Once again, we need to begin by examining the premise – “Not only are 47 million Americans without insurance, but the 253 million with it, don’t like it.” These are the base assumptions that those pitching universalized healthcare are insinuating. “The healthcare system is in crisis”, we are constantly told. We have seen that the truly uncovered constitutes a very non-crisis 4% (11 million) of the population, so the “crisis” must be with the insurance itself.
According to an ABC News/USA Today/Kaiser Family Foundation survey, 89% of Americans (over 260 million people) are satisfied with their healthcare. No crisis there. In a CBS/New York Times poll, 38% say the economy is the most important problem facing the country, 19% say jobs, and only 7% say healthcare. In an NBC/Wall Street Journal poll on the same question, 24% say the budget deficit is today’s most worrisome problem, while only 11% say its healthcare. No crisis there.
Maybe the crisis is cost. Do we know why healthcare costs are high? Yes we do, Forbes’ Peter Robinson relates an interview with the late Nobel economist Milton Friedman about the inefficiencies of healthcare. Dr Friedman stated simply and clearly that the cost problems in our system can be traced to the fact that overwhelmingly most payments for medical care are made not by the patients who receive the care, but by third-parties – insurers or government. There are no incentives for competition and cost-control because nobody’s playing with their own money. Costs aren’t high because too few people are insured, rather because too many are.
A market dominated by third-party payers is a market distorted to the point of removing the consumer from the feedback loop. Providers and payers, through their lobbies and pressure groups, haggle-out between them what will be covered and for how much, and the consumer is stuck with the results. There is something that could be done to remove real-world concerns, and that, in and of itself, doesn’t increase government spending.
One of the largest drags on American competitiveness in world markets rises from the fact that health insurance has become a responsibility of employers. Switch business over from having to offer insurance to offering 401(k)-type healthcare accounts that travel with the employee. This could be accomplished by allowing a dollar-for-dollar tax credit for company money put into these plans for employees. This solves the competitiveness issue by removing the cost of investing in healthcare from profitability, and it re-introduces the consumer (patient) into the cost/price feedback loop, because the patient (not the insurer) will be selecting and paying for doctor and treatment. Insurance companies could offset the drain on their business model by offering management services for these programs to business clients. This increases incentives for business to contribute to employees’ healthcare by reducing taxes dollar-for-dollar; and it puts downward pressure on price by returning the final consumer to the role of direct payer.
Allow health insurance companies to market nationwide instead only within states. Open up choice, don’t stifle it. For the chronic and involuntarily uninsured, government can issue debit cards that will allow for choice and coverage of legitimate (e.g., non-elective) healthcare procedures. This approach should cost ~$25 billion to $30 billion a year by moving most of this treatment from emergency rooms to primary providers’ offices.
This would leave us with the catastrophic illness and injury, the details and definitions for which would have to be worked out. This is a legitimate area for means-tested government assistance. These could be covered by a separate class of debit card good for recoverable and life-sustaining (but not coma-sustaining) treatment. This could cost another $60 billion to $80 billion annually.
Total cost to government (read: us) would be far, far less than anything being proposed, and it returns incentives to the marketplace, meaning that upward pressure is placed on quality and downward pressure is placed on price because the consumer is the payer, and by means-testing and making individual contributions to healthcare accounts (as opposed to business contributions) tax deductible, neither business nor individuals are incentivized to dump private coverage in favor of government coverage (an inevitable consequence of all current proposals).
Add to this, the market is trying to re-assert itself as many doctors and many of those 17 million making $50K or more who self-insure are opting out of the insured healthcare game due to ever-increasing amounts of red tape, and ever-increasing amounts of government interference. Again, by returning the consumer to role of payer, this will have a downward pressure on price, making it evermore possible for others to join the ranks of the self-insured. Government should encourage, not counter, these tendencies.
The only way that merely insuring more people will lower price is for government to fix those prices, and that will, of course, destroy the medical research and pharmaceutical industries in this country, while dumbing-down everybody’s treatment and turning physicians into civil servants.
But anything that increases decision-making power for the individual diminishes meddling power for Congress, and therefore is a non-starter. Politicians will never vote to reduce their power over our lives.
 See Lawrence Kudlow, We Don’t Need Big-Bang Healthcare Reform, in Rasmussen Reports, June 26 2009.
 A tax deduction is subtracted from gross income to determine taxable income, a tax credit is subtracted from taxes owed.