Obama's health reforms and risk psychology

Andrew Koppelman at Balkanization has been explaining one of the key reasons President Obama has been stuggling with his healthcare reform proposals. About 75% of US citizens apparently have health insurance they believe will cover them against any future health problems. They also believe Obama's proposals will put their access to healthcare at risk.

The reality is that insurance companies have an incentive to minimise their financial support for people with serious long term health needs and a recent American Journal of Medicine study suggests 62% of all personal bankruptcies in the US were caused by medical costs. Koppelman says:

"In 2007, 62% of all personal bankruptcies were driven by medical costs."Nationally, a quarter of firms cancel coverage immediately when an employee suffers a disabling illness; another quarter do so within a year," the report states.Most of the medical debtors were well educated, owned homes, and had middle-class occupations, and three-quarters of them had health insurance. "Unless you're a Warren Buffett or Bill Gates, you're one illness away from financial ruin in this country," lead author Steffie Woolhandler, M.D., of the Harvard Medical School, said in an interview. "If an illness is long enough and expensive enough, private insurance offers very little protection against medical bankruptcy, and that's the major finding in our study."

In other words, all those people who oppose health care reform because they like the coverage they’ve got really have no idea of the real dangers they face, because they have no idea what their insurance companies would really do to them if they got sick.This poses a real political challenge for the proponents of reform.The people who will most benefit from the consumer protections that Obama is advocating – those who will experience serious illness in the future – have no idea that they are benefiting, and so will not politically reward those who deliver the benefits.The Democrats could give most Americans substantially greater security and receive no reward for it."