Sunday, August 16, 2009

A few health care suggestions

There are tons of alternative ideas out there for health care but let me list a few. I am no health care expert but I believe these are some common sense solutions to some of the major problems.

Problem #1:
46 Million people do not have health insurance. A breakdown of those 46 million from the American Spectator website:

  • 9.7 million of the uninsured are not citizens of the United States
  • 14 million of the uninsured were eligible for Medicaid and SCHIP
  • 17.6 million of the uninsured had annual incomes of more than $50,000 and 9.1 million earned more than $75,000.
When all of these factors are put together, the 2003 BlueCross BlueShield study determined that 8.2 million Americans are actually without coverage for the long haul, because they are too poor to purchase health care but earn too much to qualify for government assistance.
Two proposals. The first is to expand Medicaid and SCHIP to cover those that are too poor to afford insurance. The second proposal is to give poor people a check to buy their own insurance. If we choose to give non-citizens health care it should be done in the same manner.

The problem is more difficult for people who can afford insurance but refuse to buy it. In one sense we could just say tough luck, you should have known better and been more responsible. Note that if these people get sick and go to the emergency room they will get treated (it's legally mandated) so their luck would not be as tough as one would think. We could mandate that they get coverage, but this makes people who don't get coverage criminals (something I disagree with). I say we allow the states to make this determination. This creates an environment for health care experimentation where we could objectively see which solution works the best.

Problem #2:
Health care costs are rising - some of that is a result of better medical care and greater affluence (i.e. you pay more because you get more and the richer you are the more discretionary income you are willing to pay for health care).

Solution :
Tort Reform. Defensive medicine causes costs to rise because physicians are afraid of being sued. They take every precaution, even ones that aren't really necessary to defend themselves from malpractice lawsuits. Additionally the payouts for malpractice are inherently random which makes malpractice insurance very costly. Texas is a good example of what tort reform can accomplish and Europe also has a much more rational system for malpractice lawsuits.

Increase competition by allowing people to buy insurance across state lines. For some reason insurance cannot be bought across state lines. This limits competition by definition. Imagine if Wal Mart is lowering prices and wants to sell merchandise in Michigan. Michigan says no because they already have K-Mart. Of course that means that whatever competition Wal Mart would have provided to K-Mart cannot happen.

Additionally, many states mandate different minimum coverage for insurance companies. If a state government requires lots of coverage that people don't want, people have no choice. If the state says that to offer insurance requires mental health coverage then as a consumer you have to buy a policy with mental health coverage even if you don't need it. Allowing people to purchase insurance across state lines would allow states to compete by offering only the coverage that people desire. This would include letting people only purchase catastrophic coverage which would be especially desirable for young people (see problem #1).

Take away the tax deduction that employers get for providing health care to their employees. Employees getting coverage through their employers is a historical accident due to wage and price controls during WWII. When you get health care from your employer this limits competition. You have to take the one plan your employer gives you with the exact coverage that is mandated in that coverage whether you need it or not. If you as an individual purchased health care, you could buy coverage which more closely matched your needs thereby reducing your premiums.

Individuals paying for their own health care with their own money have a greater incentive to shop around for the best deal. The new market created would foster more competition competing for everyone's health care dollar.

Also, you would not have to worry about losing your coverage when you switched jobs because the two would not be linked. Just like car insurance and every other kind of insurance. We as a nation are very satisfied with these other types of insurance.

None of these suggestions requires massive government intervention. They actually allow the private market to work better. If people cannot afford basic health care then we can give them money to buy some. There are other great ideas out there if you look (read the Wall Street Journal) and something is wrong when you hear all this talk about health care and none of the common sense ideas presented here are even mentioned.


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