The idea that everyone can have health insurance like most employer plans at an affordable cost to all is impossible to achieve. This country spends almost 1/5 of its income on health care. Even if you made this very progressive, it’s simply unsustainable without figuring out a way to control future growth in costs. Also, with increased insurance would come increased expectations, even for very expensive care, which would drive up costs for everyone by shifting demand outward.

The solution is ultimately going to have to involve reducing the expected standard of insurance coverage and increasing out of pocket expenses for everyone as a norm (to disincentive hypochondriacs from consuming benefits that would otherwise go to legitimately sick people).

Further, the idea of “expanding coverage” and “lower costs” at the same time is impossible in a world of scarce resources. There’s no reason to believe that for-profit, non-profit, or government can cover more people at a lower cost. Politically, this is discussed often (because unintended consequences of such a policy are not considered by people who are not economists), but the CBO has pretty much ended that debate on every plan that is on the table right now. Even preventative care, which was long touted as a solution to controlling costs, was recognized as increasing costs, because the number of people who would have to consume care in order to avoid the low probability of a very high cost illness overcame any benefits.

In a world of scarcity, we have to realize that we will never get something for nothing. Even if something uber-progressive is passed and the wealthy paid for a large portion of it, it will require massive reform even in the short run because rate of change in the cost of health care is much higher than inflation. I really don’t know of any way to control that without stifling innovation, as well, and that’s certainly not a consequence that any of us want.

Let me also add that I am not arguing for the status quo, but rather, if we’re going to have reform, it must be able to provide social gain from the status quo, or we’re wasting our time drafting the statute.

Without employer health insurance, I would have, most likely, invested the extra money that I received from my first job in industry, setting up a fund which would payoff later in life. During these healthy years, the only medical expenses that would have been paid would have been the birth of my three children. (Note, the factory’s insurance was horrible–we never went to the doctor during this time in this world. I would have been money ahead by taking it as payout, for sure.)

About 1992, at age forty, I was still in great physical shape. At that point, I would have bought the kind of insurance coverage (at a higher rate than a man of twenty) that would provide for me and my family. My pay at the University would have been about seven percent higher than it was in our real world–more than enough to get what I needed, especially since rates would be lower due to the competition.

If the company cancelled after my heart attack, I would probably have to switch to “high-risk” insurance, with a different price/coverage level to take care of big, catastrophic expenses.

Note, please, that this system will not work without removing the high cost of torts and medical education–there is simply not enough supply in the country now due to those problems. A middle-class person like myself cannot afford paying the real costs due to those.

Once again, fix those two things and many of our current problems will evaporate.

Tom

On #1 I was saying if there was no such thing as employer health insurance as you advocate then it would be impossible for you to get health insurance. I know you have it now, but that’s through the university, isn’t it?

Tom

Point 1–I *have* insurance under the current system. As a matter of fact, I have insurance that costs me virtually nothing. This is one of the reasons that I find it hard to fault the current situation.

Point 2–I sat in on Union negotiations with the factory in which I worked. I know for a fact that at least in the 1970s, the employers *did* see health insurance payments in a 1-to-1 ratio with direct pay.

Interesting aside: One major corporation (I forget which one), figuring that preventative care would lower overall health costs, insisted that all employees get preventative care. It tripled the cost of their overall health care because of all the tests doctors insisted upon to cover their asses. Without fixing the tort problem, complete and total coverage of every citizen will cost much, much more than estimated because of this tendency.

4) The situation (of which you speak) in which everyone had minimal insurance existed at one time in the United States. It was what was common over most of the country during the 1950s, when I was a child. People went to the doctor when they had something seriously wrong with them and put up with it if they didn’t. Bills were low enough then that people could pay either out of pocket or with a small bank loan.

I would go so far as to say that the proliferation of insurance coverage plus torts are the main reason for the rise in health care costs (you can add in the social costs you mentioned in the original article, too).

You might say, “well, during the late 50s, life was short and brutal–we don’t want that.”

According to these tables, http://www.infoplease.com/ipa/A0005140.html

life expectancy at birth was only about eight years more in 2004 than it was then (much of this can be attributed to new neo-natal tech saving premature babies).

