Tuesday, January 5, 2010

Left out of Reform?

This link is to a story about how the proposed health reform now before Congress would actually alter the financial and health care circumstances of two real families in Philadelphia who are representative of those who reform is mostly aimed at, the working poor. The short answer to how much this reform would help families in this circumstance is "not much."

This is not so much an argument against health reform, or the passage of the imperfect bills in Congress, as it is a reminder of an often forgotten fact. That is that the health care reform debate is largely carried on by people, myself included, that already have good health insurance coverage, in the name of, and about, those who have no health insurance at all. The great irony of this fact allows the noisiest aspects of the debate to be about how any health reform might alter the coverage or access to medical care of those already well covered.

In economic terms this is a case where an issue of average effects - what health care is available on average to all Americans - has been transformed into an issue of marginal effects - what health care might mean for the marginally best care received by those who already have good health insurance coverage.

This article highlights the real issue at stake: how "average" access to care is accomplished by working poor families who currently cannot afford health insurance.

Economists, Libertarians faithful to the supposed benefits of a free market in health care and health insurance and both Republican and Democratic lawmakers often miss this point. There are substantial numbers of people who are currently uninsured that the market does not want to, and cannot afford, to insure for health care. These working poor families are a
legitimate aim of reform, but some of them may still be left out from the type of access to the health care system that those of us who are well-insured are used to.

If you have no health insurance at all, then reform that allows you to get insurance is a major improvement. Any extension of inclusion in the health care system to such families is good thing, and the proper measure of success of any reform. But, by the same standard, the proper measure of the continuing failure of that same "reformed" system is the continuing existence of any families that are still left outside such access.

Evidence such as that provided in this article is useful in that it shows both the original goal of reform and the remaining failures of that reform. We should not be misled into thinking that this reform will magically solve all of the problems of our current health care system. As this article details, for one thing there will still be families in the "reformed" system who will choose to remain uninsured, even with the subsidies that may characterize the final version of health reform bills that will gain passage in Congress. Future incremental improvements to the current system might gain access to the American health care system for all such families. As of now we cannot predict this with any acceptable accuracy. But now including some families in access seems better than including none.

The real question for health economists is whether or not a market (regulated or not) is an aid or a hindrance to widening access to health care in America? The facts of the last 20 years, when health insurance markets were given the most rein in America that they have ever had and simultaneously shrunk health insurance coverage to a smaller and smaller percentage of Americans with each passing year, should have settled the issue of whether a "free market" (whatever that is) can or wants to offer universal coverage. Markets and commercial insurance do not seem to be the answer to the "average" issue detailed above. But they do seem to work very well on the "marginal" aspects of health care coverage.

"Reconciliation" in Congress will not alter these facts or reconcile the average and marginal problems. Only more political action can do that. It is still an open political question whether the American political system will, or even it wants to do so. What is not open to question is whether with the passage of the current bills it will already have done so.


  1. Thank you for making the point that markets have had ample time to close gaps in coverage. If they were going to do it, they would have by now.