Someone Explain to Rudy That The Human Body Is Not Like a House or Car

Rudy Giuliani has some strange ideas on health care. He regularly resorts to demagoguery in calling Democratic proposals, which are very similar to those enacted in states under Republican Governors, as “socialized medicine.” While he might not support getting government out of health care in issues such as use of medicinal marijuana, he does support reducing the benefits people receive from health insurance, whether from government or from employers. During the last Republican debate, Giuliani said:

Health insurance should become like homeowners insurance or like car insurance: You don’t cover everything in your homeowners policy. If you have a slight accident in your house, if you need to refill your oil in your car, you don’t cover that with insurance. But that is covered in many of the insurance policies because they’re government dominated and they’re employer dominated.

As US News reports, and Cato-at-Liberty confirms, libertarians like this idea. They find this idea similar to that advocated by Arnold Kling:

The health coverage most Americans have is what I call “insulation,” not insurance. Rather than insuring them against risk, most families’ health plans insulate them from paying for most healthcare bills, large and small. Real insurance, such as fire insurance, provides protection against rare, severe risk. Real insurance is characterized by low premiums, infrequent claims, and large claims. American health insurance—including employer-provided insurance and Medicare—is the opposite. Families typically are paid claims several times per year, often for small amounts. Premiums are high—the cost of providing insulation often exceeds $10,000 per year per family. However, most families pay these premiums only indirectly, through taxes and reduced take-home pay from employers. . . . Insulation relieves the patient of the stress of making decisions about treatment. The patient also does not have to worry about shopping around for the best price. The problem with insulation is that it is not a sustainable form of healthcare finance.”

While I am very sympathetic to libertarian goals which promote greater liberty in general, libertarians often allow ideology to blind them from making an accurate assessment of the situation. There are situations where government action can be beneficial without excessively restricting our liberty.

Despite Giuliani’s analogy, health care is not like fixing up a house or car for many reasons and making people pay more of their health care costs out of their own pocket is a poor solution. While most people who own cars or homes have to periodically pay for upkeep, health care costs are not as evenly distributed. Some people develop problems requiring far more medical care than others over their lives. As nobody can predict their future health care needs, one purpose of health insurance is to spread out this risk. It is far better for everyone to have predictable insurance costs than to face the types of medical bills which results in a tremendous number of people going bankrupt every year.

While insurance does partially insulate patients about making decisions about treatment, this is often beneficial. Health care decisions require far more knowledge than it takes to compare prices for a home or auto repair. Decisions on health care based on price may turn out to be poor decisions in the long term. As we find with Medical Savings Accounts, when patients are making decisions motivated primarily by price, they tend to put off preventative care and treatment of chronic medical problems. The routine care for chronic diseases is far more expensive than changing oil periodically, and for the average person such care is only affordable with health insurance.

It is far more cost effective in the long run to treat chronic problems such as diabetes and hypertension early, than to pay for bypass surgery, renal dialyses, and post-stroke care if these conditions are not adequately treated. Here we see a major difference between the health care policies of Rudy Giuliani and the Democrats. It is not that the Democrats are supporting socialized medicine, but that the Democratic candidates realize that making treatment of chronic diseases more affordable is beneficial for everyone. Polls show widespread support for increased government involvement to make such health care affordable, but few will go along with Rudy Giuliani’s ideas of paying more out of their own pocket.

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