Tuesday, July 13, 2010

And on that note...

After briefly discussing some free market health care options, I ran across this video at Hot Air, as well as Ed Morrissey's comments, which fit rather nicely into the conversation, so here you go.


Ed Morrissey:

I wrote about the issue of third-party payers extensively last year, and it will be even more of an issue if Republicans succeed in dismantling ObamaCare. Van den Broek is entirely correct in pointing out that we didn’t have a free-market system for health care as much as we had one for health insurance, and even that wasn’t so free, thanks to endless government mandates at the state and federal level. The entire basis for the health care of most Americans is spending other people’s money through the overuse of comprehensive policies that only make sense in the warped environment of tax policy that doesn’t count health insurance coverage as income.

A quick look at the economics show that most people wouldn’t choose comprehensive coverage if given a rational choice and a level field. In 2007, the average individual comprehensive policy in Minnesota cost $3600 per year, or $300 per month. That would cover two, and perhaps three, clinic visits every month. Most healthy individuals only use a clinic once or twice a year, which means they throw away $3000 per year on coverage they never use. But why would people who get comprehensive coverage for $50 a month through their employer and pay no taxes choose catastrophic insurance instead when the employer doesn’t compensate them for making a wiser choice — and even if they did pay the difference in higher wages, the government would tax it as income?

As painful as it will be, repeal has to be followed by reforming the tax system to get rid of the distortion our current tax policies create in health insurance. We have to make the system more rational in order to get people into realistic and less expensive catastrophic coverage, and let them pay out of pocket for routine care, which will then become much more price competitive and more plentiful as providers shed the overhead costs of dealing with insurers. Repeal is just the first step to real reform, and if we don’t take the next step, we will put ourselves at risk that the next attempt at ObamaCare will not be reversed.

4 comments:

  1. Yes, health insurance is "spending other people's money" to cover the outrageous cost of hospitilization and treatment for those unfortunate enough to need it. You are obviously fortunate enough to not need it yourself and obviously don't know anyone who does. I do know and have known several people who did. It is totally impossible for any individual who is not independently wealthy to pay for care themselves. Would you have only the rich be treated?

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  2. hnjchild - see my earlier posts/comments on high deductible catastrophic insurance coupled with an HSA to cover all your needs at very, very low costs, plus no bureaucrats!

    Side note: It's funny that everyone assumes a person like me is rich just because I don't want free stuff from the government, or because I don't think that other people should pay for my health care, etc. Well, sorry to burst your bubble, but my family, nor I, have ever been rich, or even close to it. No, I just have certain principles by which I must live, and that includes paying my own way, or toughing it out if I can't.

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  3. LB,

    I don't assume you you are rich, but I will assume that you & your husband are relatively young & healthy.

    Free market solutions work fine for people who are young & healthy (or not-so-healthy but wealthy). But what about people of average means with expensive health conditions?

    In a free health care market, what insurance company in their right mind is going to offer a $50/month/$10,000/deductible policy to someone they know will require $50,000 in treatment? From this family, they will receive $600 in premiums and pay out $40,000 in claims.

    I heard Congresswoman Michelle Bachman suggest "high-risk pools" for these people. But if by definition only high risk people are in them, premiums much be astronomical (and unaffordable to middle class people) to cover the costs. Governments often contribute to these pools to bring the premiums down, but now we're back to passing the costs to taxpayers. These costs will be artificially large because healthy people who don't make claims are not contributing to the pool.

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  4. For younger, healthier people (most of the population), insurance should be considered just that - insurance against unlikely but very expensive and catastrophic events. Unfortunately, for older, less healthy people, the unlikely events become more likely. The price of the insurance cannot be tied too closely to the likelihood of the catastrophic event for the individual person, since that would price out of the market those most likely to need help paying for the needed care. Yes, it's "unfair" to the healthy people - we pay for those who are not. BUT we also pay for the healthy people who have a serious accident, or suddenly develop an expensive-to-treat disease, or have a child with a serious illnes, or...
    You must think of your premiums as the cost of treating a large pool of people, not as "what I get out of it this year". "Insurance" is intended to cover the costs for a large group of insured people, and there are always "winners" and "losers". I, for one, would always rather be a "loser" from the return-from-my-premiums standpoint. Wouldn't you?

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