New at Reason

Tim Cavanaugh | October 25, 2004

Ron Bailey has a modest proposal for healthcare.

Comments

|10.25.04 @ 5:53PM|#

.. this is such a logical, reasonable suggestion that the likelyhood of it's happening is vanishingly close to zero..

|10.25.04 @ 6:10PM|#

Is anyone lobbying for this?

|10.25.04 @ 6:12PM|#

I'm surprised to find a libertarian advocate making something mandatory for people's own good. But here's a serious question: if this were mandatory, what penalties would be faced by those who don't buy the insurance? If you don't buy car insurance you're not allowed to drive, and can be arrested if you do anyway. If you don't get homeowner's insurance you can't get a mortgage. What would happen to those who opted out of mandatory health insurance?

|10.25.04 @ 6:15PM|#

What would happen to those who opted out of mandatory health insurance?

You don't have health insurance? NO SOUP FOR YOU! NEXT!

|10.25.04 @ 6:42PM|#

Let's not forget that auto insurance is substantially more costly to buy when it is mandated by law. I see no reason to expect health insurance to be remarkably different.

|10.25.04 @ 6:49PM|#

Oh, brother--

Actually, that may not be true. I've lived most of my life in mandatory-insurance states, but one summer I lived in Huntsville, Alabama (long story) where insurance wasn't mandatory. I figured I'd pay less as a result (you know, the idea that companies would have to try harder for my business), but I actually had to pay MORE, to compensate for the higher chance that my car would be hit by a penniless guy with no insurance of his own.

|10.25.04 @ 7:05PM|#

Man, that's such a long article. I'm sorry but I just don't have the attention span to

|10.25.04 @ 7:05PM|#

A nice counterargument is here:

http://www.ncpa.org/w/w25.html

Among other things, it points out that, "Realistically, the federal government cannot require the purchase of health insurance and leave insurers, providers and state legislators free to increase the price without limit. Mandating health insurance is an open invitation to federal regulation of the entire health care system."

|10.25.04 @ 7:14PM|#

I'm still curious to know the penalty for non-purchase in this system. Even if the penalty were "you won't get treated even in an emergency" that wouldn't work, since there's still the fact that Americans won't want to see people drop dead in front of doctors who refuse to treat them. Besides, it would only be a matter of time before some bureaucratic snafu wherein a guy with insurance was mistaken for one without, allowed to die, and then all the money we save in administrative costs will go to pay for a wrongful-death lawsuit.

|10.25.04 @ 7:17PM|#

Oh brother-

Good point. When I first heard of this proposal I actually kind of liked it. I know, it is still far more regulation than I want, but it seemed like an interesting way to at least reduce the amount of regulation and also disentangle health care regulations from employment regulations. However, your point gives me second thoughts.

If the mandatory minimum coverage were limited to catastrophic coverage then one might hope that price controls would be limited only to catastrophic coverage. But the problems are that (1) we all know the mandatory minimums will increase over time and (2) price controls on catastrophic coverage would cause insurers to recoup losses by increasing the price of other coverage, making additional coverage available to fewer people.

|10.25.04 @ 7:27PM|#

btw, I once tried to persuade my mother (a nurse and a Democrat) that paying for routine checkups and other minor care out of pocket would eliminate a middle-man and save money. I pointed out that insurance actually raises average costs in exchange for a guarantee of lower risk, so it only makes sense to use insurance for more serious illnesses rather than annual physicals and colds and whatnot.

Her response was that nobody would get preventive care and then more money would have to be spent when minor ailments progressed to major ailments or major ailments went untreated too long. She also thought that I was a cold-hearted bastard who doesn't care about sick people because I kept talking about money and numbers, even though she's always complaining about how health care is unaffordable for too many people (an implicit acknowledgement that there's a problem here that involves money and numbers).

I can see how insurance companies might give discounts for getting annual physicals and whatnot in order to catch problems early and bring down costs, even though strictly speaking it isn't optimal to pay for routine care via insurance. However, I also think that the vast majority of colds and aches and pains can be handled by a person going to the pharmacy and talking to the pharmacist briefly.

Oh, and you can imagine my mother's response when I suggested that it made no sense to pay for birth control via insurance (it's a known expense, zero risk, insurance just adds a middle-man without reducing any risk).

|10.25.04 @ 7:35PM|#

Interesting article on the Massachusetts experience with mandatory auto insurance with some thoughts that may be applicable to mandatory health insurance:

http://www.aei-brookings.org/admin/authorpdfs/page.php?id=41

For example, a mandatory health insurance scheme would certainly have to involve a mandatory offer rule and perhaps limitations on policy cancellation and exit rules for insurers. How would this distort the market?

And what about all the added cost of government regulation similar to what cropped up in Massachusetts relative to auto insurance?

What reason do we have to believe that rates will not be government-regulated?

MC|10.25.04 @ 7:44PM|#

"Under a mandatory insurance scheme, all Americans would be required to purchase a basic high-deductible catastrophic health insurance policy from a private insurance company."

How long until a "mandatory insurance scheme" becomes an "insurance company protection" scheme? Competition between insurance providers would lead to better services at lower costs, if people purchased their own insurance free from government interference; such would be the free market at work. However, would this still be true under a mandatory system? Would insurance companies cut corners and provide poor services knowing that they need not worry about customer satisfaction since my doing business with them is required by law? If my doing business is requried by law, what mechanism exists to stop insurance companies from raising prices arbitrarily?

This is a key problem with universal government health care as well; what incentive does the state have to provide high quality services at reasonable prices if it's income and continued existance is guaranteed by law?

