Can Obamacare save your uninsured friends?

Will repealing Obamacare kill your uninsured friends? New York Times columnist Nicholas Kristof thinks so. As evidence of a need for universal health care, he cites his own friend-Scott Androes who died this month of prostate cancer after he put off seeking medical attention in part due to lack of health insurance. Kristof concedes that Scott "blew it":

He could have afforded insurance, and while working in the pension industry he became expert on actuarial statistics; he knew precisely what risks he was taking. He's the first to admit that he screwed up catastrophically and may die as a result.

Nevertheless, Kristof argues that President Obama's health care reform will keep others like Scott from befalling the same fate.

Scott's story is tragic, to be sure. However, evidence shows that government-funded care is by no means a guarantee of better health outcomes.

Consider that the U.S.-despite not having universal health coverage-generally has much higher cancer screening rates for adults 50 and older than Europe.[1] On average, a 52-year-old American such as Scott would have nearly four times the chance of getting the PSA test used to screen for prostate cancer than his "modern" European counterpart with national health insurance.

Of course, some will argue this is an apples-to-oranges comparison insofar as Americans have higher incomes than their European counterparts. Admittedly, U.S. GDP per capita is a about 1/5 higher than that of Canadians and Germans and about 1/3 higher than UK's. Yet, a difference that small cannot account for a three- to four-fold difference in cancer screening rates.

Along similar lines, the 5-year survival rate for prostate cancer is 91.9 percent in the U.S. vs. 51.1 percent in UK, 66 percent in Sweden, 63 percent in Norway, 38.4 percent in Denmark, and 85.1 percent in Canada. Thus, America's markedly superior performance calls into question Kristof's assertion that Scott's death "might not have occurred if he had lived in Britain or Canada or any other modern country where universal health care is standard."

Additionally, Obamacare does not cover PSA because the U.S. Preventive Services Task Force (USPSTF) rated it as "Grade D." But let's not quibble over details. Even if Scott had failed to obtain a highly recommended preventive service such as colorectal screening, we cannot chalk this up to his being insured since we know that Americans on average only receive about half (54.9 percent) of medically recommended preventive care services. Though this failure to obtain recommended preventive care is more common among those without insurance, it also is clear that many with insurance coverage nevertheless do not obtain medically recommended preventive services even when cost is no object.

Providing universal coverage of preventive services is by no means a guarantee that people will get them. That's especially true in light of a too-often-forgotten Duke study that found that if U.S. primary care physicians adhered to every USPSTF recommendation, 1773 hours of a physician's annual time (7.4 hours per working day) would be needed simply for the provision of preventive services. This would 85 percent of the time such physicians devote to patient care.

Which gets us back to Scott's story. Why didn't he get the care he needed once it became clear something was wrong? Scott asserted that back in December 2003, when he quit his job as a pension consultant:

I didn't buy health insurance because I knew it would be really expensive in the individual policy market, because many of the people in this market are high risk. I would have bought insurance if there had been any kind of fair-risk pooling.

We don't have enough details to draw definitive conclusions. However, we know that when he died, Scott was living in Seattle, Washington-a state that essentially destroyed its individual health insurance market by mandating that all insurers take all comers, regardless of health, and by prohibiting them from charging higher premiums to such individuals. If Scott was seeking affordable coverage in Washington state, it's not that surprising he may have not found it, but this is the result of misguided regulation rather than a flaw in the individual health insurance market.

In a state that did not aggressively interfere in the individual market, it would have been straightforward to obtain affordable coverage. In such markets, insurers would have sensibly charged higher premiums to those who purchased coverage after they were sick than to individuals such as Scott (who at the time he elected not to buy health insurance was healthy). Moreover, as Mark Pauly has patiently explained in his book, Health Reform Without Side Effects, most people who are initially denied private health insurance coverage due to health reasons ultimately are able find affordable coverage simply by shopping around.

According to the CBO, Obamacare will increase the average premiums in the individual health insurance market by 10 to 13 percent in 2016 compared with what those premiums would have been without the law. Though the law would have made subsidies available to purchase coverage through the new state health exchanges, we don't know whether Scott would have qualified for such subsidies given his income as a tax accountant. Since the penalty for not being uninsured in 2016 ($695) would be far below the expected cost of an individual health insurance plan ($5,800), there's no guarantee that someone like Scott-who clearly knew the risk he was taking and was well capable of performing an accurate benefit-cost calculation for himself-would have elected to get insured. Quite the contrary: knowing that Obamacare requires insurers to take all comers, he might well have strategically elected not to get insurance, signing up only after getting a confirmed diagnosis of cancer, thereby ensuring that his gamble to go without coverage was bankrolled by taxpayers instead of personally.

This may seem like a harsh speculation, but consider Scott's own account:

In 2011 I began having greater difficulty peeing. I didn't go see the doctor because that would have been several hundred dollars out of pocket - just enough disincentive to get me to make a bad decision.

If several hundred dollars was sufficient incentive for him to make a bad decision, why would we expect him to pay an extra $5,200 when the law only required him to pay $695? Moreover, think even harder about this situation. This is a Harvard graduate, described by his friend as an "expert in actuarial statistics" who had evidently saved tens of thousands of dollars over the years by not purchasing health insurance between 2003 and 2011. His friend acknowledges Scott could have afforded health insurance, yet this man opted not to check out blood in his urine because of concerns about having to pay several hundred dollars out of pocket. Nevertheless, Mr. Kristof's position is that "while Scott was foolish, mostly he was unlucky." Consequently, he concludes that it would be uncivilized to roll back Obamacare since "We all make mistakes, and a humane government tries to compensate for our misjudgments."

Reasonable people can disagree on the merits of using government to protect people like Scott from themselves. Scott's plight is not the result of one bad choice, but nearly a decade's worth of repeated decisions not to elect to obtain health insurance (even though he fully conceded the foolishness of the risk he took in doing so) and not to seek care he could have afforded. It is regrettable that Scott's gamble turned out as it did.

Still, Scott's case is a very thin reed on which to argue for Obamacare. Scott's failure to obtain coverage was not a market failure reflecting a lack of consumer information or awareness about the need for coverage. Nor was it the result of an inability to afford coverage. It was the result of a financial roll of the dice Scott consciously made, no different in that regard than the driver who foolishly ignores a "check engine" light or fails to regularly put oil in his car.

America is a very compassionate society-more generous by most measures than its European counterparts.[2] I have no objection to passing the hat for someone such as Scott and letting free individuals decide for themselves whether his mistake merits their support. In contrast, I have great concerns about conscripting American taxpayers to erect an elaborate and expensive system to protect future Scotts from similar bad choices. Forced charity through taxation isn't charity. And as I have tried to show, there's no guarantee that it would make the world a better place even for people like Scott. But one thing it would do for certain is to shrink the liberty that hundreds of thousands of brave Americans over the centuries have lost their lives to preserve.


[1] The figure shown is from my book, The American Health Economy Illustrated.

[2] This assertion is amply documented in Arthur Brooks' new book The Road to Freedom.


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