Ali Binazir

Tooth
decay begins, typically, when debris becomes trapped between the teeth
and along the ridges and in the grooves of the molars. The food rots.
It becomes colonized with bacteria. The bacteria feeds off sugars in
the mouth and forms an acid that begins to eat away at the enamel of
the teeth. Slowly, the bacteria works its way through to the dentin,
the inner structure, and from there the cavity begins to blossom
three-dimensionally, spreading inward and sideways. When the decay
reaches the pulp tissue, the blood vessels, and the nerves that serve
the tooth, the pain starts—an insistent throbbing. The tooth turns
brown. It begins to lose its hard structure, to the point where a
dentist can reach into a cavity with a hand instrument and scoop out
the decay. At the base of the tooth, the bacteria mineralizes into
tartar, which begins to irritate the gums. They become puffy and bright
red and start to recede, leaving more and more of the tooth’s root
exposed. When the infection works its way down to the bone, the
structure holding the tooth in begins to collapse altogether.

Several
years ago, two Harvard researchers, Susan Starr Sered and Rushika
Fernandopulle, set out to interview people without health-care coverage
for a book they were writing, “Uninsured in America.” They talked to as
many kinds of people as they could find, collecting stories of
untreated depression and struggling single mothers and chronically
injured laborers—and the most common complaint they heard was about
teeth. Gina, a hairdresser in Idaho, whose husband worked as a freight
manager at a chain store, had “a peculiar mannerism of keeping her
mouth closed even when speaking.” It turned out that she hadn’t been
able to afford dental care for three years, and one of her front teeth
was rotting. Daniel, a construction worker, pulled out his bad teeth
with pliers. Then, there was Loretta, who worked nights at a university
research center in Mississippi, and was missing most of her teeth.
“They’ll break off after a while, and then you just grab a hold of
them, and they work their way out,” she explained to Sered and
Fernandopulle. “It hurts so bad, because the tooth aches. Then it’s a
relief just to get it out of there. The hole closes up itself anyway.
So it’s so much better.”

People without health insurance
have bad teeth because, if you’re paying for everything out of your own
pocket, going to the dentist for a checkup seems like a luxury. It
isn’t, of course. The loss of teeth makes eating fresh fruits and
vegetables difficult, and a diet heavy in soft, processed foods
exacerbates more serious health problems, like diabetes. The pain of
tooth decay leads many people to use alcohol as a salve. And those
struggling to get ahead in the job market quickly find that the
unsightliness of bad teeth, and the self-consciousness that results,
can become a major barrier. If your teeth are bad, you’re not going to
get a job as a receptionist, say, or a cashier. You’re going to be put
in the back somewhere, far from the public eye. What Loretta, Gina, and
Daniel understand, the two authors tell us, is that bad teeth have come
to be seen as a marker of “poor parenting, low educational achievement
and slow or faulty intellectual development.” They are an outward
marker of caste. “Almost every time we asked interviewees what their
first priority would be if the president established universal health
coverage tomorrow,” Sered and Fernandopulle write, “the immediate
answer was ‘my teeth.’ ”

The U. S. health-care system,
according to “Uninsured in America,” has created a group of people who
increasingly look different from others and suffer in ways that others
do not. The leading cause of personal bankruptcy in the United States
is unpaid medical bills. Half of the uninsured owe money to hospitals,
and a third are being pursued by collection agencies. Children without
health insurance are less likely to receive medical attention for
serious injuries, for recurrent ear infections, or for asthma.
Lung-cancer patients without insurance are less likely to receive
surgery, chemotherapy, or radiation treatment. Heart-attack victims
without health insurance are less likely to receive angioplasty. People
with pneumonia who don’t have health insurance are less likely to
receive X rays or consultations. The death rate in any given year for
someone without health insurance is twenty-five per cent higher than
for someone with insur-ance. Because the uninsured are sicker than the
rest of us, they can’t get better jobs, and because they can’t get
better jobs they can’t afford health insurance, and because they can’t
afford health insurance they get even sicker. John, the manager of a
bar in Idaho, tells Sered and Fernandopulle that as a result of various
workplace injuries over the years he takes eight ibuprofen, waits two
hours, then takes eight more—and tries to cadge as much prescription
pain medication as he can from friends. “There are times when I
should’ve gone to the doctor, but I couldn’t afford to go because I
don’t have insurance,” he says. “Like when my back messed up, I
should’ve gone. If I had insurance, I would’ve went, because I know I
could get treatment, but when you can’t afford it you don’t go. Because
the harder the hole you get into in terms of bills, then you’ll never
get out. So you just say, ‘I can deal with the pain.’ ”

