The Unintended Consequences of Universal Health Insurance

One of the Democrats' rallying cries has been the plight of all the millions of people who do not have health insurance.  Candidate Obama promised to change the system so that everyone would have health insurance.

The implication is that people who do not have health insurance don't get medical care and that giving people health insurance would save lives.  Although this seems like a reasonable assumption, a recent study shows that it's not necessarily so.  Newswise published a paper "Universal Health Insurance Might Not Save Lives" which states:

A new analysis suggests that universal health insurance might not save many adult lives - or any - if the United States actually puts it into place.

A previous estimate by the influential Institute of Medicine is too optimistic, said Richard Kronick, a former health care adviser to President Clinton who crunches numbers in a study appearing online in the journal Health Services Research.

In contrast to the Institute's estimate that universal coverage would save 18,000 adult lives per year, Kronick thinks the number is substantially smaller and possibly around zero.

"It's quite counterintuitive and it's not a message that most people, including myself, want to hear," said Kronick, a professor of family and preventive medicine at the University of California at San Diego.  However, "the evidence we have concerning the relationship between lack of insurance and mortality is not very good, and a reasonable reading of that evidence is that the number of deaths in the United States probably wouldn't change a lot if everybody gets health insurance." [emphasis added]

This analysis puts a different light on the health care debate; the major justification for giving health care insurance to everyone is to save lives. What if that justification is wrong-headed?  Would we still want to give everyone health insurance?

Mr. Obama has said that the $600 billion that has been allocated for health care costs is only a "down payment;" it's a safe assumption that any universal system will cost a great deal more than that.

Let's give health insurance the benefit of the doubt.  Let's go with the optimistic estimates.

Assume that Mr. Obama's health care system costs only (!?) $600 billion and that it saves 18,000 lives per year.  That works out to $33 million per life saved based on an optimistic estimate of lives saved.  We've written how requiring air bags in cars saved fewer than 1/10th as many lives as air bag advocates promised, which puts the cost per life saved by air bags at .5 million each.  Mr. Obama's changes to the health care system promise to cost a lot more per life saved.

One thing is certain - making health insurance more widely available will increase the demand for health care services.  In "Obama administration concerned about growing shortage of primary-care doctors," the Cleveland Plain Dealer wrote:

Obama administration officials, alarmed at doctor shortages, are looking for ways to increase the number of physicians to meet the needs of an aging population and millions of uninsured people who would gain coverage under legislation championed by the president.

The Association of American Medical Colleges is advocating a 30 percent increase in medical school enrollment, which would produce 5,000 additional new doctors each year.

"If we expand coverage, we need to make sure we have physicians to take care of a population that is growing and becoming older," said Dr. Atul Grover, the chief lobbyist for the association.  "Let's say we insure everyone.  What next?  We won't be able to take care of all those people overnight." [emphasis added]

It's known that increasing the number of people who are covered by health insurance increases demand.

The experience of Massachusetts is instructive.  Under a far-reaching 2006 law, the state succeeded in reducing the number of uninsured.  But many who gained coverage have been struggling to find primary-care doctors, and the average waiting time for routine office visits has increased. [emphasis added]

Massachusetts has more primary-care doctors per person than most other states.  Even so, making health care insurance more available has led to longer waits and difficulties finding doctors.

These facts are staring us in the face:

• Mr. Obama said that $600 billion is only a "down payment" on the cost of his health care program; it will almost certainly cost a lot more than that.
• Even if national health care costs no more than Mr. Obama estimates and it saves 18,000 lives per year, the cost per life saved is more than $3 million dollars.
• We can look forward to a doctor shortage.

Better hope you don't get sick while Mr. Obama's plan settles down.