Monday, October 27, 2008

Universal Healthcare = Economic Stimulation

The following is  from Summer Pierre's excellent blog, and she was borrowing it from Matt Haughey's blog, but it's just so doggone interesting I had to pass it along too:

Everyone I know that freelances or works a day job and wishes they could quit and follow their dreams of launching a company complains about the lack of healthcare. Whenever I used to talk about freelancing at tech conferences, the first question was always about healthcare coverage. I've heard that in places like Berlin where you don't have to worry about where your healthcare is coming from or how much it costs, up to 35% of working age adults are freelancers. 

It may sound crazy and anti-capitalist to consider healthcare for all, but if we flipped a switch tomorrow and everyone had health coverage I swear a million small businesses would launch overnight. I know lots of people that keep a job just to get healthcare that are wasting their creative talents because they had a cancer scare or were born with a defect or otherwise are deemed uninsurable on their own.

Makes sense to me!


Mark said...

Sorry, doesn't make sense to me.

Yes, perhaps "a million" small business would launch overnight. But would they be successful (and stimulate the economy) or would they fail and soak up tons of capital and human resources on their way down? I would expect [i]most of them would fail[/i]. Not being pessimistic, just realistic.

So now, I the taxpayer, have paid for all these people's healthcare so they could go chase their rainbow. I take on their risk, regardless of whether I agree with them or not. And then I would probably also get stuck with the bill when the Federal Government steps in with a Small Business Rescue Package ("The American Dream Act", anyone?) once they realize the pot of gold is not there.

The fact is, there are some considerable obstacles to launching a successful business. This is a [i]good[/i] thing, because it means that only the best, most compelling business cases - in the hands of the most competent and dedicated individuals - get off the ground.

Life is not easy. Work is work. Can't get somethin' for nothin'.

Kim said...

Seriously, how are we related? :)Mark, this group of rainbow chasers would also be paying taxes and contributing the same as everyone else. Not everyone can or should work for large companies that can offer affordable insurance, or any at all. I personally think that insurance for all is a very good thing, especially after living in Holland where that is the case. It's not "free" insurance, but it is a right (and requirement).
Jos (in a way a type of freelancer) doesn't have health insurance here and he works his butt off. But he loves his job, his dream, and he has a wife who can include him on family coverage... which keeps me working and baby in day care. We figured it out, but it would have been nice to have been able to even consider staying home or working part time. And oddly, I'm the least educated, least productive out of the two of us.
I don't think that it's a benefit to society to segregate adults into what kind of work they do, and deem some insurable and others a business risk.

The Dan Ward said...

Good questions & observations as always, Mark! Some additional thoughts for ya:

I'm sure there would be plenty of failures in the cohort of first-time freelancers & entrepreneurs, but I'd suggest that failures do stimulate the economy. Further, these failures would be relatively localized, unlike the gigantic Bank-zilla failures we've been seeing lately.

Businesses fail - that's life - and since we must have some failures, let's have small ones. Small business failures are really the best kind of failure, because their impact is relatively isolated and the opportunity to learn is maximized (because it's localized - the people involved see the impact of their decisions).

Also, the post didn't say the healthcare should be free or government-sponsored. It was about ensuring everyone could get coverage (and today, all too many people can't, for a variety of reasons). Sure, Uncle Sam would probably have a role there, but there are alternatives that don't involve simply nationalizing the whole medical system.

While I suspect most of the freelancers, small business owners and entrepreneurs would be pursuing practical, useful professions, I'd rather see more people chasing their rainbow than grinding away in Dilbert-esque blandness. Following one's passion is both good for the soul and good for society.

And finally, I agree completely that obstacles and difficulties are good - they make us stronger. The fact that work is hard is a natural barrier and appropriate to the market. But the fact that the talented Joe Smith can't risk leaving his job at MegaCorp and starting a small business of his own because he's got some pre-existing condition which would make him ineligible for health care is an artificial barrier, a mere artifact of the current healthcare structure... it hurts my head (and my heart) that a barrier like that is in place.

The Dan Ward said...

Good point, Kimmer! (You posted your comment while I was still composing mine, so I didn't see yours until I clicked done on mine).

Personally, I'm thinking about being a freelance writer and/or consultant after my time in uniform is over... and one of the reasons I'm comfortable even considering a move like that is the knowledge that I'll have AF-sponsored healthcare for myself & my family. If I had to pay for an individual policy given current policy costs, I'm not sure how I'd do that.

