Episode: 2360
Title: HPR2360: Tradeoffs in the US Health Care System
Source: https://hub.hackerpublicradio.org/ccdn.php?filename=/eps/hpr2360/hpr2360.mp3
Transcribed: 2025-10-19 01:42:07

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This in HPR episode 2,360 entitled,
Train Offs in the US Healthcare System.
It is hosted by a huker and in about 13 minutes long
and carrying a clean flag.
The summary is,
financing healthcare means choices to be made.
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Hello, this is a huker welcoming you to Hacker Public Radio
and another exciting episode.
And I'm going to continue my look at health insurance
and healthcare policy in the United States.
This time looking at Train Offs.
Now as we saw last time,
the United States has historically relied on a marketplace approach
to providing health insurance in the main.
There are exceptions,
such as the Veterans Administration Hospitals,
which provide directly healthcare to military veterans.
And then there are somewhat hybrid approaches,
such as Medicare and Medicaid,
in which the government acts as the insurer,
but the actual provision of healthcare
is through private providers,
that is doctors and hospitals.
But majority is still insurance by private insurers
and actual healthcare by private providers.
In my case, which is pretty typical,
my family is on a private insurance plan
which comes from my employer.
I pay a portion of the monthly premium as a payroll deduction,
but that most likely is still less than half of the total premium.
When I started working many years ago,
it was normal to have the employer pay all of the premium.
But the rise in healthcare costs over recent decades
has caused cost sharing to become the norm.
Now what we need to keep in mind is that in the US,
healthcare costs have been rising
and from all the data I've seen more rapidly than in other countries.
And this has led to conflicts among different interests
to shift these costs in various ways.
But any attempt to change the system,
what we'd like to call reform,
starts to look like squeezing a balloon.
You can squeeze in one place and it just bulges somewhere else.
That is why there are trade-offs.
For example,
suppose a populist politician proposes to stop insurance companies
from using pre-existing conditions to deny insurance to people
or to limit their insurance coverage.
As a consumer, I'm likely to applaud this.
Very few people like to run into this limitation.
But as we saw previously,
this is a strategy insurance companies use
to hold down their costs and maintain profitability.
So how will insurance companies respond?
Probably they will either raise their premiums
if they can do so and in the United States,
the government frequently regulates these premiums.
And if they cannot raise them, they will exit the market.
Now in the United States, we have what is called federalism,
which means that there is not a single regulator.
There's actually one for each of the 50 states.
So we have 50 separate markets.
It's not unusual to see a company stop offering insurance
in a state that does not give them a reasonable chance at profitability.
Well, that is not exactly what we wanted,
but it does point out that there is no free lunch here.
What might induce insurance companies to accept no limits on pre-existing conditions
without leaving the market and without raising premiums?
Well, you would have to offer them something to make up the loss in some other way.
You might, for instance, offer them exclusivity in the market,
but that would affect other companies and reduce competition.
Or you might do something like mandate that everyone would have to purchase insurance,
thus increasing the size of the pool and raising the revenue of the companies.
Sounds great, but wait.
Mandating that everyone buys insurance means that some people have to spend money that they maybe didn't want to spend.
This is where we have to acknowledge that individuals are not a homogeneous group with aligned interests.
Some people with pre-existing conditions are thrilled to get insurance,
but others, mostly younger and healthier, don't regard it as a necessary priority.
So there is still conflict here.
Now, the political problem here is that most people would love to get high-quality,
inexpensive healthcare when they need it, but would also love to not have to pay for high-quality
health insurance when they don't need it. Now, this is not really different from many other
public policy questions that come up and not just in regards to healthcare.
In the United States, this can lead to what are called unfunded mandates,
which is when the government requires that something must happen,
but does not provide any funding to help make it happen.
I don't think the United States is unique in this respect.
I'm only pointing out that political pressures have that effect.
An example in healthcare of this kind of unfunded mandate is something we discussed previously,
which is that hospitals are legally required to treat people in the emergency department,
at least to the point that their condition is stable.
Hospitals call this uncompensated care, but it still has to be paid for by someone,
and one way or another it will end up being citizens who pay for it.
