National healthcare is resting in the ICU
As many of you are aware, the crisis of the day is health care. Specifically, it looks like every person who has a microphone, with the possible exception of Tim Hardaway, wants to talk about fixing health care in this country. They all have ideas, and it looks to me like everyone’s idea stinks.
One favorite that seems to be gaining steam among policy makers is universal health care. This is a government-run health insurance scheme that would allow the government to control how the health insurance system works. There are, of course, advantages to this system. It would potentially lower the cost of health care for many. It would almost certainly provide health care to some at no cost. It would also go a long way toward standardizing prices for medical care across the country.
It also has some major drawbacks. Many people would be forced to pay more than they currently do for health care. It’s not possible to get something for nothing, and although the system would have bargaining power, that power would not be unlimited. It’s difficult to bargain a lot when the other party knows what you are going to buy. In this system, the government is committed to purchase insurance from somewhere. That is, unless (this is scary) they set up a fund and attempt to self-insure the health care of Americans (for more on why this is scary, see Social Security). Another problem with this is it eliminates choice for Americans. It, like Social Security, forces many Americans into a system they’d just as soon steer clear of.
A second option is to require employers to provide health insurance for all employees. Wal-Mart has been the subject of some state statutes in this vein and has been successful in litigation getting at least one statute in Maryland struck down. That victory, though, wouldn’t have any real effect on the ability of the federal government to regulate corporations in such a way that would require them to provide health care to their employees. Again, though, this system would just pass the buck. When you require a corporation to do something, you are passing the cost in one of two ways:
* Possibility One – The corporation shrinks profits. This might not seem like a big deal because people these days aren’t too sympathetic of corporations and don’t really care about protecting profits. The trouble is that if profits are low, investment will fall. This, in turn, means economic growth slows because if the profits aren’t there, the incentive to take a risk on investing in business is lost because they can get the same return in money markets, bonds or other safer investments. Of course, this is really what would happen. What would really happen is…
* Possibility Two- The company will pass the cost on to its customers, who pass it on to their customers. My dad once told me the customer ultimately pays for everything, and it’s true. When gasoline costs increase, cereal and milk are more expensive. This isn’t because it now costs more to make them. It’s because it costs more to deliver the goods to market. Costs of any kind are passed on to the consumer in the form of higher prices. Any artificial increase in costs leads to an increase in prices, which leads to less than optimal markets.
The third plan I’ve heard floated is mandatory insurance. The idea here is that you require a person to carry health insurance like you require drivers to carry liability insurance on their cars. This, I must point out, is really just another way to shift the costs from one group of people to the other. The idea is somewhat interesting.
First, all people who don’t have health insurance, but can afford it would be forced to get it. There is a large segment of people who are young, healthy and decide to roll the dice by not carrying health insurance. These people would have that option removed. The second step that with the increased pool of insured, the cost of health insurance would drop for everyone. This is probably true because there would be a large increase in the low-risk insured. The final step has the government picking up the tab for those who still can’t afford insurance. Or employers should do it, or insurance companies are required to insure people for free, or who knows?
There are two major problems with these systems. First, its ridiculous to force people to buy something they don’t want. Those who don’t carry insurance aren’t hurting anyone else. The point of mandatory auto liability insurance is to protect others from possible damages, not to protect the insured. Oh sure, there are people who don’t have insurance and get sick, forcing others to pick up the tab. Those are most likely the same people who wouldn’t be able to buy insurance to begin with. This is just another way of shifting the burden from the poor to the more affluent. And doing so would be disproportional for the younger middle-income people who might not get insurance at all.
* * *
OK, I’ve spent enough time bashing all the ideas that are out there. I suppose I need to make a suggestion of my own. The best plan, I think, is to increase education among health consumers. The problem is that medical care is such a mystery to most Americans. Nobody knows how much everything costs. People go to the doctor when they don’t need to. People are given tests they don’t need because the doctors are afraid of malpractice lawsuits. The system is broken, and only the consumers can fix it.
Step one, get prices up front. Consumers need to be diligent in their purchases of medical services. They need to inquire about the cost of various services. They need to shop around, compare prices and let the medical professionals know they are doing so. This will, through market forces, put pressure on medical care providers and lower prices.
Step two, tort reform. Until doctors can breathe a little bit, prices will remain high. Doctors have astronomical malpractice insurance premiums. If there was a limit on the potential recovery in a malpractice lawsuit, these premiums would drop. The customer would ultimately see savings in two ways. First, the doctor’s overhead expenses would be lower. This would mean he could pass these savings on to the patient/customer. Second, because the doctor is not quite as afraid of being sued, she would be less likely to order all kinds of unnecessary tests. As demand for things drops, so would the prices.
In short, the obligation to fix health care is only partially the job of the legislature. They pass broad tort reform, we become diligent consumers of health care and the system eventually gets fixed.
Reed Luthanen is a law student at the UA. His column appears every other Wednesday.