Monthly Archives: August 2009

Healthcare reform

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To all the people who find themselves concerned with the health care reform proposals going on now, particularly those who are worried about socialized healthcare, I would like to explain why I don’t think you should be worried. I’m not going to try to debunk some of the hysterical claims about things like “death panels” because they’ve already been debunked in other places. Also, I’m not going to argue that creating a new socialized healthcare system will be better than our current capitalist free-market system. On the contrary, what I’d like to argue is that our current system is already a socialized system and not a free-market system, and therefore it’s nonsensical to worry about “socializing” it.

This might seem like a strange claim– we have private insurance systems, so how could that be socialist? First of all, the government already subsidizes the healthcare industry, including health insurance companies. The reason we commonly get our health insurance policies through our employers is that money spent on health insurance is classified as an expense for your employer, and therefore is not taxed. It’s also not counted as income for the employee, and so it’s not taxed there either.

Now a tax break like this is a funny thing, because in one sense tax breaks are simply the government taking less of your money. However, if you start from the supposition of a flat tax, then every targeted tax break could be viewed as a subsidy. Some people find this hard to understand, but imagine a store which is selling an item at full price, and then providing an immediate $20 refund at the cash register. If you’re paying with cash, you get cash back. If you’re paying with credit, $20 gets credited to your credit card. Now is that any different than the store simply selling the item for $20 less? Effectively, no. In the same way, there’s not a significant difference between viewing a tax structure with deductions as being the same as a flat-tax system with subsidies. Essentially, the government is subsidizing everything that they’re allowing tax deductions for.

Once you consider this, you realize that by not taxing health insurance, the government is essentially subsidizing your employer’s purchase of health insurance, and thereby subsidizing the health insurance providers themselves. And it makes sense, because who would buy health insurance if it were not subsidized? It’s the nature of insurance that the average cost to the policy holder must be more than what they receive back from the insurance company. If this weren’t the case, the insurance company could have no operating budget. Because of this, insofar as health insurance pays for regular care (checkups and medication), healthy people will generally pay more into the system then they receive back in terms of care by the amount of their share of the operating costs and profit of the insurance company.

So just making numbers up on the spot, imagine 10 million healthy people all buy insurance from the same company, each person spending $2,000/month. That means the health insurance company receives $240 billion per year. Now let’s say that it takes $100 million per year to run the insurance company, and they expect a $20 million annual profit. That means the customers can only get an average of $1,999 per year in coverage. Now that’s not too bad to only lose a dollar, but it’s not gaining you anything.

Now imagine half of those 10 million people get sick, and need an average of $3,000 in care one year. That means that healthy people are only able to get $999 worth of coverage for their $2,000 expense. It’s not a great value for the healthy people, but that’s how insurance works. So in another sense, health insurance itself is a socialist system already, even without the government subsidy. It is a method of socializing the costs of health treatment rather than expecting each person to pay for their own health care costs.

Of course the problem is that, in a free market, health insurance wouldn’t work. People who believe themselves to be healthy generally wouldn’t buy health insurance because it’s not a good value for them. In my made-up example, they have to pay $2,000 for $999 worth of services. However, if you look at what happens to my example when the healthy people leave the system, suddenly everyone is paying for $2,000 for average of $3,000 worth of coverage, which cannot possibly be profitable for the health insurance company. They’ll have to raise their rates. Now the healthier portion of the sick people are no longer getting a good value, since the same model prevails and the people with cheaper care are subsidizing those with more expensive care, so they might very well drop out of the system too. The likely outcome is that, if health insurance would exist at all, it would be only for catastrophic coverage and would be no more common than life insurance or maybe renter’s insurance. That is to say, some people might buy it, but many people wouldn’t.

And this is why the government subsidizes health insurance through tax breaks, so that people get health insurance because they think it’s very cheap, when in fact it’s only cheap because we’re subsidizing it with tax dollars. Because of all this, I think it’s fair to claim that our current healthcare system is socialist– after all, it’s funded by the government with the goal of distributing costs, to take money from everyone and use it to provide for those who are in need.

What’s more, even if you look at those who can’t afford health insurance, their health care is still paid for by the rest of us. In some cases, the services are provided more directly by the government through systems like Medicare, but even in other cases the costs are still distributed among the rest of us. If someone without health insurance gets very sick, they go to the emergency room and simply don’t pay for the services they receive. This increases the operating costs of the hospital, which makes it necessary for the hospital to charge health insurance more for services provided to those who have health insurance. These increase in charge to the health insurance company in turn is passed to their customers, which we all pay for. We pay for it through our premiums and copayments and through our tax dollars which are used to subsidize health insurance. None of this comes free.

