Instead of pushing for full government coverage for everyone, why not try for government funded catastrophic health insurance for everyone?

In case anyone doesn’t know, catastrophic health insurance is a type of plan that has a very high annual deductible, but covers everything or nearly everything after that. The plan holder is responsible for the first bunch of costs accrued in a year, and then the insurance provider takes over payment. Essentially, it only covers serious medical problems, and doesn’t do really anything for the day-to-day ailments.

Such a plan would seem to meet most of the stated requirements for both camps. For those who oppose government run healthcare, a government catastrophic insurance plan would have much lower costs, and would not significantly increase the demands on our already overburdened health system.

Health care costs. Many of these costs would likely increase with a full public option. Source: The Economist

Because the government insurance doesn’t kick in until costs are already high, people won’t be running to their doctor for free full body MRIs every time they get a case of the sniffles; people still have a financial motivator to remain responsible about their utilization of health care resources. We’ll get to keep what motivators we have for the health care providers to compete on costs and services. We’re at greatly reduced risks of facing health care rationing. Such a plan would also not cost nearly as much as a full coverage government plan – the actual amount depending on where we set the point for government payments to kick in, of course.

For those who supported government run healthcare, you also get most of what you want. It’s going to be a lot harder to go bankrupt from medical bills even when uninsured, since the government will take over payment after a certain point. Additionally, since the government is covering costs after a certain point, private insurers have a known limit to how much they could possibly have to pay out in a given year, which will help drive private insurance costs way down for everybody. It’ll be a lot cheaper and easier to get insurance to cover everything before the government pay out kicks in.

I’m sure there’ll be resistance to that idea, since neither side gets everything they want. This is still another expense for the government, and it still means an expansion of the bureaucracy. People will still have to plan for some of their own health expenses in some way, and the private insurance industry will survive. However, a plan like this would get everyone almost all of what they want – much lower individual costs at a societal cost not too much higher. Beyond an unwillingness to ever do anything as uncomfortable as compromising with one’s ideological adversaries, is there any reason this doesn’t bear further pursuit?