One
of the great mysteries of political life in the United States is why
Americans are so devoted to their health-care system. Six times in the
past century—during the First World War, during the Depression, during
the Truman and Johnson Administrations, in the Senate in the
nineteen-seventies, and during the Clinton years—efforts have been made
to introduce some kind of universal health insurance, and each time the
efforts have been rejected. Instead, the United States has opted for a
makeshift system of increasing complexity and dysfunction. Americans
spend $5,267 per capita on health care every year, almost two and half
times the industrialized world’s median of $2,193; the extra spending
comes to hundreds of billions of dollars a year. What does that extra
spending buy us? Americans have fewer doctors per capita than most
Western countries. We go to the doctor less than people in other
Western countries. We get admitted to the hospital less frequently than
people in other Western countries. We are less satisfied with our
health care than our counterparts in other countries. American life
expectancy is lower than the Western average. Childhood-immunization
rates in the United States are lower than average. Infant-mortality
rates are in the nineteenth percentile of industrialized nations.
Doctors here perform more high-end medical procedures, such as coronary
angioplasties, than in other countries, but most of the wealthier
Western countries have more CT scanners than the United States does,
and Switzerland, Japan, Austria, and Finland all have more MRI machines
per capita. Nor is our system more efficient. The United States spends
more than a thousand dollars per capita per year—or close to four
hundred billion dollars—on health-care-related paperwork and
administration, whereas Canada, for example, spends only about three
hundred dollars per capita. And, of course, every other country in the
industrialized world insures all its citizens; despite those extra
hundreds of billions of dollars we spend each year, we leave forty-five
million people without any insurance. A country that displays an almost
ruthless commitment to efficiency and performance in every aspect of
its economy—a country that switched to Japanese cars the moment they
were more reliable, and to Chinese T-shirts the moment they were five
cents cheaper—has loyally stuck with a health-care system that leaves
its citizenry pulling out their teeth with pliers.

America’s
health-care mess is, in part, simply an accident of history. The fact
that there have been six attempts at universal health coverage in the
last century suggests that there has long been support for the idea.
But politics has always got in the way. In both Europe and the United
States, for example, the push for health insurance was led, in large
part, by organized labor. But in Europe the unions worked through the
political system, fighting for coverage for all citizens. From the
start, health insurance in Europe was public and universal, and that
created powerful political support for any attempt to expand benefits.
In the United States, by contrast, the unions worked through the
collective-bargaining system and, as a result, could win health
benefits only for their own members. Health insurance here has always
been private and selective, and every attempt to expand benefits has
resulted in a paralyzing political battle over who would be added to
insurance rolls and who ought to pay for those additions.

Policy
is driven by more than politics, however. It is equally driven by
ideas, and in the past few decades a particular idea has taken hold
among prominent American economists which has also been a powerful
impediment to the expansion of health insurance. The idea is known as
“moral hazard.” Health economists in other Western nations do not share
this obsession. Nor do most Americans. But moral hazard has profoundly
shaped the way think tanks formulate policy and the way experts argue
and the way health insurers structure their plans and the way
legislation and regulations have been written. The health-care mess
isn’t merely the unintentional result of political dysfunction, in
other words. It is also the deliberate consequence of the way in which
American policymakers have come to think about insurance.