I find it interesting when opponents to reform, claiming to be in favor of free markets, also claim that we already have the best healthcare system in the world. Given that our system is already socialized, wouldn’t that mean that the best healthcare system in the world is a socialist healthcare system?

Laziness

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I’ve been pretty interested in the idea of laziness for most of my life, tracing back to the experience of having a teacher in middle school who regularly accused me of being lazy. It really made me wonder what it means to “be lazy”. Sure, I didn’t like working. But isn’t it the default state of human beings to be averse to work? You might think, “No, not me. I’m willing to work very hard.” Well yes, you may work very hard when hard work is required to attain something you desire, but that doesn’t mean you’re not averse to work.

Einstein is reported to have said, “Everything should be made as simple as possible, but no simpler.” Similarly, I would say that people should work as hard as is necessary, but no harder. It’s important to keep in mind that “laziness” can be very useful. Avoiding spending your time on things that are neither necessary nor valuable will keep your work efficient and productive, and an aversion to work can, at times, produce superior results.

For example, in all the times I’ve worked doing IT support, I would say that it was laziness that drove me to do a good job. I didn’t want to continually run around fixing the same things over and over again, so I arranged everything as well as I could such that things wouldn’t break in the first place, and that when I fixed something it stayed fixed. From everyone else’s point of view, this meant that the entire network ran more smoothly and without interruption. From my point of view, it meant much less work in the long run.

Of course, even if we accept that being work-averse can be a healthy inclination, we might still want to claim that people are “lazy” when they are unwilling to the important work we see as needing to be done. However, just because we think a job is important doesn’t address whether anyone else is convinced that the work is worth doing, i.e. whether the effort required is adequately justified by the benefit derived from the doing the work. So if you ask someone to do a task and he refuses on the grounds that the task isn’t worth doing, it’s not laziness; you simply have some kind of a disagreement. It may be that you underestimate the amount of effort needed to complete the work or that he’s underestimating the benefit that will come from the work, or it may be that you two are both estimating the same cost and same benefit, but are disagreeing on how much effort that benefit is worth.

On the other hand, I believe that a lot of what we call “laziness” isn’t caused by disagreements of that sort, but are actually caused by an excessive amount of misdirected effort and not by a deficit of effort. For example, so-called “perfectionists” sometimes squander their effort by refusing to engage in any activities at which they won’t excel. Instead of putting their effort toward accomplishment, their effort is put into the avoidance of failure. Instead of focusing on what they’re going to do and how they’ll do it, we sometimes focus on the prospect that we won’t be able to do things well and we make efforts to avoid mistakes and to avoid situations where we might fail.

Sometimes this failure-avoidance takes the form of procrastination. If we believe ourselves currently unfit for a task, we may put those tasks off in the hopes that we’ll gain sudden insight in how to complete them or that the situation will magically improve as time passes. If we believe a task will become easier to complete later on, and we don’t perceive any negative consequences of waiting, then it makes perfect sense to put off until tomorrow that which you can do today.

I may be wrong, but I believe that this is a fairly exhaustive explanation of “laziness”– that we call someone “lazy” when their cost/benefit analysis differs from ours, or that the “lazy” person is in fact unsure how to proceed or unsure of his ability to succeed. You may be asking, why is this interesting? Am I just trying to excuse my own laziness?

Well no, I’m not particularly trying to avoid blame or promote laziness, but I think this is important because it may be that there is no such thing as a person who is simply “lazy”. It may be that every “lazy” person is just someone who has no motivation to do the things we’d like them to do, someone who doesn’t believe that he will actually benefit from the work you’d like them to do, someone who is afraid of failure, or someone who doesn’t know where to begin. This is important to me because it suggests that, rather than writing people off as personally defective, we might be able to convince them to contribute something positive to our world.

So this would mean that, if someone isn’t motivated to help us solve the problems we’re facing, we have to learn to motivate them. If we disagree about the costs and benefits, then we can discuss them and reach an agreement. We can try to show people that they have an interest in improving the situation around them by demonstrating the various ways in which those things are connected to each of our best interests. When people don’t know where to begin, we can try to educate them on where they can get started. When they’re afraid of failure, we can encourage them to try their best.

And sometimes people will fail. We all fail, and we all have some false starts before we succeed. Perhaps we can begin by going easier on each other.