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Care for Chronic Conditions

Apropos my health insurance essay, I was asked to say more about medical care for people with chronic conditions.

To the extent insurance companies are successful at basing premiums on risk, in contrast to other potential ways of grouping such as by employer or by age (which is only one of many risk factors), people with chronic conditions will not be insured for those conditions.

There will be no market for insurance against an risk with probability 1. Premiums have to be higher than claims, and if everyone's making claims, the cost of administering the insurance is simply unnecessary. It's cheaper to pay out-of-pocket. It may be reasonable to obtain insurance that specifically excludes the chronic condition, but covers other risks. However, that isn't what the query is really about.

The real question is: How will those with chronic conditions pay for their medical care, if not through insurance?

The answer is: If they can't afford it themselves, they'll rely on charity.

That's terrible, you may think. Well, how are the chronically ill paying for health care today?

If through insurance, it's only due to the fact that other people are overpaying relative to their risk, subsidizing the chronically ill. That isn't fair to the healthy. It's particularly unfair to the poor, who might have to go without insurance due to the cost of the subsidy but who could have afforded insurance otherwise. (Which "victim group" is more important, the poor or the sick? Justify your answer to those in the opposite group.)

If through a government program, the chronically ill are already relying on "charity", although it would be better characterized as legalized theft. Voluntary charity is clearly morally superior to theft. Opposition to it must be based not on morality, but on on the fear that charities wouldn't raise enough money. How much money are we talking about? In 2003, the government spent $435 billion on Medicare and Medicaid payments. With roughly 215 million adults (an estimate for the number of taxpayers), that's over $2000 each. A lot of money. But whatever the amount you actually pay, think about the following questions.

If the government programs were ended and your taxes were correspondingly cut (say, by $2000), would you give it all to charity? No, you prefer the system as it is? You'd rather force yourself to give to charity rather than giving voluntarily? Why — because you're angry at people who would take the tax cut and not give to charity, when you'd do precisely the same thing? Pot. Kettle. Black.

Hypocrisy aside, I believe the criticism is valid — I don't think private charity would raise $435 billion annually. I also don't think it would need to. Because these government programs are viewed as an entitlement, rather than as charity or (more honestly) as theft, there's no incentive to limit consumption. A recipient of charity is modest, and the charity itself would be interested in seeing its money well-spent, not giving a virtual blank check for care. I do not know how much money this would save, but I am certain it would save some.

Voluntary charity is ethical and would save money. The obstacle is fear that despite the savings, it wouldn't raise enough money to pay for the level of care people want to enjoy. I suggest that despite this, it is the right direction to go. Someone has to say it: Health care is not a right.

Tiny Island