426. Overhauling Health Inequality feat. Amy Finkelstein

unSILOed with Greg LaBlanc

How complex are the dynamics of employer-based insurance? Is the time ripe for a radical transformation towards universal basic healthcare—a move that could potentially curb the spiraling expenses and offer stable access to care?

Amy Finkelstein is the John & Jennie S. MacDonald Professor of Economics at MIT and the author and co-author of several books including We've Got You Covered: Rebooting American Health Care and

Risky Business: Why Insurance Markets Fail and What to Do About It.

Greg and Amy discuss the truth behind America's healthcare conundrum. Amy peels back the layers of the nation's healthcare system, exposing the patchwork structure that's left millions without stable insurance and grappling with soaring costs. Amy lays out the progression of medical practices and the government's shifting role in health insurance. Greg asks about the effects of cost-sharing in systems with universal coverage, and they weigh the pros and cons of mandates versus automatic health insurance provision

*unSILOed Podcast is produced by University FM.*

Episode Quotes:

Why did insurance get so highly insecure and highly uncertain?

05:59: Almost everyone who's privately insured, which is about half the population as you said, is getting their insurance through their employer. And that actually can create a fair amount of this uncertainty, this insurance turnover. If you lose your job, change your job, retire, become ill (and therefore lose your job), you can lose your health insurance. And that's not a particularly sensible way to design a health insurance system. The very purpose of health insurance is to provide some modicum of economic and financial security in an insecure and uncertain world. So it's quite perverse from our perspective that health insurance is itself highly insecure and highly uncertain. And you asked, why did it get that way? I think because, there was never a "let's start with a clean slate and figure out how to build a coherent system" moment.

The true purpose of universal health coverage

48:15: We're arguing that we wouldn't have to raise taxes to provide universal basic coverage that fulfills sort of our commitment to access to essential medical care, regardless of resources. But we're not arguing, nor do I think it would be true, that this is actually going to save money. But again, this notion: when people advocate, we're going to do something to save money. So often, that's both a bit of a stretch, but it's also, I think, a bit of a distraction in the sense that the purpose of most policies is not to save money. It's to accomplish an objective, and we pay for that objective. We don't say we're having national defense to save money. We're having it to be secure. Similarly, the purpose of health insurance is not to save money; it's always nice if you do, but it's to ensure access to essential medical care, regardless of resources.

Why do people find it hard to invest in preventive care?

52:02: In general, there's a sense that it's hard to get people to take their statins to lower their cholesterol after a heart attack, even if those statins are free – so it's not about financing. And why? One of the theories is, well, you've got a lot going on in your life, and when you don't take the statin, there's no immediate feedback loop. You don't immediately have a heart attack. And so you don't see the benefit, and that makes it harder to remember…[52:48] Part of the reason it's hard to get people to invest in preventive care is because the returns are not so salient or obvious. You have to believe the evidence and remember it all the time, as opposed to seeing with your own eyes what's happening when you change your behavior.

What does health insurance really mean?

08:53: The term health insurance is a bit of a misnomer. Health insurance doesn't actually insure your health. It's not providing the fountain of youth. Instead, it provides economic or financial protection against the medical costs of poor health.

Show Links:

Recommended Resources:

• Gross Domestic Product
• An Act for the relief of sick and disabled seamen
• Friedrich Hayek
• Massachusetts Health Care Reform
• Charles Murray
• Alexander Hamilton
• Affordable Care Act

Guest Profile:

• Faculty Profile at MIT
• Profile on Wikipedia
• Profile on NBER

Her Work:

• Amazon Author Page
• We've Got You Covered: Rebooting American Health Care
• Risky Business: Why Insurance Markets Fail and What to Do About It
• Moral Hazard in Health Insurance
• Google Scholar Page
• MIT Economics Publications List