“Moral
hazard” is the term economists use to describe the fact that insurance
can change the behavior of the person being insured. If your office
gives you and your co-workers all the free Pepsi you want—if your
employer, in effect, offers universal Pepsi insurance—you’ll drink more
Pepsi than you would have otherwise. If you have a no-deductible
fire-insurance policy, you may be a little less diligent in clearing
the brush away from your house. The savings-and-loan crisis of the
nineteen-eighties was created, in large part, by the fact that the
federal government insured savings deposits of up to a hundred thousand
dollars, and so the newly deregulated S. & L.s made far riskier
investments than they would have otherwise. Insurance can have the
paradoxical effect of producing risky and wasteful behavior. Economists
spend a great deal of time thinking about such moral hazard for good
reason. Insurance is an attempt to make human life safer and more
secure. But, if those efforts can backfire and produce riskier
behavior, providing insurance becomes a much more complicated and
problematic endeavor.

In 1968, the economist Mark Pauly
argued that moral hazard played an enormous role in medicine, and, as
John Nyman writes in his book “The Theory of the Demand for Health
Insurance,” Pauly’s paper has become the “single most influential
article in the health economics literature.” Nyman, an economist at the
University of Minnesota, says that the fear of moral hazard lies behind
the thicket of co-payments and deductibles and utilization reviews
which characterizes the American health-insurance system. Fear of moral
hazard, Nyman writes, also explains “the general lack of enthusiasm by
U.S. health economists for the expansion of health insurance coverage
(for example, national health insurance or expanded Medicare benefits)
in the U.S.”

What Nyman is saying is that when your
insurance company requires that you make a twenty-dollar co-payment for
a visit to the doctor, or when your plan includes an annual
five-hundred-dollar or thousand-dollar deductible, it’s not simply an
attempt to get you to pick up a larger share of your health costs. It
is an attempt to make your use of the health-care system more
efficient. Making you responsible for a share of the costs, the
argument runs, will reduce moral hazard: you’ll no longer grab one of
those free Pepsis when you aren’t really thirsty. That’s also why Nyman
says that the notion of moral hazard is behind the “lack of enthusiasm”
for expansion of health insurance. If you think of insurance as
producing wasteful consumption of medical services, then the fact that
there are forty-five million Americans without health insurance is no
longer an immediate cause for alarm. After all, it’s not as if the
uninsured never go to the doctor. They
spend, on average, $934 a year on medical care. A moral-hazard theorist
would say that they go to the doctor when they really have to. Those of
us with private insurance, by contrast, consume $2,347 worth of health
care a year. If a lot of that extra $1,413 is waste, then maybe the
uninsured person is the truly efficient consumer of health care.

The
moral-hazard argument makes sense, however, only if we consume health
care in the same way that we consume other consumer goods, and to
economists like Nyman this assumption is plainly absurd. We go to the
doctor grudgingly, only because we’re sick. “Moral hazard is
overblown,” the Princeton economist Uwe Reinhardt says. “You always
hear that the demand for health care is unlimited. This is just not
true. People who are very well insured, who are very rich, do you see
them check into the hospital because it’s free? Do people really like
to go to the doctor? Do they check into the hospital instead of playing
golf?”

