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Being indifferent matters

Relying on indifference in the health system

The Republicans have presented their much-awaited healthcare bill. That’s the ‘replace’ part of the ‘repeal and replace’ rhetoric that they’ve been spouting for the better part of a year.

The new bill (dubbed the American Health Care Act) did not receive the requisite support from fellow Republicans because it was not viewed as enough of a departure from the Affordable Care Act (aka Obamacare). Today, America is still running under Obamacare. Some in the party tried to ‘sell’ the new bill to the American people and argued that there are multiple ‘prongs’ to the plan and that this is just the first prong. It remains to be seen whether the bill will be modified enough to meet the requirements of some of the more hardline Republicans who want a complete shredding of Obamacare.


Even though the bill was soundly rejected, there are many narratives around the American Health Care Act that deserve discussion. Let’s focus on the aspect that is at the core of it all: the individual mandate - found in Obamacare - that requires individuals to purchase health insurance or face a penalty. The Republicans have looked critics squarely in the eye and acknowledged that the 24 million person increase in uninsured Americans over the next decade was a logical outcome of their now-rejected new bill. “We’re saying the government’s not going to force people to buy something that they don’t want to buy,” House Speaker Paul Ryan told Fox News.

By and large, most people have shrugged that comment off as logical and transparent. It’s certainly a transparent statement. I’m not quite sure about the logic behind it. Here’s the problem: a central tenet of health policy and public health is that consumers/citizens/patients (call them what you will) may not be capable of making the best decisions when it comes to their own health. I wrote about this in the July 2016 issue of this publication and I spoke about the fundamental error of medicine that has been opined by the likes of Richard Thaler. And that fundamental error is this: we assume that individuals always make (healthcare) decisions in their best interests or, more importantly, at least better than the decisions that others would make for them. This is the crux of the difference between Obamacare and the Republican model.

GraphFor a 27-year-old or a 34-year-old in excellent-to-perfect health, it’s all well and good to say that ‘we’re not going to force people to buy something they don’t want to buy’. Whether you’re released from the onus of being mandated to buy insurance under Obamacare or whether you just pay the penalty, nothing really changes for this group of people. They’re not buying insurance because they don’t see a need for it. Of course what the Republicans miss is that there was an attempt with Obamacare to establish a ‘point of indifference’ that might motivate healthy people to buy insurance and help optimise the risk pools so that premiums could stay within an affordable range. In health economics, we have what we call ‘indifference curves’ (pictured right) and we define this phenomenon as those curves on a graph (the axes of which represent quantities of two commodities) linking those combinations of quantities that the consumer regards as being of equal value. That is to say that there is a point at which healthcare consumers ought to be indifferent between buying insurance and paying a penalty if they don’t, such that they do buy the insurance. The Republicans say this is the fundamental difference between Obamacare and their now-defunct plan. The government isn’t going to tell people what to do. They are proud of this.

Another crack in the Republican calculus is this: how many more people, in the current iteration of the plan or any future iteration, will be uninsured but can actually afford healthcare versus those who will be uninsured because they truly can’t afford to purchase health insurance. This is a telling number (that we don’t have visibility on). The bigger the first number is the worse off we are as a society. Because the first number tells us that now people are indifferent about something that represents a core fabric of society. Now people don’t care about helping absorb costs for the elderly and the disenfranchised. Now people don’t get the fact that the system is circular: I pay for you and, down the road, you pay for me.

We’ve always been trained to think that indifference and ‘not caring’ is bad - and in most instances it is. But, in a somewhat ironic twist, the health system in many ways also relies on indifference to function properly.

Article by
Rohit Khanna

is managing director of Catalytic Health, a healthcare communications, advertising and strategy agency. He can be reached at:

18th April 2017

From: Healthcare



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