In the New York Times Magazine this past week, Peter Singer writes about health care rationing and determining the value of health care. Why We Must Ration Health Care. Towards the end, Singer writes,
“Will Americans allow their government, either directly or through an independent agency like NICE, to decide which treatments are sufficiently cost-effective to be provided at public expense and which are not? They might, under two conditions: first, that the option of private health insurance remains available, and second, that they are able to see, in their own pocket, the full cost of not rationing health care.”
Under a state-run single payer national health program, as in the UK and Canada, the state is tasked with making this cost-value calculation. A national health service may not pay for a procedure where the life value is thought to be less than its cost.
But in the American system of private health insurance, don’t insurers already place a value on life? And they are asking that question as “is this good for shareholders,” rather than “does the public interest in general welfare support the cost?” Aside from the small minority of Americans who can afford to pay for their health care at retail cost, most Americans rely on the judgment of their health insurance carrier to determine whether a procedure is cost-effective or not.
In theory, a free market allows customers to pick and choose between insurance plans and coverage. But in the absence of stricter regulation, the public is fairly limited in which plans they can choose. In addition, individuals typically rely on employer-provided health insurance, which makes switching carriers to a more responsive carrier or comprehensive plan difficult.
A state-run single payer plan is accountable to the people. While it might be a bureaucratic mess, how could dealing with that bureaucracy be any worse than dealing with a private sector health insurance company? With a public plan, these cost-benefit decisions are ultimately under the control of Congress, and each elected representative or Senator is accountable to his or her constituents.
Private health insurances companies are primarily held accountable by their shareholders, for whom the primary reason for owning stock is profit (especially for the large institutional investors who hold enough stock to have an impact on electing the board.) State regulators do not have the same direct chain of oversight that Congress would have over a national public health insurance plan. So wouldn’t a Federal health plan be more accountable to the people it covers than the private health insurance industry?
(In general, health insurance companies are serving their stockholders by insuring only the healthiest people to subsidize as little use of the health system as possible. Perhaps public health is a public good, and a goal of its own right that is never going to be an efficient market when incentivized by profit.