For that matter, when you have to pay for your
own health care, does your consumption really become more efficient? In
the late nineteen-seventies, the rand
Corporation did an extensive study on the question, randomly assigning
families to health plans with co-payment levels at zero per cent,
twenty-five per cent, fifty per cent, or ninety-five per cent, up to
six thousand dollars. As you might expect, the more that people were
asked to chip in for their health care the less care they used. The
problem was that they cut back equally on both frivolous care and
useful care. Poor people in the high-deductible group with
hypertension, for instance, didn’t do nearly as good a job of
controlling their blood pressure as those in other groups, resulting in
a ten-per-cent increase in the likelihood of death. As a recent
Commonwealth Fund study concluded, cost sharing is “a blunt
instrument.” Of course it is: how should the average consumer be
expected to know beforehand what care is frivolous and what care is
useful? I just went to the dermatologist to get moles checked for skin
cancer. If I had had to pay a hundred per cent, or even fifty per cent,
of the cost of the visit, I might not have gone. Would that have been a
wise decision? I have no idea. But if one of those moles really is
cancerous, that simple, inexpensive visit could save the health-care
system tens of thousands of dollars (not to mention saving me a great
deal of heartbreak). The focus on moral hazard suggests that the
changes we make in our behavior when we have insurance are nearly
always wasteful. Yet, when it comes to health care, many of the things
we do only because we have insurance—like getting our moles checked, or
getting our teeth cleaned regularly, or getting a mammogram or engaging
in other routine preventive care—are anything but wasteful and
inefficient. In fact, they are behaviors that could end up saving the
health-care system a good deal of money.

Sered and
Fernandopulle tell the story of Steve, a factory worker from northern
Idaho, with a “grotesquelooking left hand—what looks like a bone sticks
out the side.” When he was younger, he broke his hand. “The doctor
wanted to operate on it,” he recalls. “And because I didn’t have
insurance, well, I was like ‘I ain’t gonna have it operated on.’ The
doctor said, ‘Well, I can wrap it for you with an Ace bandage.’ I said,
‘Ahh, let’s do that, then.’ ” Steve uses less health care than he would
if he had insurance, but that’s not because he has defeated the scourge
of moral hazard. It’s because instead of getting a broken bone fixed he
put a bandage on it.

At
the center of the Bush Administration’s plan to address the
health-insurance mess are Health Savings Accounts, and Health Savings
Accounts are exactly what you would come up with if you were concerned,
above all else, with minimizing moral hazard. The logic behind them was
laid out in the 2004 Economic Report of the President. Americans, the
report argues, have too much health insurance: typical plans cover
things that they shouldn’t, creating the problem of overconsumption.
Several paragraphs are then devoted to explaining the theory of moral
hazard. The report turns to the subject of the uninsured, concluding
that they fall into several groups. Some are foreigners who may be
covered by their countries of origin. Some are people who could be
covered by Medicaid but aren’t or aren’t admitting that they are.
Finally, a large number “remain uninsured as a matter of choice.” The
report continues, “Researchers believe that as many as one-quarter of
those without health insurance had coverage available through an
employer but declined the coverage. . . . Still others may remain
uninsured because they are young and healthy and do not see the need
for insurance.” In other words, those with health insurance are
overinsured and their behavior is distorted by moral hazard. Those
without health insurance use their own money to make decisions about
insurance based on an assessment of their needs. The insured are
wasteful. The uninsured are prudent. So what’s the solution? Make the
insured a little bit more like the uninsured.

Under the
Health Savings Accounts system, consumers are asked to pay for routine
health care with their own money—several thousand dollars of which can
be put into a tax-free account. To handle their catastrophic expenses,
they then purchase a basic health-insurance package with, say, a
thousand-dollar annual deductible. As President Bush explained
recently, “Health Savings Accounts all aim at empowering people to make
decisions for themselves, owning their own health-care plan, and at the
same time bringing some demand control into the cost of health care.”

The
country described in the President’s report is a very different place
from the country described in “Uninsured in America.” Sered and
Fernandopulle look at the billions we spend on medical care and wonder
why Americans have so little insurance. The President’s report
considers the same situation and worries that we have too much. Sered
and Fernandopulle see the lack of insurance as a problem of poverty; a
third of the uninsured, after all, have incomes below the federal
poverty line. In the section on the uninsured in the President’s
report, the word “poverty” is never used. In the Administration’s view,
people are offered insurance but “decline the coverage” as “a matter of
choice.” The uninsured in Sered and Fernandopulle’s book decline
coverage, but only because they can’t afford it. Gina, for instance,
works for a beauty salon that offers her a bare-bones health-insurance
plan with a thousand-dollar deductible for two hundred dollars a month.
What’s her total income? Nine hundred dollars a month. She could
“choose” to accept health insurance, but only if she chose to stop
buying food or paying the rent.

