Keep Your Advice Motley Fool

Brad Hessel and Madge Cohen do a decent job at laying out the things causing problems in the medical and health insurance market in the United States in their piece at the Motley Fool, Dear President Obama, Per Your Request…

I’m not a fan of all of their recommendations.  They prescribe a meddlesome role for government in everything from mandating coverage to setting education curricula and maintaining health records, all beyond the limited role of government should have.  The Founders of this country believed in the limited role of government to protect our freedom from overreaching politicians.

Hessel and Cohen recommend overreaches from the outset.  Do we want the government to maintain our individual health records?  Do we really want them to mandate coverage?  Is this still a free country?

Over time it would get worse.

For example, under their recommendations, by what mechanism would government be prevented from prescribing lifestyle choices in the name of “keeping health care costs down.”

Let’s revisit Obama’s criteria:

1) Bring down premiums

2) Reduce deficit

3) Cover the uninsured

4) Strengthen Medicare

5) Stop insurance company abuses

Health Savings Accounts, elimination of the tax advantage employer-provided plans have and fewer mandates can accomplish #1 and #2.

#3 should be changed to: cover everyone that wants to be covered.  Many uninsured are uninsured by choice.  I see no reason to force them to do something they don’t want to do.  And, if you accomplish #1 and #2, that should reduce, if not eliminate, the number of people who are uninsured not by choice.    For those who still cannot afford coverage, I could entertain ideas of targeted assistance in the form of health coupons, much like food stamps.

#4 If we go to HSA’s, over the course of the next generation or two, we’d be able to reduce the need for Medicare as people would be able to save for a fair chunk of their health care costs.

#5 I think this is overblown.  Getting government involved in health care would give rise to much more abuse.  Make the health insurance market more transparent by eliminating the employer tax advantage and much of this (if much exists) will go away.  Do we often hear of auto or home insurance company abuses?  No.

Advertisements

Costs Don’t Go Away With Mandates

In his column today, Politicians in Wonderland, Thomas Sowell explains a very important point:

It costs politicians nothing to mandate more insurance coverage for more people. But that doesn’t mean that the costs vanish into thin air. It simply means that both buyers and sellers of insurance are forced to pay costs that neither of them wants to pay. But, because soaring political rhetoric leaves out such grubby things as costs, it sounds like a great deal.

Costs can vanish into thin air if you let the free market work.  My cell phone company is giving free phones away each year now.  The latest one I got for free is more powerful than anything I’ve ever had before.  Two years ago, a phone like this was only available to those willing to pay significant amounts.  Now, it’s a freebie.  That’s an example of costs vanishing into thin air.  Nobody in the government mandated this.

Mandating insurance companies to cover unprofitable cases doesn’t make those costs go away.  The mandate is really a mandate for the customers like you and I to pay those costs.