Saturday, September 26, 2009

The moral hazard of a public option

As the health care debate heats up I keep hearing political pundits like Ed Schultz cite situations in which a person has a health problem but does not have insurance and is thus being denied the care they need. Ed's most recent example was at a town hall for some republican congressman where one of the attendees spoke about a woman she knows who has stomach cancer. This woman has several tumors in her stomach that need to come out but because she doesn't have health insurance she cannot afford the operation. Of course without knowing any more information Ed jumps all over this and says this is why we need a public option and anyone who doesn't support a public option should be ashamed of themselves and so on.

What Ed Schultz never says though is who is going to pay for this lady's operation. Ed supports the public option so it can be inferred that he thinks the government should pay. The problem is the government has no money. We the people provide them with money. When the government pays, I pay, you pay, Sally in Minnesota pays, Tom in Alabama pays, and every other person who has never met this lady pays for her operation. Not that this is in itself a bad thing. Helping others is a very worthwhile. The problem is that Sally, Tom and I never get to know who we are helping before we are forced to pay. Has this lady been taking care of herself? Does she smoke, drink, do drugs? With something like cancer maybe it could not have been avoided. But what about bypass surgery? Type 2 diabetes? Lung cancer brought on by smoking? Are we all supposed to subsidize the treatment of these and other ailments just because it is the "right" thing to do, regardless of whether the situation could have been avoided?

I think that it is important to think about this kind of stuff every time you hear one of these stories. There are people who are suffering and there are people who need help, but we should not be forced by the government to help those who do not help themselves. In my opinion the public option will create a moral hazard in health care. According to the supporters of the public option, the poor will be subsidized and no care will be denied. So millions of people will pay nothing into the system and yet have access to every benefit, all in the name of being compassionate and caring. What is their incentive to stay as healthy as possible? We need health care reform that puts people in charge of their own health with things like health savings accounts and tax free dollars to buy health insurance on the open market. Only when people are confronted with the full cost of their health care will they make the healthiest decisions.

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