Health Insurance and the Lure of Someone Else

Insurance is all about "someone else" paying your bills.

However, if everyone's healthcare bills were the same, if our bodies failed and expired in the same way and on the same schedule, if our little lives were as predictable as those of the adult mayfly, we wouldn't have a health insurance industry. Insurance makes sense only if it's for the unpredictable.

But we are not a uniform species like the mayfly. Our bodies differ dramatically. Some folks are rarely sick; one day their bodies simply stop, incurring little if any cost to the insurance industry and government treasuries. Healthy people are all alike, perhaps a bit like the mayfly. Sick folks are all different. And the variety of ailments they suffer from beggar the imagination. Some have multiple degenerative diseases, all at the same time. Some are basket cases from birth.

If everyone had absolutely wretched health, would Congress be so intent on insuring us all? It is because there are only a few of us who have truly wretched health that health insurance is feasible. Insurance makes sense only if claims vary.

And those who make the fewest insurance claims get the worst deal from insurance. If everyone were to pay the same in health insurance premiums, the healthier half would be better off to "go it alone", i.e. be self-insured. Betsy McCaughey reports that in America "about 5 percent of the populace uses 50 percent of treatment dollars", citing the Congressional Budget Office. Could that possibly mean that 94+ percent of us would be better off financially if self-insured? (Check out Ms. McCaughey's more detailed critique of the healthcare debate here, at The American Spectator.)

Some say: "healthcare is a right". But where in the Constitution is this right conferred? Perhaps these folks are confusing "is" for "should be". The Constitution doesn't even say we have a right to be fed by the feds. If they want healthcare to be a right, there's a way to bring that about: amend the Constitution. It would be interesting to see if such an amendment could ever be ratified; I have my doubts. (During last year's campaign, I expressed my doubts about the constitutionality of the individual mandate, which is still under consideration.)

In her blog for Fox Business, Elizabeth MacDonald quotes economist Ed Yardeni:

Ask doctors and hospital administrators about Medicare and Medicaid and they will tell you that it amounts to a theft of their services because the government doesn't pay them enough to cover their expenses for the care they provide. So they pass those costs on to patients covered by private health insurance.

If the "reformers" in Congress want to create a real market for healthcare, they would enact a law that demands this: No individual nor private health insurance company can be billed more for a medical expense than what government programs pay. This would help end price discrimination, which Uwe Reinhardt describes as "the practice of charging different payers different prices for identical health care goods or services". The same should be done for drugs: No co-op, foreign government, nor bargaining bloc could be given special prices. Let's put the kibosh on the "cost shifting" that has sent the price of private insurance soaring and distorted the market.

If the "reformers" in Congress weren't in the hip pocket of trial lawyers, they would put a cap on malpractice torts. Recently, columnist Charles Krauthammer, who happens to be an MD, provided an elegant solution for malpractice:

The penalty would be losing your medical license. There is no more serious deterrent than forfeiting a decade of intensive medical training and the livelihood that comes with it.

The "reformers" in Congress claim they want to bring competition, choice and cost savings to healthcare. If so, they should enact a law that allows workers to direct their employers to drop them from company-provided health insurance and then add to their paychecks whatever their employers were paying for them in health insurance. And if these workers then elect to buy health insurance on their own, they would get the same tax break as their employers get. Or, they could pocket the money and "go it alone" -- if they're diligent about their health regimens (and lucky), they'll save money.

If the "reformers" in Congress want to overhaul America's healthcare system and erect some "comprehensive" new system, then Congress should first demonstrate to the American People that they are competent at holding down healthcare inflation. But they can't do that.

That's because Congress itself is responsible for healthcare inflation.

Congress caused healthcare inflation by mandates (e.g. Medicare) that it refused to fully pay for, thus shifting costs to "someone else", i.e. the private sector; by disallowing the purchase of insurance across state lines, thereby quashing competition; by mandating that emergency rooms take everyone and then not paying for it (shifting those costs to "someone else"); by mandating that illegal aliens be treated in emergency rooms; by disallowing the purchase of drugs from Canada; by cordoning off vast chunks of the economy which they reserve for healthcare; etc; etc; etc.

Despite having run up the deficit by a factor of 10 in just 2 years, despite the recently revealed $2 Trillion bump up in the projected deficits over the next decade, despite an unemployment trend that continues to worsen, despite being in 2 wars, and despite an Iran that gets ever closer to the bomb, our brilliant Congress wants to create the largest entitlement of! This is the most irresponsible Congress in modern history.

And that's a pity, because just as for the mayfly, our time is running out.

Jon N. Hall is a programmer/analyst from Kansas City, and worked for the Kansas University Medical Center.
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