In the comments of this post, Wally asks:
If you were given a free hand to reform the health care system in the US, what would you do with it? What would be the philosophical goals (if any) of the system?
What follows is my short answer. I will elaborate on them more in future posts.
1. Eliminate the tax advantage employers have over individuals for health insurance (either give the same advantage to individuals or remove it from employers).
2. Modify the emergency care act to encourage responsibility. A couple of ideas include putting a limit on the freebies that can be received and having the expectation that something will be paid somehow.
3. Allow for experimentation and choice. If someone living in New York wants to buy an insurance policy that meets Idaho’s state mandates, let them. Btw, before Obamacare, Idaho’s insurance plans were dirt cheap compared to New York’s. Nobody seemed all that interested in understanding why.
4. Convert as much of medical care as possible to first-party payments. This can be done with health savings accounts and medical stamps for the poor. See Singapore.
Update: In the comments, Mark Rossow reminded me of some excellent pieces by economist John Cochrane on health care.
Here’s a link to Cochrane’s paper and an EconTalk podcast where he discusses it. I previously discussed the paper here and here.
Also, I elaborated on #1 in this post from 2009, Fix Pre Existing Condition, which explains how I think the tax advantage for employers provided insurance contributed to the oft cited problem of pre-existing conditions. Cochrane agrees.
John Goodman makes the case here (via Don Boudreaux at Cafe Hayek).
Goodman opens with a story about how a person faced with spending $2,800 of her own HSA money on a CT-scan, called around and got one for $400.
He then explains one major problem in our health care system:
For the most part, no one ever sees a real price for health care services – not doctors, not patients, not employers, not employees.
The reason patients never see the prices is because third-party payers (insurance companies, employers and government) negotiate with providers – leaving patients with a small co-pay under traditional insurance. Because no one sees what services cost, individuals have every incentive to over-consume and caregivers to over-provide, resulting in waste of precious health care resources. And without real prices, there is no basis for third-party payers or anyone to negotiate the lowest possible prices.
On his show this radio morning, Chris Stigall made great points about medical care. Like my employer, it sounds like his employer is encouraging associates to move to high deductible insurance plans combined with a Health Savings Account.
For those who claim Republicans are playing health reforms critics without offering solutions or having made any changes while in power, Health Savings Accounts were made possible by Republicans made possible in 2003.
Stigall described a scene in his company’s benefits meeting where associates hyperventilated about having to take more responsibility for their health care. He made some excellent points that we shop and compare on almost everything else – cameras, auto repair work, restaurants – but, we’ve grown accustomed to not thinking about health care costs.
I’m about to finish my first year on high deductible insurance with an HSA. I recommend it. I feel more empowered. I ask better questions and make sure I understand my treatment options better. I also find myself a tad bit more interested in articles with titles like, “Controlling Your Health Care Costs”, “Alternatives to Emergency Room” or “How to Save Big Bucks by Paying Your Doctor Cash”. I find myself, strangely, thinking through my options about what I would do in an emergency and discussing those options with my doctor, wife, family and co-workers looking for good solutions. I’m a little more motivated to stay healthy. I find myself comparing the cost to visit my doctor to the cost of the CVS/Pharmacy Minute Clinic (he’s priced well against the Minute Clinic, I like him and will take him over some stranger).
Milton Friedman said that we spend our own money on ourselves more carefully than any other way money is spent. The changes I’ve seen in my own behavior with regards to health care over the past year highlights that point for me.
I believe that if we let health insurers go back to being health insurers – that is insuring us against high, unexpected medical costs – that many problems in health care would work out.