Especially interesting is that, despite a sixth of our medical costs being “end of life” care, the life expectancy of a person at 70 was only three and a half years more in 2004 than it was forty-five years earlier.

So, in short, much of the medical care that is received in the US right now is unnecessary, in my opinion, and the pressure on the suppliers is raising the prices. We need to reduce the operating costs of the hospitals and doctors with tort reform, increase the supply of medical personnel by subsidizing the education of new practitioners, and we need to somehow encourage mostly-healthy individuals not to go to the fucking doctor every ten minutes for conditions that they would put up with if it was directly apparent what it really cost them to get it fixed.

Universal coverage will aggravate every one of the above problems.

Tom

Tom

It doesn’t matter that employers self-insure really because the aim is to get insurance companies to lower prices. It doesn’t matter what self-insurers do because they are only the big boys. Insurance companies are going after the small and medium sized employers (or individuals) who are not big enough to self-insure. There’s a reason that bigger employers self-insure in large numbers rather than going with private insurance. It seems highly unlikely that private insurers would give two licks about what self-insurers are doing because that’s simply not their market. It’s a red herring.

Tom,

If we had a 100% free marketplace there would be a few issues.

1) You would never be able to get health insurance ;-) (not to insult you, but I don’t think you could pay enough to get an insurer to cover a middle aged man with a dodgy heart)

2) I’m not sure that employers would raise incomes enough to compensate for the loss of benefits. It could be the case. Do you have any numbers or references? (not a challenge, I’m genuinely curious)

3) Increasing supply is a great idea. Same goes for nurses.

4) I’m highly concerned by the ramifications of such a move if only because we are not isolates and if someone chooses not to carry insurance, someone will have to pay for whatever happens, even if “whatever” happens to be their imminent death. A truly free market would not require hospitals to treat anyone regardless of ability to pay, so we could see people dying on hospital doorsteps because they didn’t have an insurance card. Also, just because YOU (generalized you) chose to buy a beamer instead of health insurance, that doesn’t mean that your family wouldn’t want to save your life if you were dying. Then you just shift the burden of your stupidity on to others which is completely unfair to them. In all honesty, I just see this as rewarding irresponsibility for those who are relatively healthy and punishing those unfortunate enough to have been born with or later develop a serious condition that requires regular attention.

The AMA and other special interests might have serious problems if it were to depress the wages of doctors, but if combined with reasonable tort reform and lower malpractice insurance costs, it could be a potential cost saver.

I do not support eliminating punitive damages, however. My grandmother was paralyzed by a doctor who severed her spinal cord in 1957. For the next 11 years of her life, she lived a miserable existence and my family suffers for it to this day. Closing the door to punitive damages would be a tremendous injustice to those who have really suffered.

Capping punitive damages at some number or making a statutory way to calculate it, I can see as something I’d possibly support, even though I’m generally not in favor of more statutes as I think we have too many already.

There are few markets that are as competitive as insurance is. John Lott wrote an excellent piece on this, which you can see here:

http://www.foxnews.com/opinion/2009/09/16/john-lott-health-care-claims-obama/

The end of employer insurance is nothing important–the employers would just have the money available to give their employees as wages instead. In a free society the employees could choose to use it on insurance or on a bass boat or private schools for their kids.

The problem with your plan is that if you require everyone to have insurance and no one to be refused because of pre-existing conditions, you end up with a lot of “SafeAuto”-type insurance companies that sell you insurance you don’t want to have to use for more money than you have to spend on it (check out the situation in Massachusetts for an example of this). At the same time, legit companies end up raising their rates because they can’t refuse folks who are going to receive $45,000 in benefits in the next two years and then die before paying more than a fraction of that cost in premiums. This *reduces* the number of people with decent insurance and is a disservice.

In truth, we have a system in the US now in which the very poor are covered by the government, the lower middle-class uninsured end up negotiating with their health-care providers directly for reduced rates, the middle class gets insurance paid for by their employer, and the upper class gets the best health care in the world.

If we could simply reduce the overall cost of health care (without further rationing) to move each of the categories down one notch, we’d have the best system in the world. Increasing supply is the answer, I’m certain, and it’s possible to do it with the ways I outlined in my earlier comment.

Tom