The biggest difference
between the two accounts, though, has to do with how each views the
function of insurance. Gina, Steve, and Loretta are ill, and need
insurance to cover the costs of getting better. In their eyes,
insurance is meant to help equalize financial risk between the healthy
and the sick. In the insurance business, this model of coverage is
known as “social insurance,” and historically it was the way health
coverage was conceived. If you were sixty and had heart disease and
diabetes, you didn’t pay substantially more for coverage than a
perfectly healthy twenty-five-year-old. Under social insurance, the
twenty-five-year-old agrees to pay thousands of dollars in premiums
even though he didn’t go to the doctor at all in the previous year,
because he wants to make sure that someone else will subsidize his
health care if he ever comes down with heart disease or diabetes.
Canada and Germany and Japan and all the other industrialized nations
with universal health care follow the social-insurance model. Medicare,
too, is based on the social-insurance model, and, when Americans with
Medicare report themselves to be happier with virtually every aspect of
their insurance coverage than people with private insurance (as they
do, repeatedly and overwhelmingly), they are referring to the social
aspect of their insurance. They aren’t getting better care. But they
are getting something just as valuable: the security of being insulated
against the financial shock of serious illness.

There is
another way to organize insurance, however, and that is to make it
actuarial. Car insurance, for instance, is actuarial. How much you pay
is in large part a function of your individual situation and history:
someone who drives a sports car and has received twenty speeding
tickets in the past two years pays a much higher annual premium than a
soccer mom with a minivan. In recent years, the private insurance
industry in the United States has been moving toward the actuarial
model, with profound consequences. The triumph of the actuarial model
over the social-insurance model is the reason that companies unlucky
enough to employ older, high-cost employees—like United Airlines—have
run into such financial difficulty. It’s the reason that automakers are
increasingly moving their operations to Canada. It’s the reason that
small businesses that have one or two employees with serious illnesses
suddenly face unmanageably high health-insurance premiums, and it’s the
reason that, in many states, people suffering from a potentially
high-cost medical condition can’t get anyone to insure them at all.

Health
Savings Accounts represent the final, irrevocable step in the actuarial
direction. If you are preoccupied with moral hazard, then you want
people to pay for care with their own money, and, when you do that, the
sick inevitably end up paying more than the healthy. And when you make
people choose an insurance plan that fits their individual needs, those
with significant medical problems will choose expensive health plans
that cover lots of things, while those with few health problems will
choose cheaper, bare-bones plans. The more expensive the comprehensive
plans become, and the less expensive the bare-bones plans become, the
more the very sick will cluster together at one end of the insurance
spectrum, and the more the well will cluster together at the low-cost
end. The days when the healthy twenty-five-year-old subsidizes the
sixty-year-old with heart disease or diabetes are coming to an end.
“The main effect of putting more of it on the consumer is to reduce the
social redistributive element of insurance,” the Stanford economist
Victor Fuchs says. Health Savings Accounts are not a variant of
universal health care. In their governing assumptions, they are the
antithesis of universal health care.

The issue about
what to do with the health-care system is sometimes presented as a
technical argument about the merits of one kind of coverage over
another or as an ideological argument about socialized versus private
medicine. It is, instead, about a few very simple questions. Do you
think that this kind of redistribution of risk is a good idea? Do you
think that people whose genes predispose them to depression or cancer,
or whose poverty complicates asthma or diabetes, or who get hit by a
drunk driver, or who have to keep their mouths closed because their
teeth are rotting ought to bear a greater share of the costs of their
health care than those of us who are lucky enough to escape such
misfortunes? In the rest of the industrialized world, it is assumed
that the more equally and widely the burdens of illness are shared, the
better off the population as a whole is likely to be. The reason the
United States has forty-five million people without coverage is that
its health-care policy is in the hands of people who disagree, and who
regard health insurance not as the solution but as the problem.