Envisioning a Free Market in Health Care

[Gavin]

D. Eric Schansberg, Cato Journal

It's a PDF file; Envisioning a Free Market in Health Care

I have quickly read the article (and I mean quickly), it looks to be a good article and I will have to read it fully when more time allows over the weekend.

[Ritty77]

Paul Ryan discusses patient centered health care reform at the Hoover Institution

[philunderwood]

www.qando.net/?tag=reason

[philunderwood]

Why should government be involved in medicine at all?

By John Stossel

www.JewishWorldReview.com |

Any day now, the U.S. Supreme will rule on whether the Obamacare insurance mandate is constitutional. Seems like a no-brainer to me. How can forcing me to engage in commerce be constitutional?

But there's a deeper question: Why should government be involved in medicine at all?

Right before President Obama took office, the media got hysterical about health care. You heard the claims: America spends more than any country — $6,000 per person — yet we get less. Americans die younger than people in Japan and Western Europe. Millions of Americans lack health insurance and worry about paying for care.

I have the solution! said Obama. Bigger government will give us more choices and make health care cheaper and better. He proceeded to give us that. Bigger government, that is. The cheaper/better/more choices part — not so much.

Costs have risen. More choices? No, we have fewer choices. Many people lost coverage when companies left the market.

Because ObamaCare requires insurance companies to cover every child regardless of pre-existing conditions, WellPoint, Humana and Cigna got out of the child-only business. Principal Financial stopped offering health insurance altogether — 1 million customers no longer have the choice to keep their insurance.

This is to be expected when governments control health care. Since state funding makes medical services seem free, demand increases. Governments deal with that by rationing. Advocates of government health care hate the word "rationing" because it forces them to face an ugly truth: Once you accept the idea that taxpayers pay, individual choice dies. Someone else decides what treatment you get, and when.

At least in America, we still have some choice. We can pay to get what we want. Under government health care, bureaucrats will decide how long we wait for our knee operation or cataract surgery ... or if we get lifesaving treatment at all.

When someone else pays for your health care, that someone else also decides when to pull the plug. The reason can be found in Econ 101. Medical care doesn't grow on trees. It must be produced by human and physical capital, and those resources are limited. Politicians can't repeal supply and demand.

Call them "death panels" or not, a government that needs to cut costs will limit what it spends on health care, especially on people nearing the end of life. Medical "ethicists" have long lamented that too much money is spent in the last several months of life. Given the premise that it's government's job to pay, it's only natural that some bureaucrat will decide that 80-year-olds shouldn't get hip replacements.

True, surveys show that most Brits and Canadians like their free health care. But Dr. David Gratzer notes that most people surveyed aren't sick. Gratzer is a Canadian who also liked Canada's government health care — until he started treating patients.

More than a million Canadians say they can't find a family doctor. Some towns hold lotteries to determine who gets to see one. In Norwood, Ontario, my TV producer watched as the town clerk pulled four names out of a big box and then telephoned the lucky winners. "Congratulations! You get to see a doctor this month."

Think the wait in an American emergency room is bad? In Canada, the average wait is 23 hours. Sometimes they can't even get heart attack victims into the ICU.

That's where we're headed unless Obamacare is repealed. But that's not nearly enough. Contrary to what some Republicans say, we didn't have a free medical market before Obama came to power. We had a system that limited competition through occupational licensing, FDA rules and other government intrusions, while stimulating demand through tax-favored employer-based "insurance," Medicare and Medicaid.

If we want affordable and cutting-edge health care, there's only one approach that will work: open competition. That means eliminating both bureaucratic obstacles and corporate privileges. Only free markets can give us innovation at the lowest possible cost.

Of course, that also means consumers should spend their own money on health care, limiting insurance to catastrophic expenses. Americans don't want to hear it. But that's the truth.

[philunderwood]

In Praise of Discrimination

By John Stossel

www.JewishWorldReview.com |

I'm scared.

I fear that even if the Supreme Court overrules most of Obamacare (or did already, by the time you read this), Republicans will join Democrats in restoring "good" parts of the law, like the requirement that insurance companies cover kids up to age 26 and every American with a pre-existing condition.

Those parts of Obamacare are popular. People like getting what they think is free stuff. But requiring coverage to age 26 makes policies cost more.

Even Bill O'Reilly lectures me that government should ban discrimination against those with pre-existing conditions. Most Americans agree with him. Who likes discrimination? Racial discrimination was one of the ugliest parts of American history. None of us wants to be discriminated against. But discrimination is part of freedom. We discriminate when we choose our friends or our spouse, or when we choose what we do with our time.

Above all, discrimination is what makes insurance work. An insurance regime where everyone pays the same amount is called "community rating." That sounds fair. No more cruel discrimination against the obese or people with cancer. But community rating is as destructive as ordering flood insurance companies to charge me nothing extra to insure my very vulnerable beach house, or ordering car insurance companies to charge Lindsay Lohan no more than they charge you. Such one-size-fits-all rules take away insurance companies' best tool: risk-based pricing. Risk-based pricing encourages us to take better care of ourselves.

Car insurance works because companies reward good drivers and charge the Lindsay Lohans more. If the state forces insurance companies to stop discriminating, that kills the business model.

No-discrimination insurance isn't insurance. It's welfare. If the politicians' plan was to create another government welfare program, they ought to own up to that instead of hiding the cost.

Obama — and the Clintons before him — expressed outrage that insurance companies charged people different rates based on their risk profiles. They want everyone covered for the same "fair" price.

The health insurance industry was happy to play along. They even offered to give up on gender differences. Women go to the doctor more often than men and spend more on medicines. Their lifetime medical costs are much higher, and so it makes all the sense in the world to charge women higher premiums. But Sen. John Kerry pandered, saying, "The disparity between women and men in the individual insurance market is just plain wrong, and it has to change!" The industry caved. The president of its trade group, Karen M. Ignagni, said that disparities "should be eliminated."

Caving was safer than fighting the president and Congress, and caving seemed to provide the industry with benefits. Insurance companies wouldn't have to work as hard. They wouldn't have to carefully analyze risk. They'd be partners with government — fat and lazy, another sleepy bureaucracy feeding off the welfare state. Alcoholics, drug addicts and the obese won't have to pay any more than the rest of us.

But this just kills off a useful part of insurance: encouraging healthy behavior. Charging heavy drinkers more for insurance gives them one more incentive to quit. "No-discrimination" pricing makes health care costs rise even faster. Is it too much to expect our rulers to understand this?

Of course, the average citizen doesn't understand either. When I argue that medical insurance makes people indifferent to costs, I get online comments like: "I guess the 47 million people who don't have health care should just die, right, John?"

The truth is, almost all people do get health care, even if they don't have health insurance. Hospitals rarely turn people away; Medicaid and charities pay for care; some individuals pay cash; some doctors forgive bills. I wish people would stop conflating the terms "health care," "health insurance" and "Obamacare." Reporters ask guests things like: "Should Congress repeal health care?" I sure don't want anyone's health care repealed.

Reporters also routinely called Obamacare health "reform." But the definition of reform is: making something better. More government control won't do that. We should call politicians' insurance demands "big intrusive complex government micromanagement."

Let the private sector work. Let it discriminate.