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Being Poor and Sick Can Make You Poorer

November 15th, 2005 · No Comments

Over the past few weeks, I’ve added Matthew Holt’s Healthcare (“Everything you wanted to know about the healthcare system. But were afraid to ask.”) Blog to my list of daily reads.

Last Thursday’s post, “Did you need more evidence that being poor and sick is bad for your financial health?” cited an Access Point survey that shows medical debt is prevalent among households earning under $35,000.

This reminded me that a few months back, I had wanted to comment on best-selling author Malcolm (The Tipping Point, Blink)Gladwell’s New Yorker piece “Moral Hazard.”

The point of the article is to discuss our mess of a healthcare system in terms of moral hazard, “the term economists use to describe the fact that insurance can change the behavior of the person being insured. ”

According to Gladwell,

    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.

The point is that those of us with insurance will use it to take good care of ourselves, while those of us with no insurance will not take care of ourselves and, thus, end up costing the healthcare system more than if we had taken care of ourselves in the first place.

Worse, says Gladwell, “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. ”

In the context of Holt’s post and the Access Point survey, Gladwell notes, “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.”

Which is probably not surprising. What continues to surprise me are the numbers. Here are some from Gladwell’s article:

  • Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world’s median of $2,193.
  • 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.
  • [Despite that,] Americans 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.
  • 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.


    Gladwell goes on:


      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.

    It gets depressing after a while.

    • Tags: Healthcare IT

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