For example, government pays a share in the United States through something called
Disproportionate Share Hospital, DSH,
colloquially known in the hospital finance business as dish payments,
which allowed the hospital to pass along a share of their uncompensated care costs
in proportion to the share of Medicare and Medicaid patient days out of all patient days.
So it's a proportionate allocation, and there's a link in the show notes that you can read more
about this from the Center for Medicare and Medicaid Services.
Now, in some cases, this may be passed along to private insurers,
depending on the contracts they have with the hospital.
There are cases where private insurers agree to pay a portion of the uncompensated care.
Most of this, though, is still left to hospitals to cover out of their funds.
Now, that reduces the money available for other uses, such as new plant and equipment,
and may lead to higher prices for hospital services.
Very often, you will hear about how much a particular procedure costs in a hospital,
and it seems like an outrageously high amount.
But if you take a look at the profitability of hospitals,
it's not outrageously high.
Whatever they're charging you is a proportionate to their costs in some way or another,
and this is one of the ways that tends to happen.
So I think the key insight we need to keep in mind is that there is no free lunch,
and that we need to pay for the services we expect to have rendered.
We can reasonably debate the alternatives in terms of how we pay for these services,
but there is no avoiding the need to pay for them one way or another.
So, we're going to pay what are the options?
There's a number of them. They all have consequences.
Other countries use a number of these approaches.
So, government-regulated insurance pools.
This was the basic approach of Obamacare,
and it is employed in other countries, for instance, Switzerland, has mandatory health insurance.
Germany has a system that, to me, at least superficially resembles Obamacare
in that it combines employer contributions, employee contributions, and government subsidies.
Now, as I've said previously, I am not an expert on every country,
so mostly what I know about is the United States.
But in looking at some of the comparisons, these are things that jumped out at me.
Now, what about non-mandatory private insurance alone?
In other words, if you want health insurance go out and buy it, if you don't, don't,
and this is a preference of at least a segment of U.S. politicians,
and would essentially be what we had prior to the enactment of Medicare and Medicaid in 1965.
Now, number of consequences of all of this, what do you do with someone who doesn't get insurance,
but suddenly shows up in the emergency room? We still have these issues.
At a certain point, this idea that buy insurance or not as you care puts us in the
position at some point of saying, all right, do we really want to provide health care to people
that don't have health insurance? So, if someone rides a motorcycle without wearing a helmet
and gets into an accident and requires brain surgery, do we just say, let them die?
Anyone who doesn't wear a helmet isn't that bright, and they didn't buy insurance, we don't care.
All right, what we could do that, but is that really the sort of society we want to be,
that's something we need to think about. Now, another approach, non-mandatory private insurance,
plus targeted government insurance, and that's basically what we had in the United States prior
to Obamacare. Most people had private insurance, usually through their employer. If you didn't have
it through your employer, you had the option of going out and buying it, but it was strictly optional,
but then you had Medicare and Medicaid that covered specific populations with needs that could
not be met through the private marketplace. Another option, basic government insurance with optional
private insurance that supplements it. This is now probably the most common among the various
developed nations. The government provided health care provides a floor that guarantees a certain
level of care to everyone, but people are free to purchase additional private insurance if they wish.
It looks to me like France and UK tend to follow this kind of model.
And then finally, you could have government-provided free health care.
Just, you know, the government provides it. That's it. And if story Norway does this currently,
generally ranks at or near the top of the worldwide health care rankings.
So it may be an expensive way of doing it. Maybe other countries couldn't do it. Norway does. They
have an advantage of a fairly low population, along with a lot of oil money from the North Sea.
So maybe that puts them in a better position. Now, the mix of funding in each of these options
is different. But once you realize that there is no free lunch and that health care has to be
paid for, just like any other service, you can see that reducing one component of the financing
will only increase another one. If you reduce costs for individuals, the costs to employers
and or the government will likely increase. If you hold down government costs, the costs
to individuals will probably increase. And that will lead us to the next topic, the competing
interests of all the players in this particular market. So this is Ahuka thanking you and reminding
you all again to support free software. Bye bye.
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