Investments in human capital require an upfront cost but provide long-term benefits. Human capital is much broader than just education and includes any investment that improves the quality of production. These decisions include things like moving across the country or improving one’s health. The US government uses some of its tax receipts to invest in healthcare for its citizens. This investment has resulted in increases in life expectancy, especially for those that have been treated at the National Institute of Health.
Economic growth is driven by investments in both physical capital and human capital. To increase the health and wealth of a society, the US must ensure that businesses have access to resources (both physical and financial) but that everyone has access to resources that improve their human capital. Under this framework, government investment in irradicating diseases like malaria, polio, and measles allows individuals to live longer, healthier lives which increases their productivity.
Terry is debating with himself on whether to get a vasectomy after the birth of his two little girls. He goes in for the procedure, but while under anesthesia he confesses to Jake that he is conflicted. Terry doesn’t believe Jake, but Jake has tried to make it a point that he’s Terry’s friend and is looking out for him. Terry asks him to focus on his own body and points out that Jake’s poor diet is the reason why healthcare is so expensive for everyone else. At the end of the episode, Terry gifts Jake a box of carrots, but Jake doesn’t really appreciate it.
Moral hazard occurs when a party that is protected from risk behaves differently from the way it would behave if it were fully exposed to the risk. Here, the last line is a perfect example of moral hazard, when Aasif Mandvi says, “Hey man! You can get drunk and have a great time and it doesn’t matter ‘cuz you’ve got health insurance!” Now students can fall off of keg stands and get hurt but that’s ok, they have health insurance now!
Thanks to James Tierney for the clip and the description!
After Dee has a heart attack, she heads to the hospital only to find out that she doesn’t have insurance because her dad canceled the policy when they were younger. Mac and Charlie are confused that people have to pay to stay in a hospital because they think of it like a public good similar to police and fire protection, which is nonexcludable.
Frank shows up to get a full body health scan because he’s been having a bit too much fun. This line alone is a great clip for teaching moral hazard when it comes to healthcare.
Two victims of a train accident come into the emergency room with a pole going between both their stomachs. The team isn’t able to help one patient without causing potential injuries to the other patient. The doctors go back and forth about who to help and what to do. If they decide to help one patient, the other is sure to die. How do you decide who gets to live?
When Mateo gets sick, Jonah comes up with an insurance fund to help cover employee medical bills because the store does not offer health insurance. The team members join the plan because it only costs $20 each month, but Jonah has promised to pay previous medical bills. Jonah and Amy quickly find out each team member, especially Sandra, has a lot of pre-existing conditions and they realize that they can’t cover everyone’s costs at one time. The two try to break the two groups apart, but the members in the pre-existing condition group will have to pay significantly more to cover all their costs.
Mateo comes down with an ear infection and Jonah comes up with an idea to create a store insurance policy. Originally, the store raised money for medical bills by putting a donation jar out for customers to donate spare change. When Jonah realizes that takes a lot of work, he proposes creating a pool of funds from the employees and have them contribute monthly to cover someone’s bills. Unfortunately, he’s created a semi-pyramid scheme that requires individuals to donate money to help one individual.
After a coworker comes down with an ear infection, the team members decide to try and raise money to help cover the costs of medicine. Jonah decides to come up with a group health plan where each member donates money from their check and then covers the medical costs of store members whenever the become sick. Amy sarcastically points out that this is basically what health insurance is meant to do.
Mateo has an ear infection and everyone in the store has a way of curing it. While some are more appropriate than others, each believes that their method will cause Mateo’s ear infection to be cured.