Purchasing Health Care in a Market System

In today's Wall Street Journal there is a letter from a gentleman who was responding to a column by Karl Rove concerning market based health care. The writer's complaint was that purchasing health care isn't the same as purchasing something like a car. Patients, he states, are 'incapable' of making reasoned decisions when purchasing health care, they just want to be cured.

To some extent he is right, however he overlooks several things. First of all, how is it that people know what car to purchase? It might strictly be price, but quality enters the picture as well. How do we evaluate quality? My guess is that most people who purchase a car do so by relying on brand reputation, recommendation from other people or by reading the countless magazines (or web sites) which evaluate cars. The point is, most people don't know how to evaluate a car, they rely on those people who do know how to evaluate a car. The same would be true for health care if the system operated in a more transparent fashion.

There will always be people who will do the research necessary to determine the best places to buy a particular item, and the same will be true for medicine. Health care providers will try to attract these people. In addition, private organizations will form to do evaluations for their membership. Think something like Consumer Reports. Unions could provide this service to their members. The beauty of this is that people don't have to belong to a Union, or subscribe to Consumer Reports to benefit from their services. As care providers work to attract the knowledgeable patient (or those who have been advised), a shakeout of sorts will occur. There will likely be health care 'brands' that form. People will only need to look for the brand, compare prices with other branded providers and decide which they prefer. We already see this sort of thing with laser eye surgery, for example.

Medical providers like to think that they are somehow above the commercialism of other goods and services. What they don't realize (or maybe they do) is that the commercialism (i.e. marketing, branding, etc.) serves a very important function. This sort of commercialism promotes knowledge in a way that no longer requires people to be experts in order to buy a particular product. If lack of expertise is a problem in a market based health care economy, you can bet that entrepreneurs will find ways to fill the gap, earning income for themselves, but also providing a useful service at the same time. Adam Smith's invisible hand at work.

Hillary for Benevolent Dictator '08

In speaking with the Associated Press about her health care proposals, Hillary Clinton said:

I wish it were possible to just wave a magic wand and say from the White House, 'Here's what I want.' But that's not the way it works.

To me, this quote speaks volumes. Hillary (like most other politicians) believe that they know what's best for "the country". They believe that if they pull the right levers, pass the right laws, they will be able to fix all problems. Of course, this approach has been tried many times in the past, and the result is always tyranny. But a well meaning tyranny.

Honesty in a Presidential Candidate

At least John Edwards has the honesty to let people know that the government will own your body once single payer health insurance is inacted.  At a campaign stop in Iowa, Edwards said

'It requires that everybody be covered. It requires that everybody get preventive care [...] If you are going to be in the system, you can't choose not to go to the doctor for 20 years. You have to go in and be checked and make sure that you are OK.'

Somehow I'm not comforted by the notion that the government is going to require me to get preventative care.  I'm sure that's just the tip of the iceberg.  It follows that I will be required to take appropriate medications and to get appropriate treatment as recommended by my government paid physician.  No thanks.

HT to the Cato Institute

Single Payer Insurance?

I'm continually amazed at the number of people who are clamoring for a 'single payer' health system in the United States.   I'm shocked that people would voluntarily want to give up control over their bodies to a bunch of politicians and bureaucrats.   Why on Earth would you want to cede control over your body to a single, monolithic insurance entity which only responds to lobbying and vote buying?  If you are in an HMO, you may have trouble getting certain health care options treated, but at least you have the possibility to switch insurance providers.  If we move to a single payer system, we will effectively have one very large HMO, run by the federal government.   If you are dissatisfied with what's covered by that HMO, what are you going to do?  Are you going to move to a new country?  Hope that in the next election 'your' people get elected and change the rules?  HMOs may be bad, but a single government monopoly HMO would be much worse.

The smarter choice is to go in the opposite direction, with more payers, not fewer.  Most people should pay for simple things out of pocket and use privately purchased insurance for big and unexpected expenses.  You, not your employer or government, would choose the insurance that best fits your family.  Insurance portability is a non-issue because you own your policy.   For those people who truly can't afford health care, there could be assistance programs, ideally through private charity, that could be established to help out.  Think about it, we have people who can't afford housing, but we don't require everyone to move into public housing.  We have people who can't afford food, yet we don't require everyone to go on food stamps.  Similarly, just because a segment of the population can't afford simple health care expenses doesn't mean we should throw everybody into one giant public system.  Certainly private health insurance is a mess right now because of years of government meddling, often at the behest of the insurance industry itself.  Cross-state purchasing restrictions and government mandates only reduce variety and drive up costs unnecessarily.  If you remove these restrictions, increased competition will bring new innovation, better service and lower prices.

Those who think single payer would be a good thing are living in a fools paradise.  Medicare, a smaller scale single-payer system, is facing financial difficulties.  Other countries are recognizing that their systems also have problems.   Really sick people are dying from being on wait lists.  There are quality of care issues as well.  However, in my mind, the biggest problem with single payer is the threat posed to individual freedom.  This aspect of the system is never mentioned by supporters.   The simple fact is that once taxpayers start paying the bills for health care, taxpayers are going to want to make sure their money is being well spent.  As such, there will be increased pressure to pass new nanny state laws to 'promote' good health and to control costs.  You can expect all sorts of new 'sin' taxes.  You can also bet that there will be increased pressure to ban or reduce controversial procedures such as abortion.  After all, a reasonable argument can be made that the government shouldn't be paying to kill unborn children.   The important thing here is that once taxpayers are responsible for paying the bills, taxpayers have a large amount of control over what you do with your body.