Man Without Qualities

Saturday, November 15, 2003

Medical Insurance As A Non-Priority Item

Consider this passage from a New York Times report on middle class people losing their health care insurance:

Ms. Pardo, a 29-year-old from Houston, said that having no insurance meant choosing between buying an inhaler for her 9-year-old asthmatic daughter or buying her a birthday present. The girl, Morgan, lost her state-subsidized insurance last month, and now her mother must pay $80 instead of $5 for the inhaler. Rent, car payments and insurance, day care and utilities cost Ms. Pardo more than $1,200 a month, leaving less than $200 for food, gas and other expenses. So even though her employer, the Harris County government, provides her with low-cost insurance, she cannot afford the $275 a month she would have to pay to add her daughter to her plan.

Isn't there something more than a little bit odd about an article that presents medical insurance as an essential, whose loss forces people into the most dreadful choices, casually explaining that the $240 cost for a child's medical insurance must come from what is left over after rent, car payments and insurance, day care and utilities?

And what is one to make of this passage:

Mr. Thornton, 41, left a stable job with good health coverage in 1998 for a higher salary at a dot-com company that went bust a few months later. Since then, he has worked on contract for various companies, including one that provided insurance until the project ended in 2000. "I failed to keep up the payments that would have been required to maintain my coverage," he said. "It was just too much money."

These people are not poor, and they are not unaware of the costs and risks connected with the decision of whether to purchase or not purchase health insurance. They are making consumption choices - and they quite clearly view health insurance as of a type with other ordinary goods. Indeed, in the case of Ms. Pardo, health insurance seems to be an ordinary good that is of less signifiance than economizing on rent, car payments and insurance, day care and utilities.

Of course, the middle class is not alone in expressing a sometimes low value assignment to medical insurance. Recent reports of state-subsidized health insurance simply going unclaimed by eligible low-income people are also striking.

Many economists treat the decision not to purchase health insurance as somehow "irrational" - or evidence that people who don't purchase such insurance are simply incapable of evaluating the risks and benefits. But the growing population of middle class people choosing to forego health insurance even though they could afford it if they chose to economize on other ordinary expenditures is strong evidence to the contrary. The inclination of economists to second-guess such decisions may have more to do with the relative risk aversion of economists compared to the population as a whole than it has to do with the ability of middle class people to evaluate these costs and risks for themselves.

Of course, if one takes this risk and actually develops a serious medical problem, one is normally perfectly well inclined to make use of whatever argument one can lay hold of to pay for the costs of one's own decision. But that doesn't mean one didn't understand the risk or make the choice.

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