Free Markets, Free People


Health Care Reform And The Free Market

Ramesh Ponnuru writes one of the better op/eds discussing the push for “universal health care” I’ve seen.

The practical case is that uninsured people raise premiums for everyone else. But such cost shifting raises premiums by 1.7 percent at most, according to a 2008 study published in the journal Health Affairs. Reforms that increase the number of people with health insurance, while stopping short of universal coverage, would presumably make that small percentage even smaller.

The obvious way to take care of that is to directly insure that relatively small group instead of messing with the entire system.

What about portability and pre-existing conditions? As we’ve been saying here, for literally years, remove it from being employer based and you’ve taken care of both as long as a person keeps their payments current. And, to make it more affordable, remove state mandates. Ponnuru says precisely the same thing:

An alternative approach would be to make it easier for people to buy insurance that isn’t tied to their employment. The existing tax break for employer-provided insurance could be replaced with a tax credit that applies to insurance purchased either inside or outside the workplace. At the same time, state mandates that require insurers to cover certain conditions, which make it expensive to offer individual policies, could be removed.

More importantly, it is a free-market approach. As Ponnuru says:

These two reforms would address most people’s anxieties about the health care system. Insurance would be more affordable, especially for people who cannot get it through an employer, so the number of people with insurance would rise. Indeed, this would enable more than 20 million more Americans to get insurance, according to a model created by Steve Parente, a health economist at the University of Minnesota.

More important, people would own their insurance policies and thus be able to take them from job to job. They would no longer need to worry about losing their job and their insurance at the same time, or feel they need to stay with a job they dislike because they need the benefits.

There it is, the same solution we’ve been pushing at QandO pretty much since QandO has existed. It is a common sense solution which actually reduces government’s role, gives people choices and makes coverage more affordable for a larger number of people, portable and negates the concern for “pre-existing” conditions.

Which is precisely why government will reject such a remedy.

~McQ

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11 Responses to Health Care Reform And The Free Market

  • Well the preexisting conditions has always been the most difficult problem to solve i think. While i think its true it might alleviate it some with regards to the consumer, i wonder if it might not force the insurance cost upwards, because alot of people have chronic problems. How would a contract be created to serve the insurer appropriately. I mean they HAVE to make money. Supporting lots of people with chronic lifetime problems basically forfeits any payment they might have made to the insurer. The hope would be that healthy people would cover the cost, but would they really be able to?

    …Well i guess they do now for the most part. Can the insurance company raise my cost alot? If so what recource do i have if i obtain a chronic illness? I cant leave the insurer or i get into the same place with a preexisting condition.

    Im not advocating socialized medicine, just in case it sounds like it. Only raising a question.

    • You address “pre-existing conditions” in the same way you do in all other forms of insurance.  Home insurance covers many things but the most obvious major catastrophic threat to a home, flooding, is not covered.  An additional flood insurance rider must be purchased for that coverage.  Put the same mechanism in place for those “chronic” problems you mention that do not affect 95% of the population.

      • Most “pre-existing” conditions only show up as “pre-existing” when someone changes jobs. Otherwise it is an existing condition for that insurance company. The point of portability of insurance is you keep your insurance company even when you change jobs. Like Tricare for Life – it doesn’t matter what I’m doing, all my conditions are “existing” conditions and covered.

  • Unfortunately, the whole issue was resolved when Obama and the Democrats took over. It’s now “Medicare for all” phased in as soon as the public option drives the private insurers out of business. Those who disagree with this approach in Congress will be marginalized and ignored. Obama will tell them anything but the public-option approach is a “false option.” Unfortunately, there is now no turning back from the disastrous course Obama is taking us down.

  • Choice is the most important thing to me.  The freedom to make our own choices, I think, is one of our founding principles and it’s still a good principle.

    I saw a bumber sticker today that read, “It’s Time for Everyone to have Health Care with a Single Payer”.  In answer to that, I’m going to create my own bumper sticker that says, “When Your Health Care has a Single Payer, You No Longer have a Single Choice”.

  • My health insurance already has a single payer….and i like it that way.

  • The word needs to get out that the word ‘ Insurance’ doesn’t mean ‘Someone else will pay all your bills’.

  • Unfortunately, many on the right don’t share your beliefs on this one.  When Bush proposed to extend the tax credit to individuals rather than employers, the people at Red State freaked out.  They thought it was “social engineering” and made all the “Republicans same as Democrats” arguments that you guys make about spending and government control.  It was one of the most amazing displays of sheer obtuseness that I have ever seen.

  • There has to be a fundamental change in what “insurance” covers as well.  A lot of health care dollars aren’t spent “insuring against unlikely events”.  A yearly checkup…does that seem like a chance event?  The whole concept of insurance is that the cost of an event is factored into probability of it happening spread over a population.  Now obviously in any business model, administrative costs and profit are tapped on too.  

    So let’s say there is a 1% chance you’ll need a procedure that runs $1k.  The premium cost for your share of that would be 10$.  Add on 5% for administrative costs and 5% for profit, your premium is $11 for the 1% chance you’ll need the $1k procedure.  Seems smart, right?

    Now compare that to a routine physical.  The chance you get the physical: 100%.  The cost of the procedure: 50$.  Your premium = [Cost x Probability] x 1.10 (10% overhead) = $55.  By running things through the middle for an event that is in all honesty NOT insurable, you overspend 5$.  Multiply this by 300 million individuals and you’re wasting $1.5 BILLION a year.  

  • This is “rationing”. You know that, right? Removing state mandates = the immediate dumping of coverage offerings to anyone with pre-existing conditions. Furthermore, it leads to the immediate dumping of coverage for anyone who *develops* a chronic condition, regardless of whether they’re current on their payments or anything else.

    You save insurance money by pragmatically eliminating the realistic opportunity for non-perfectly healthy people to get insurance.

    Insurance is fundamentally a racket. Everyone wants to charge healthy people and scr*w sick ones. The only concievable way to get insurers to cover less healthy people is to force them to cover people in large lumps that they can’t choose. Until sickness starts aligning with wealth, there’s no price level at which coverage for many, many unhealthy people is more profitable than not covering them.

    This not only doesn’t deal with adverse selection, it is utterly blind to its very existence.