Chapter 8: The Triumph of Accomodation

a.I was surprised to learn that insurance during the Depression emerged mainly to benefit hospitals, who were struggling to fill their beds. Currently, I think of health insurance as primarily benefiting the enrollee as well as the health insurance company, with a secondary benefit to the physician or hospital, who may see more business. I also found it interesting that actuaries felt that Blue Cross would not succeed due to the difficulties in calculating risks and costs.

b. I agree with Starr's position that financial intermediaries benefit employers and insurance companies. Companies which provide health insurance impart good-will on their employees, and health insurance companies gain profit and power.  I agree with several of the principles spelled out by the AMA on medical health services, namely that patients should have "absolute freedom to choose a duly qualified doctor of medicine...from among all those qualitative to practice and who are willing to give service." I believe that one should have the right to choose who they seek care from, although this is not always practical today.

c. I disagree with Starr's statement that "from these two variables alone, nearly all of their other characteristics can be derived," in reference to the type of benefits and how the plans are controlled. Private health plans may only be limited to considering two main types of variables when calculating their financial risks, but certainly financial risks are influenced by an infinite number of characteristics.

d. One element which I have seen in my own experiences is the principle addressed by the AMA that "a permanent, confidential relation between the patient and a "family physician" must be the fundamental, dominating feature of any system." This idealism holds true in my own experiences, where many people esteem to find a doctor who meets their criteria and then hope to continue seeing them as their health provider for long periods. When people see one provider consistently through time, they trust them with a variety of health issues.

e. A topic addressed in Starr's book which I am interested in learning more about is that of moral hazard. Moral hazard refers to the effect on an individual's behavior when they are buffered from a certain risk, such as through health or accident insurance. This concept has been mentioned in several courses. In Starr's example, an entity has trouble calculating risk correctly when risks are ambiguous. This has implications in our society, because there exist many types of health insurance plans, which include different physicians and types of services, and offer different solutions to health problems. Therefore, risk is difficult to determine. Starr's positions on moral risk in regards to preventing abuse, calculating risk, actuarial science, and calculation of health care costs will definitely inform my views as I continue to learn more about moral hazard in my classes.