The health care system in this country has ample room for improvement.  I think that the worst way to address any problems with it would be to interject more government into the situation.

I’ll cite what I feel are the biggest problems with our health care system directly, but first I would just like to analogize government run health care with government run schools.  Think about being zoned to receive your medical care at a particular hospital based on your address.  You would not be able to see physicians at other hospitals without first receiving government permission.  The medical professionals, now government employees, would unionize and pursue goals such as capping the maximum number of patients that can be treated in a day.  Exceeding that number will put the public’s health at risk they will say.  Doctors offices start to look like bread lines in communist Russia.  This story could go on and on.

The biggest problems, in no particular order, with health care are insurance, employer provided health care plans, and excessive government regulation.

Health insurance is a misnomer.  Insurance implies protection against the unforeseen.  Your homeowners insurance is a good example of this.  But health care insurance has morphed into something more akin to a group savings plan for routine medical expenses.  You wouldn’t file a claim with your homeowners insurance carrier to pay for your HVAC filter every month, so why should you file a similar claim for birth control?  The result of wrapping coverage for too many elective or routine items into the policy is that the premiums are prohibitively expensive.

All those claims we file for routine purchases cost money.  An insurance CEO once said that it costs $35-$50 to process a $25 claim.  No wonder the system is expensive.  And those costs can’t be legislated away, although they can be mitigated through technology.  They represent the time spent by real people entering things, fraud checking, etc.  We can’t cut corners by eliminating fraud checks.

When insurance covers things that people should pay for out of pocket it turns people into terribly poor consumers.  Instead of making prudent decisions they spend like they are playing with house money (not unlike politicians do with our tax dollars).  A perfect example of this is hospital food.  When you’re in the hospital insurance will pay for the food, but the trouble is that most hospital food sucks.  During my wife’s stays in the hospital for the births of our children I wound up running out to pick up food more often than not.  But, the hospital still dutifully brings a plate of food - wanted or not - every meal.  That expense is billed directly to the insurer.  I guarantee you that if I were paying for the stay out of my own pocket I would have told them where to put their tray of food.

John Stossel highlights how insurance makes us bad consumers - especially when someone else (your employer) foots a majority of the bill:

Suppose you had grocery insurance. With your employer paying 80 percent of the bill, you would fill the cart with lobster and filet mignon. Everything would cost more because demand would rise and supermarkets would stop running sales. Why should they — when their customers barely care about the price?

Employer provided health insurance is harmful to the health care system.  It depresses the natural vitality of the free market by “chaining” workers to their jobs.  When people are scared to leave their job for fear that they will lose their health insurance they are hurting themselves and their employer.  Churn in the labor market incites innovation and studies show that employer provided health care reduces mobility by up to 25%.

The very notion of getting health insurance exclusively through our employers should strike us as quite odd.  We don’t purchase car or home owners insurance through work.  The big factor, and I’ll admit I didn’t realize it at first, is that employer provided health care is a loophole in our income tax system.  It is certainly a tangible asset, synonymous with income, yet we get it completely tax free.  Bush’s proposed plan to tax health care benefits would at least take away one of the primary reasons employers offer health care benefits.  That money the company pays in benefits could go into your pocket (tax free) and you could shop around for the health plan that fit your needs.

The government’s intrusion into the health care system amounted to a hidden tax of $169 billion in 2004.  Need I say more?

Some who are pining for “universal” health care have tried to equate government mandated health insurance to mandated liability automobile insurance.  That is a fallacious argument.  Mandatory car insurance is intended to protect you from someone else.  Mandatory health insurance is intended to protect you from your own decisions.

Our health care system can be fixed so that it is able to affordably serve more people, but government mandated or provided healthcare is not the solution.  Well, it is a solution - a very costly and inefficient one.  The best way to fix the system is to discourage omnibus insurance plans in favor of catastrophic coverage (real insurance), detach health care from employers, and strip away excess government involvement.

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This entry was posted by Brian on Friday, January 26th, 2007 at 10:18 pm and is filed under Health Care. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.