20.7.17

IT'S THE INSURANCE, STUPID.

Ryan McMaken, at The American Conservative.  Probably not surprising.
What can be done?

First of all, it is important to lessen the reliance on the insurance model of healthcare. The use of insurance as the primary means for distributing healthcare services is largely a post-World-War-II government invention, and thanks to government created tax and regulatory incentives, the insurance model has displaced ordinary market transactions in which consumers pay a fee for a service.

Many have been trained to recoil in horror at the thought of reducing the role of insurance, of course. Thanks to the power of the status quo, many now equate the idea of health insurance with healthcare itself. And yet, this is not true in any other industry—even those that are necessary for life’s basic necessities. There is no “food insurance” for example. Auto insurance exists, but is nothing like health insurance since it covers only rare accidental events.

Cash-for-service industries—whether groceries, or mobile phones, or dental case—continue to see increases in quality while prices remain far more stable than healthcare prices. Food budgets, for example, now take up less of our overall household spending than was true in the past. We certainly can’t say the same for healthcare.

To wean us off the insurance model, tax codes and regulations must be changed to stop giving preference to the use of insurance by employers. Tax-free health savings account must be expanded and tax credits for healthcare spending must spread. Flexibility for group coverage must be expanded beyond employer-based healthcare, and markets must be opened to more providers willing to be flexible and meet these needs.

Simultaneously, governments must get out of the way so service providers can compete and expand.
More intriguing is this recognition by RoseAnn DeMoro, at Common Dreams, that the old "public option" is not going to be a good harbinger of the Conrail Option.
The public option, the argument goes, can offer less expensive coverage because it doesn't have to divert massive sums for administrative costs, mainly profits, lush executive pay packages, claims denial paperwork, and marketing.

But in practice, the outcome would be far different. Medicare works in large part by including all the people it covers in one large risk pool so that healthier patients balance out sicker patients in costs that must be reimbursed to providers. But the public option would not have that protection.
That's pretending Medicare is working (the so-called trust fund is in parlous shape, and the reimbursement rate does for practitioners what Wal-Mart does to vendors) but it's a start.

Perhaps, after the political class has tried everything else and found it wanting, they will try expanding commercial freedom.

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