So I’ve been all kinds of busy with work, climbing mountains, catching up with friends, sleeping, and not writing on this blog. Sorry, dear reader. Luckily I stumbled across this Slate article that does most of the work for me. The article summarizes a conversation I have with friends relatively frequently and actually packs a decent amount of real health/health econ issues in. Therefore, it is…MANDATORY READING (Insert large, authoritative voice of your choosing here. I prefer Morgan Freeman.).
I think that most of the arguments we have around healthcare boil down to some pretty simple (not really simple) ideas: 1) How much healthcare do we consider to be the bare minimum acceptable? And 2) how then is this bare minimum financed? Examining the purpose of health insurance is an interesting way to look at this problem and I think the article linked to above does a great job of covering it.
I do wish, however, that the author started with an even more basic observation. Insurance is a financial product. Its intent is to cover the costs an individual or company would otherwise bear due to a catastrophic event. Fire insurance pays for the cost of rebuilding or replacing your house; it does not prevent your house from burning down. The same for flood insurance or car insurance. These insurance products are all actuarially sound (if you have a safe driving record or a fire extinguisher in your house you get a reduction). Following this logic, health insurance would cover the cost of a catastrophic medical bill and similarly be actuarially priced. But health insurance is not, generally speaking, actuarially priced. And maybe most importantly, unlike fire insurance where the probability of making a claim over the lifetime of the insurance policy is relatively low, in health insurance this probability is pretty much 1. And if you want your health insurer to actually help make you healthier, well that’s a whole different story.
When you combine these financial factors, 50 million+ uninsured people in our country, and the Emergency Medical Treatment and Active Labor Act (EMTALA in one sentence: If you show up in a medical emergency or in active labor on hospital grounds, not just the emergency department, you have to be evaluated and stabilized regardless of ability to pay), we get a situation where hospitals treat patients knowing that they will never receive payment for care delivered to the uninsured. My hospital writes off something in the neighborhood of $30 million per year in free care. This leads to the the cost shifting and implicit rationalization discussed in the Slate article.
So, we can try and fool ourselves into thinking that more competition is the way to reduce costs, but that does not hold in the insurance industry. EMTALA proves that we think that people (not just citizens – people) should receive emergency care regardless of their ability to, or choice not to, purchase an appropriate insurance product. That removes actuarially appropriate premiums from the scenario and leads us to our current situation.
As Donald Berwick has said, “The decision is not whether or not we will ration care, the decision is whether we will ration with our eyes open.”
Hard, Not Impossible 
This is such a clear explanation to help allay confusion on this topic: cost of care ≠ insurance for catastrophic cost. Preventative care (now expected to be covered by insurance) should lower the incidence of catastrophic cost, but universal health insurance does not fully solve the overall cost problem. It’s a step toward “opening our eyes” by attempting to understand the need. Right now we don’t have good data on the uninsured because so much is based on insurance claims. However, we still have not solved a key problem: care for the undocumented (who are by definition a special population of uninsured). As you mention, our hospitals treat patients in crisis regardless of need, and those costs are a big part of the equation. If we don’t include the undocumented in our plan, it’s not a holistic solution. We won’t prevent a significant percentage of the $30M in free care at just your hospital alone. And you’re right, this part of the problem is not solved by competition either. It’s often the hospitals with the least resources who end up serving the uninsured / undocumented, and though these hospitals are partly compensated for their work, it’s typically not enough to cover total cost. We need to find better ways to incent and reward our highest performing hospitals (and primary care centers) to care for the needy to break the vicious cycle. In particular, Critical Access Hospitals and Community Health Centers who are high performing in the areas of cost and quality must be given the financial support they need to continue to meet these needs and expand where demand exists.