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Why Health Care "Reform" was a Colossal Blunder |
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How do I hate thee, health care “reform”? Let me count the ways:
Second way: Insurance is the problem. You hear stories of salesmen who have expense accounts. Money is no object, because it’s not their money. And they act like it. This is the problem at the heart of health insurance. I have really good health insurance. Although the copays are going up and it is killing my company, I don’t really have to worry about price. It’s all the same to me. More physical therapy, or less? Let’s do more. The expensive good stuff or the mediocre cheap stuff? I want results—let’s splurge. I don’t think I’m some kind of greedy so-and-so; this is just part of my benefits package. I’m very grateful for it, and I use it. You may have noticed that health insurance is different from every other kind. I don’t submit my receipts for oil changes and new tires to Progressive. Progressive doesn’t really care about the maintenance of my car. There is no point at which they will pick up the bill. They only cover catastrophes. House insurance is pretty much the same way. But health insurance gets involved in pretty mundane maintenance- strep throat, athlete’s foot, whatever. But what if health insurance was like auto and house insurance? What if it only covered catastrophes? Well, there IS health insurance like that. If you get a $10,000 deductible policy, it’s pretty cheap. Of course, you are on the hook for $200 doctor visits and $100 prescriptions, and that sucks. Well, maybe it doesn’t suck. Read on. Suppose I had the option of my current health plan, or the company taking out a high-deductible policy on me, and giving me the difference in cash. I mean the difference between the current premium they pay, and the reduced premium they WOULD pay. It would be a wash for them, right? If I took them up on it I would have to pay tax on that extra money, which would sour the deal a fair amount, but I think I’d still take it. Why? Well, if I really have a catastrophe, it won’t destroy me: I’m insured. And as far as the little stuff goes, I think I could bargain doctors and pharmacies down by waving cash in their faces. I promise you that I can conduct a doctor’s visit for a lot less than CIGNA can. And I have an incentive. If I avoid the doctor, and if I talk the price down, I make money! There’s something in it for me! I’d like a shot at that money. If you contrast the two behaviors (me on my current plan and me on my proposed plan), you get to the heart of the problem. You get to why almost everything gets cheaper while medical care gets costlier. It’s because so much of the market doesn’t care about price, and has zero incentive to control price. And I can prove it. Are you familiar with Lasik? When it hit the market maybe 15 years ago it cost several thousand dollars per eye. Now it costs several hundred, and those are today’s dollars. What’s the difference? Well, insurance won’t cover Lasik. It’s a free market item and the magic of the free market has made it dirt cheap. Have appendectomies come down 90% in the last 15 years? QED. And you know what? If most or all of us were doing this, the free market would drive down the price. Always has, always will. And the insurance companies would go back to the sideline, only kicking in to handle catastrophes. So my point could be summarized like this: common health insurance decouples the price from the customer. It is therefore in the customer’s best interest to use as much as possible. This drives the price into the stratosphere. In light of this, maybe you are right. Maybe it was good that the government stepped in to fix this insurance problem. Did it, perhaps, escape your notice that the government’s solution is to decouple the price from EVERYONE? To make the problem universal? Now every medical issue in the entire country will be conducted using somebody else’s money. Yes, insurance is the problem. Your solution is to put the problem on steroids. Now no one cares about price, and everyone’s best strategy is to use as much as possible. THAT will end well. |