I'm also quite convinced that small is beautiful, particularly when it comes to business. There's just something right about a family-owned shop, a small group of people working directly on something they care about... and something almost cancerous about huge, impersonal enterprises where a person's contributions are virtually invisible.

The current banking situation is obviously convoluted and it's difficult to draw any conclusions from it yet, but one thing it seems to demonstrate is the danger of building an infrastructure out of institutions that are "too big to be allowed to fail"... 'cause sometimes, they do, and where are we then?

Kim said...

Right on, Dan!

Mark said...

Hmmm... how does one have "healthcare for all" but not "free" healthcare? I guess it would be to have a "fair" system where those who can afford it (the rich) pay more so those who can't afford it pay less. Riiiighhht...

And not everybody pays the same taxes. Certainly not in the world of personal income tax, and I am pretty sure businesses with a loss for the year do not end up paying as much as the profitable ones.

Hey, I am all for doing good things, chasing rainbows and enriching the soul - really, I don't mean to diminish any of that or sound (too) condescending. In fact, there's a part of me personally that would love to quit my day job (as much as I do like it) and start a business as a musician, recording engineer and/or instrument maker. That would have some pretty dramatic implications for my family - especially in terms of healthcare coverage. In a world of universal healthcare, how would my family be insured? If I joined a band gigging in clubs - would the band be forced to turn over a portion of it's take to the healthcare fund to pay the premiums? After beer money, there wouldn't be anything left! :)

So let's face it - while I do have passion for these things, and do devote some of my time and energy to them, I just don't have what it takes in those fields (raw talent, experience, gear/equipment) to be financially independent, even without healthcare costs factored in. This means I have to make the grown-up choices to work hard in school, get a good job, perform to the best of my abilities, and keep myself attractive to the best employers with the best benefits. Kim, you and Jos have clearly made similar choices with your family, and I commend you for it. You have done what it takes to be independent and self-sufficient, even though it might mean sacrificing some other areas. And that's my point... as you say "it would have been nice to have been able to even consider staying home..." - also, it would be nice for Dan to be able to be a freelance writer, it would be nice for me to be able to play music for a living, it would be nice if everybody had healthcare. All these things might happen in the future, but for all of them, some other things need to fundamentally change first. It would not be right for me to accelerate my dream by taking money from your pocket.

Finally, I am still scratching my head about how failed businesses stimulate economies... and the original thesis that reducing competition leads to more opportunities which then leads to more success seems flawed (the first step I'll buy, not the second).

Actually, one more thing: "I don't think that it's a benefit to society to segregate adults into what kind of work they do"
I agree!!! In this free society we have (at least for a little while longer), no one segregates adults into what kind of work they do, except for those adults themselves. Ye Olde Soviet Union, on the other hand...

The Dan Ward said...

I think it's important to point out there's no such thing as "free" health care, even in Cuba. Somebody always pays, and I'm not saying healthcare could or should be free.

I also recognize there's no such thing as government money - only the people's money, some of which gets pooled together via taxes for the common good to pay for things like streets, teachers, cops and defense. We can debate whether health care is more like food (which each person pays for directly) or more like a police force (which each person pays for via taxes), but I don't think that's really the core question here.

See, whether it's paid directly or indirectly, the bill needs to be paid (and I agree with Mark that I shouldn't accelerate my dream by taking his money - see my earlier posts about my economic philosophy). In my mind, this is really about lowering the cost of healthcare, to bring it into reach for more people. It's also about making sure the people who need it most -i.e. those with "preexisting conditions" - are not artificially restricted from getting it. Remember, the original post simply pointed out there is a potential economic benefit in terms of increased job growth among small businesses if more people had secure, reliable access to healthcare.

And please, small businesses and freelance work is indeed grown-up work. It's not all artsy novels and nightclub gigs - it's real services and products meeting real needs and satisfying real markets.

Now, as far as I can tell, one of the most effective ways to lower costs is to collaborate. That is, group policies are cheaper than individual policies. Thus, employees of big companies pay less than a freelancer would (but both pay, of course). So, what if we let everyone in on a big group policy (or let them pick from several group policies, etc)? I suspect (admittedly based on no data) that would save some $$.

