ECON 4510 QUIZ #1 extended

Tooth decay analogy

Gladwell opens with the medical progression of tooth decay to illustrate how untreated health problems worsen until the entire system collapses.

Stories of the uninsured

Sered and Fernandopulle interviewed uninsured Americans and found dental issues were their most pressing concern.

Daniel’s solution

A construction worker, Daniel, pulled out his decayed teeth with pliers due to lack of affordable care.

Loretta’s story

A Mississippi night worker described her teeth breaking off and pulling them out herself to relieve constant pain.

Gina’s mannerism

Gina, a hairdresser in Idaho, kept her mouth closed while talking because of visible tooth decay.

Dentistry as luxury

For the uninsured, visiting a dentist feels like an unaffordable luxury rather than a necessity.

Dietary consequences

Missing teeth make eating fruits and vegetables difficult, pushing people toward soft, processed foods that worsen chronic conditions like diabetes.

Alcohol as pain relief

Many uninsured turn to alcohol to numb the pain of untreated dental and health issues.

Employment discrimination from teeth

Bad teeth prevent people from customer-facing jobs, limiting them to work out of the public eye.

Teeth as caste marker

In the U.S., bad teeth symbolize poor parenting, low education, and intellectual inferiority, reinforcing class divisions.

Medical bankruptcy

Unpaid medical bills are the leading cause of personal bankruptcy in the U.S.

Uninsured debt

Half of uninsured Americans owe money to hospitals, and a third face collection agency action.

Uninsured children

Children without coverage are less likely to receive care for injuries, asthma, or ear infections.

Uninsured cancer patients

People with lung cancer are less likely to get surgery, chemotherapy, or radiation without insurance.

Uninsured heart attack victims

Less likely to receive angioplasty compared to insured patients.

Uninsured pneumonia patients

Less likely to receive x-rays or physician consultations.

Uninsured mortality

Annual death rates for uninsured Americans are 25% higher than for those with insurance.

Cycle of poverty and illness

Poor health keeps the uninsured in low-wage jobs, which makes affording insurance harder, worsening their health further.

American loyalty to current system

Despite dysfunction, Americans resist universal health care and maintain a fragmented private system.

Six failed attempts at universal coverage

Efforts during WWI, the Depression, Truman, Johnson, the 1970s Senate, and the Clinton years all failed.

Per capita U.S. spending

Americans spend $5,267 per person annually, compared to $2,193 in other wealthy countries.

High cost, poor outcomes

U.S. spending buys worse results—lower life expectancy, low immunization rates, high infant mortality.

Doctor and hospital access

The U.S. has fewer doctors per capita, fewer doctor visits, and fewer hospital admissions than peer nations.

Medical technology paradox

U.S. doctors perform more high-end procedures, but other countries have more CT scanners and MRI machines per capita.

Administrative inefficiency

The U.S. spends $1,000 per capita annually on paperwork, compared to Canada’s $300.

Uninsured population size

Despite higher spending, the U.S. leaves about 45 million people uninsured.

European labor vs U.S. labor

European unions fought politically for universal coverage

Private and selective system

U.S. health insurance has always been fragmented and selective, creating political battles over who gets added.

Ideas driving policy

Beyond politics, economists’ ideas—especially moral hazard—have deeply shaped U.S. health insurance policy.

Moral hazard definition

Insurance encourages people to take risks or consume more care because they are shielded from costs.

Pepsi analogy

Free unlimited Pepsi at work leads to more consumption, just as insurance supposedly leads to unnecessary doctor visits.

Insurance paradox

Insurance is designed to make life safer but may backfire by promoting wasteful or risky behavior.

Mark Pauly’s 1968 paper

Made moral hazard central in health economics, influencing decades of insurance policy.

Policy tools against moral hazard

Copayments, deductibles, and utilization reviews aim to reduce “excess” health care use.

Economists’ skepticism

Fear of moral hazard fuels economists’ reluctance to support expanding health coverage.

Uninsured vs insured spending

Uninsured spend $934 per year on care, insured spend $2,347—interpreted as uninsured being more “efficient.”

Uwe Reinhardt’s critique

Reinhardt argued moral hazard is exaggerated, since people don’t seek unnecessary hospital stays or doctor visits.

RAND health experiment

Found that higher deductibles reduced both necessary and unnecessary care equally.

RAND hypertension finding

Poor patients with high deductibles controlled blood pressure worse, with a 10% higher risk of death.

Cost sharing as blunt tool

Average people cannot distinguish necessary from frivolous care when deciding what to cut.

Preventive care and efficiency

Insurance makes preventive care (mammograms, mole checks, cleanings) more common, saving future costs.

Steve’s broken hand

An uninsured factory worker chose an Ace bandage instead of surgery, showing lack of care isn’t efficiency but deprivation.

Bush’s 2004 report

Claimed Americans had too much insurance and promoted Health Savings Accounts to reduce moral hazard.

Uninsured as choice

Bush report described many uninsured as declining coverage voluntarily, ignoring economic barriers.

Poverty vs choice framing

Sered and Fernandopulle highlight poverty as the barrier, while Bush’s report downplays it.

Social insurance principle

Risk is shared: the healthy subsidize the sick, creating financial protection against misfortune.

Medicare satisfaction

Medicare recipients report higher satisfaction than private plan members due to social insurance protection.

Actuarial insurance principle

Premiums tied to individual risk, concentrating costs on the sick and destabilizing employers with high-cost workers.

HSAs as actuarial shift

By making people pay with personal funds, HSAs reduce redistribution and penalize the sick.

Separation of sick and healthy

Actuarial systems cluster the healthy in cheap plans and the sick in costly ones, eroding solidarity.

Victor Fuchs’ observation

HSAs reduce the redistributive element of insurance, making them the opposite of universal health care.

Central ethical question

Should people with misfortune—genetics, accidents, poverty—bear more health costs than the lucky healthy?

Global assumption

Most industrialized countries assume risk-sharing makes the whole society better off, unlike the U.S.