Sicko!

I just realized it has been months and months since my last post. Wow. I have thought a few times about posting some random comments on here but I guess I haven't gotten around to it recently.

I just got back from seeing the movie Sicko! by Michael Moore. Interesting movie! I also found it interesting in that he seemed to step back from being such a big presence in this film. I enjoyed that, because it meant that he could focus on the stories themselves. I suppose one should throw out the usual caveats, in that he focuses very much on individual cases which don't easily paint the broader picture.

However in the case of healthcare I found that the cases speak for themselves. The fact of the matter is that it is those extreme cases that illustrate the problems with the US healthcare system. The main problem is that it is not universal. The actual method and way of getting towards a universal system matter less than the fact that it is not universal. He is merely presenting some examples of where the health care system breaks down. In fact it is a classic caes of market failure.

Now I happen to be reading an excellent book on efficiency by Joseph Heath called The efficient Society and in it he explains the two problems with your typical insurance market which includes the market for healthcare. The first problem is Adverse selection, and the other is moral hazard. They are both important aspects to consider in an insurance market.

Adverse selection is created when there is imperfect information. So for example in most cases without the huge questionnaires and forms the insurance company has no way of knowing how sick you really are. Because of that sick people will want insurance and will be willing to pay more for insurance than those that are healthy. Healthy people will not want insurance at the same price as those who are sick.

The company will essentially end up with high costs and high premiums because those who are healthy will not be willing to pay high prices and those that have high costs will choose to have insurance and be willing to pay more.

The fact that the insurance company will in general all things being equal attract more sick people than healthy people is called adverse selection.

Basically that was the main example that we kept seeing in the movie. The fact that insurance companies spend an inordinate amount of time trying to deny claims and trying to gather more information on which to asses their policies. They are trying to overcome the adverse selection involved in the health insurance market.

I was also glad in away that Moore did not go into too much detail because I think that would have detracted from his more general point. Americans get poor outcomes for the money they spend. Also for all the money they spend they fail to have universal coverage. This is unlike in any other western country!!

Now when it comes to Canada, I hope that they will begin to realize that there are many other models we can emulate. I find in this country we tend to end up in a situation where it is either the status quo or the American system. Nothing could be further from the truth. The French get better outcomes and do include some aspects of the private system.

The structure of our system does have all sorts of inefficiencies. The fact that private insurance is not allowed in Quebec has been ruled illegal in the Chaoulli decision. The impact of this decision is still rumbling through Quebec and will soon have effects in the rest of the country. We need to have a more honest debate and sooner rather than later.