According to the Telegraph newspaper (“Don’t treat the old…“), “Smokers, heavy drinkers, the obese and the elderly should be barred from receiving some operations, according to doctors, with most saying the health service cannot afford to provide free care to everyone.”
Should you be denied coverage because of lifestyle choices or because you are ‘too old?’ From a strictly medical point of view, there are likely some individuals who’s lifestyles will create a high risk of complications during surgeries. For some elderly, surgical procedures may offer a slim hope at the prospect of a better life, but at a cost of a significant risk of making the patient worse off. There should be little debate that when a doctor believes that an operation is not necessary or would create too high a risk of complications, then these patients should not be offered free care.
However, the government (i.e., NHS and Medicare/Medicaid) or third party (i.e., private insurance companies) have an incentive to limit the number of people who are eligible for surgeries to decrease cost. In a general equilibrium, free-market framework, if an insurance company would refuse treatment for many individuals, than these individuals can switch insurance companies and the less generous firms will lose market share. Health insurance, however, is not a perfect market and insurance companies have a financial incentive drop individuals with a poor unobserved health statuses.
When the government is running a health care system, then there is no market mechanism (unless there is an outside option of private insurance) and thus these entities will have an incentive to deny coverage for many operations. Health care is expensive and it costs a lot of money to run a single payer system. In fact, the Telegraph reports that “[a]mong the survey of 870 family and hospital doctors, almost 60 per cent said the NHS could not provide full healthcare to everyone and that some individuals should pay for services.”
Should a 95 year old receive a hip transplant even when their probability of living 5 more years is low? Should an alcoholic be refused a liver transplant if they refused to stop drinking?
These are important philosophical questions for a society to determine when insurance is provided publicly. Despite the many flaws of a free-market system where medical care is purchased through private insurance or out-of-pocket payments, these issues are attenuated in a free-market setting. Individuals would only pay for an operation if their benefit is higher than the cost and there would be no liability for a government or private payer entity. Further, in a free-market without insurance, there is a less of a moral hazard problem since individuals may engage in healthier behaviors in order to avoid paying for expensive operations. It may be the case, however, that moral hazard has a small impact because individuals always have an incentive to make effort to stay healthy.
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