As for failures stimulating the economy, failures lead to learning, which leads to growth. Also (and I realize this damages my small-is-beautiful position), the telecom companies who laid tons of fiber optic cable and then went bust actually helped spur the current IT revolution. I'm pretty sure that was a net gain, economically speaking.

One more comment - Ron Paul is kind of a nut in a lot of ways, but I think the first few paragraphs of this article are pretty interesting (tho I don't know much about the bills he goes on to recommend):

Kim said...

I don't get you, Mark.

Mark said...

That's ok, Kimmy - 'cause you're still stuck with me! ;)

I think our main difference here is how we would each answer the question: is healthcare a right, a privelege, a commodity, an obligation, or what? I think you said you see it as a right, and that's fine - I can certainly understand your position. I happen to disagree, because I think a "right" is something that no one can deny you. Meaning you have it already, and no one can take it away. (Like the right to vote, the right to speak your mind, etc). Healthcare is different - it is not something you automatically have just by being. Healthcare needs to be given to you by someone - healthcare requires a healthcare provider. That's what I meant before when I said you can't get somethin' for nothin' - it comes at a cost.

And now we're getting somewhere... yes, let's talk about lowering healthcare costs! But that is in my opinion a very different topic than what I read in the original post: "...places like Berlin where you don't have to worry about where your healthcare is coming from or how much it costs..." sounded to me a lot like "free" healthcare. And perhaps it's splitting hairs, but "Universal Healthcare" is different from healthcare that is "in reach for more people".

I think "open" group policies is not a bad idea at all - yes, there is strength in numbers. But even that does not go at the root cause of high costs, it is just a matter of massing together to out-bully the bully by negotiating reimbursement rates for standard procedures.

Where does the money go? Ron Paul's ideas touch on one aspect - ridiculous amounts of money spent on settling malpractice lawsuits, and doctors and hospitals paying big bucks for malpractice insurance. I haven't really thought much about the "negative outcomes" insurance bill he touts, but what about some legislation aimed at reducing frivolous lawsuits?

Another factor is that Americans demand top quality, cutting edge medical treatment, facilities, and equipment, which of course means expensive (my Big Company experience can attest to this directly). Again Ron Paul hits on this point in regards to the fact that most healthcare consumers do not have a vested interest in lowering costs. Most plans let you pay a $20 copay for a doctor visit - whether that doctor was top of her class at Harvard with years of experience, or just (barely) graduated from med school in Central America. And the providers are now forced to compete (or stay afloat) based on volume - higher patient throughput, faster diagnosis, more predictable treatment, out the door as soon as possible, next please... Patients get on waiting lists for "good" docs because they know they will get better treatment for the same cost. If, in addition to waiting longer for an appointment, they had to pay a market rate, you can bet that costs would come down as docs competed on cost as well as reputation. But that would mean that people paying less would get poorer quality healthcare... an ugly reality.

Of course, if this was an easy issue, we would have fixed it by now. It is an important issue and there are many other aspects to touch on here, but it's getting late and I'm getting tired.

By the way - I didn't mean to imply that all small business and freelancing is artsy - I was just picking on two examples that each of us personally are passionate about. I also didn't equate artsy with being not grown up or addressing real markets. And while I too see the beauty of Small, I do not necessarily think that Big=Bad (or "cancerous"). The medical products I work with every day just could not be developed or brought to market by a small company, unless that company had some serious external resources/partners and a very large budget for consulting and capital equipment. Sure, there are some bureaucratic annoyances that come along with a large multinational corporation, but I truly believe that the products we make save lives. The individual contributions I make may or may not be visible to corporate HQ, but if they make a difference to the patient with heart disease or cancer, then I'm ok with that.

The Dan Ward said...

I think this is some kind of record for the number of comments - and a very fun discussion.

I'm part of a pretty big organization too, obviously, so big isn't always bad. But I do think small is better, and even a big org does best when it organizes around small, interdependent but somewhat autonomous units. I suspect that's what happens with Mark's employer (and it's certainly what the AF does). Decentralized collaboration is a pretty powerful approach.

I'm sure there's more to say about this healthcare thing, and as Mark pointed out, if there was an easy solution we'd have found it already...

Kim said...

What about vegetarians? Should they get a break on health insurance coverage?


Mark said...

