Why Should I Pay For Anyone Else's Health Care?

The power of survivor bias

Posted Aug 10, 2017

stokpic at pexels
Source: stokpic at pexels

"Why should I pay for anyone else’s health care?" is a sentiment frequently expressed.  Congressmen like Mo Brooks point out that the “good, healthy” people should not be “subsidizing” the care of others. So how did we come to the point where leaders believe the risks of life, its uncertainty and luck, do not apply to them?

It's time to look at another version of survivor (or survivorship) bias, a significant actor in American life.

Survivor Bias

Survivor bias is most commonly reported in the media in relation to markets.  Mutual fund mavens or statistically challenged economists “back test” their theories, looking to the present as a clean measure of the past.  For example, companies will broadcast the “success” of their various mutual funds, showing how they have “beat the markets,” conveniently disregarding their funds that have closed.  Others might look to backtesting their strategies using the present S&P 500 index, happily neglecting the companies thrown out by bankruptcy or failure.

In epidemiology, survivor bias is well understood by drug companies.  That is why present day regulations require that all the original participants of any treatment trial be included in the final analysis, so that those who “left” the trial or were “necessarily excluded” cannot be denied representation. Otherwise companies and researchers can easily bias their results to far more positive effects than deserved.

Politicians use survivor bias, too.

It works well because people have very little idea of the literally thousands of ways to bias studies, particularly issues like survivor bias and volunteer bias. It's only natural to generalize looking at oneself as a representative of the rest of the population. If folks are alive and healthy, and particularly if they are economically successful, they easily believe it probably had a great deal to do with what they did themselves.  If others just “lived right” and “worked hard”  as Congressman Brooks points out, they would obtain similar results.

So many forget about the power of luck.  Bad results happened to people who “didn’t do it right,” or “didn’t take care of themselves.”  The real workings of fortune are often forgotten by the fortunate. 

Nicholas Taleb demonstrated this brilliantly in “Fooled by Randomness.” Many financial traders who thought themselves "brilliant" or "geniuses" were merely riding the general uptrend of markets.  We quickly recall the entrepreneurs who “led” the computer revolution.  We don’t think as often of the equally brilliant men who “led” the robotic revolution of the seventies, and eighties – one of many "revolutions" that did not happen.

In health, we visit centenarians and ask them “how did they did it.”  We don’t talk a lot about Eubie Blake, smoking three packs per day when he died at 100, or the vegan, marathon runners who die of pancreatic cancer at 40. 

Luck and Insurance

Pooled risk has been useful to humans for thousands of years.  Community granaries have been around millennia. Paying insurance for accidents or storm list cargoes goes back at least as far as the Code of Hammarubi almost four thousand years ago.  Insurance pools were institutionalized by the  Rhodians at least 2500 years ago.

So why are people opposed to pooled risk in health?

Approximately two thirds of the risk of cancer and dementia is now considered to be the result of luck.  For many years, medical teaching has been half of heart disease is related to family history.  Is it right to blame people for accidents of fate?  Should people try to switch their coronary prone parents before their birth?

Only when we look at ideas like survivor bias can we begin to understand such sentiments.

What’s most curious is how anti-business such sentiments are.

Pooled Health Risk

Most of the developed world possesses universal health care.  There are moral reasons for it – the fortunate pay for the unfortunate.  Yet there are strong business reasons, too.  Pooling risk over the entire population can save millions of lives and trillions of dollars.

The reason – universal health care systems are heavily incentivized to pay for public health measures that keep people healthy cheaply.  Unlike American insurance companies, who complain their “superior” wellness programs will only benefit their competitors who get the next contract, national health care systems can play the long game.

And they do.  In the OECD, America ranks at the top of health care costs and at or near the bottom of every health outcome measure. That's one reason Warren Buffett calls health care a "tapeworm on the American economy.” The British pay a little more than half per person what we do in health care, and live several years longer.  Even a dictatorship like Cuba, with its horrific economic and political record, spends pennies on the dollar compared to the US, and produces a longevity result not far behind us.

Bottom Line

There are lots of reasons you should pay for other’s health care.  First, because it’s the moral thing to do.  The lucky pay for the unlucky, as fate is not kind. Second, because it is efficient, economically and socially.  Third, because it helps build community and leads to economic and political strength.  A healthy economy requires a healthy population. Things go even better when people see themselves as part of a community that cares for each other in good times and bad.

Survivor bias blinkers those eyes.