Actually, that's not such a crazy idea. Some private insurers offer discounts on gym memberships, etc to encourage healthier lifestyles. Sort of like "good driver discounts" for car insurance. If a private insurer wants to give discounts for certified veggie-eaters because they think it is healthier, then that's ok with me. Of course, they might require periodic urine samples or something to make sure you didn't sneak a bacon cheeseburger in with your lentils... How about offering coupons for grocery stores reedemable for veggies only?

Mark said...

Lucky comment #13!

Kim said...

There's a good idea - veggie coupons! At least one thing that we agree on. :)

You're right, I view health insurance as being a right. I think that in our society there are so many reasons to have affordable health insurance for all. The benefits make it worth the costs. As you pointed out, it's not uncommon for larger companies to offer healthy living incentives, and isn't that a good thing for the general population to have access to? My health insurance company gave me a $250 breastpump and 3 lactation consults, because it's worth$ it to them to do so. In contrast, new mom's without insurance coverage instead get free infant formula from the government, clearly not the healthier option both long and short term. A little investing can go a long way, and I believe that this would be true on a large-country-sized scale as well. Sure, there will be abuses, and some will pay more than others, but that's kind of the point of society, isn't it? Not everyone contributes equally but we benefit as a whole.

I wonder who is going to end up with the last word in this comment section...

The Dan Ward said...

Last word? Not me!

Kim said...

Or me

Mark said...

Ok, fine... me.

Kim said...

Okay Mark, you get the last word.

Mark said...


Kimmer said...

Boy, you were up late.

Mark said...


dad said...

Hi Dan (& Mark & Kim): looks like I waited too long to 'add in' to this 'erudite' discussion on health care. Interesting views from all 3 of you.... by the way, did you know that all three of you growing up from the time you were born (as well as your parents when they got married) benefited from 'socialized medicine' (free health care)... it wasn't called that by name, but that's what it was. When your Dad joined the AF right out of college with no money, no job skills, nothing but a hope & dream, & two suit cases (in the middle of the Viet Nam War) he did so mostly because the AF offered 'free health care' for life for him & his wife (your Mom) and for any kids that came along (you guys) until they turned 21... it wasn't perfect but it was always available served you and your family very well.... it still does.... enjoyed following your discussion very much... you are all very bright & very smart thinkers.... Dad

Mark said...

D'oh! Dad got the last word!

Oh, wait, now I did again... :)

Gabe said...

I've had some e-mail conversations with several folks who reside outside the US to include one Trevor Gay, who I dare say is very knowledgeable of the UK system. He advised that, as always, there are drawbacks to universal healthcare, but over all it works very well.

He did make a distinction, or at least I thought it was he, that "universal" isn't the same as socialized medicine. My take is that it just means you're covered, not that you're precluded from getting better health care if you wanted.

Seriously, if you have the money to get the health care you want, then do you really care if others are getting theirs through some type of government assistance?

Additionally, why is there such a big deal made about socialized this or that. I was brought up to think that socialized anything is evil because it leads to communism. That seems like an awful big leap of logic to me.

It seems you never hear about the cases where a socialized "something" turns out to be good. Yet there are. From this 20/20 episode on The Pursuit of Happiness: The people of Denmark are rated as being the happiest (Happy Danes). On the list of items why: universal healthcare. I'm not saying that the U.S. should adopt this Danish model, I'm just saying we should not simply brush aside certain socialized ideas.

Kimmer said...

Hey Mark, read this!

David Dzidzikashvili said...

Government run health insurance won't work – I think this example has been proven in many countries that tried government run healthcare and failed. But we also see that Private healthcare does not work either, sometimes people get disqualified because they have one of the million sicknesses listed in the applications and those companies try to give insurance to healthier individuals because healthy individual = less doctors visits, less medications and less drug coverage = more profits.

I think what we need is cooperation between government and private insurance companies. I do not believe it is right to list million health preconditions as a qualification test for applications and deny them healthcare. This is in fact barbaric, can’t believe in 20th century America we can disqualify an American citizen from healthcare coverage because 5 years ago they had an emergency visit. That’s where the government should step in and redefine all rules for private healthcare companies. These companies should not be able to easily disqualify families for coverage and if they want to stay in the game they have to actively work with the people, not just push them away. I think the better model of such healthcare is in Europe, the doctors still get paid very well and every sick person can go to doctor and take care of the their medical needs.

So the problem is obvious: get rid of health industry and drug company lobbyists and start listening to people. Until the lobbyists will have money, power and say, we will have this problem follow us as a shadow from dark past.