The inevitable results of a mandatory private scheme are these: 1) increased government regulation and price controls, in which case the whole point of the exercise is defeated, or 2) removing the "mandatory" bit from the equation, thus re-establishing the threat of a business not making income, thus re-establishing the basic mechanism of competition and the free market.

|10.25.04 @ 7:46PM|#

"If you don't buy car insurance you're not allowed to drive, and can be arrested if you do anyway. If you don't get homeowner's insurance you can't get a mortgage. What would happen to those who opted out of mandatory health insurance?"

You're right if you're pointing out that forcing other people to insure themselves against your potential losses, in this case damage to your automobile is an abuse of government. If you want to buy non-insured driver coverage, then you should. (I live in a state with a lot of illegal aliens and, although I haven't looked at my policy lately, I think that part of my coverage is less than ten dollars a month.)

In the case of lenders refusing to lend on an uninsured property, they're really protecting themselves in case of foreclosure.

If someone doesn't insure themselves for health care, then they either have to pay out of pocket or seek free care. Even under Medi-Care, it should be noted, people are refused treatment for life saving procedures. No one has a right to a heart and lung transplant; not even little old ladies who love children.

|10.25.04 @ 8:09PM|#

Just eliminating business's tax deduction for providing insurance would go a long way to ending the problems that come with having a third party pay for health care.

Businesses only provide health insurance because of the tax advantages. Look at how companies are scrambling to replace stock options as a compensation vehicle now that the option's tax atvantages are being taken away.

A good way to do this is to eliminate the income tax altogether! Or, I suppose, a national sales tax...

|10.25.04 @ 8:25PM|#

The article said that a majority of Americans fear losing health insurance in the case that they lose their jobs. I don't understand this popular objection to employer-funded health insurance. If a person loses his job, graduates or leaves his job he has the right to enroll in a COBRA. I am under the impression that the chance to get continuation of benefits is a law. Is this incorrect?

|10.25.04 @ 8:28PM|#

Genna,

Having been unemployed for a good chunk of time last year, I assure you that if you don't have a job, there's no WAY you can afford COBRA.

|10.25.04 @ 8:28PM|#

Anything that sends *more* money to private insurance companies is a bad thing. They are the bad guys here. It's the insurance companies who invented the $10 bandage. Better would be to use anti-trust laws to ban contracts that insurance companies use to force doctors to charge cash customers more than insured ones. If people could see that it costs only $20 cash to see a doctor for 5 minutes, they would wonder why they should pay a grand a month to the insurer to manage a bunch of paperwork on top of that.

|10.25.04 @ 9:00PM|#

Actually, car insurance seems like a bad metaphor for health insurance. Your car insurance is not going to pay for a new engine if you forget to put oil in the old one and ruin it.

By the same token, it seems odd that health insurance would cover you for the things that you do have some control over - weight, activity level, etc.

What we need is an extended warrantee health analog.

|10.25.04 @ 9:12PM|#

Trey, while a lot of the ill health in western society may be preventable by strenuous exercise and proper diet, not all of it is. There is a knowledge problem of identifying which people have failed to prevent their ill health, and which have done the best they can do.

|10.25.04 @ 9:42PM|#

Actually, I'm a little worried about the moral hazard created by the knowledge asymmetry.

You will know what you did or didn't do.

To continue the car analogy, some folks will be less motivated to maintain their car if they know someone else will pay to fix it.

I guess we have that now, eh?

|10.25.04 @ 10:46PM|#

Our health insurance system violates what I consider should be the first law of insurance. You only have insurance for the things you can't afford.

The result of insuring everything a doctor does is inflation. Consequently, the list of things that are unaffordable skyrockets.

If auto insurance worked the way health insurance did an oil change would cost $20. The mechanic would bill insurance $200, but get paid $140. And your monthly insurance would be $300 more. The insurance companies would claim that they're controlling costs when their mere existence spurs inflation. The mechanics would blame the insurors for slow payment and paper work. And lawyers would sue them both for incompetence.

|10.26.04 @ 1:07AM|#

This is the worst health care proposal I've seen, except for all the others.

|10.26.04 @ 2:09AM|#

And Reasonites will debate with each other and the country will move slowly to national health care ... (or do you really imagine your vote will make much of a difference ....).

The problem is no one has a *politically feasible* alternative that still has some safety net for the poor (anything without it will never pass politically anyway). The health care system has become a mess we've gotten ourselves into and can't get out of.

A small part of the problem is that american medicine is the most agressive in the world. "Never give up", is the moto. Now this is a virtue but only if it actually prolongs lives or improves their quality and it doesn't seem to be doing this very well.

|10.26.04 @ 5:30AM|#

There is such a scheme in place in Chile for more than 20 years.
Everyone pays 10% of his income toward health insurance. The money is deducted from the income just like a tax.
There are a number of private health care providers (insurers) which receive this money and must supply to the insured a basic package of benefits, defined by government.

The HCP (health care providers) are private, for profit, companies, though closely monitored by government. Enterpreneurs are free to enter into this business, provided they have the necessary guaraties that they will not default.

The HCP compete for the insured; each person, having been forced to set aside money for health insurance, is free to select the company that will receive his money. They cannot compete by offering lower rates - the rates are set by Gov., but they can compete in providing more, or beter services for the money they get.
An interesting scheme, and it seems to work just fine, with more than 20 years of experience.

|10.26.04 @ 8:53AM|#

Benedict Arnold turncoat muthafucka!!!

|10.26.04 @ 8:57AM|#

Oops - wrong thread!! That was for Dr. Hospers.

|10.26.04 @ 11:46AM|#

I would much prefer changing our tax system so that the a person who makes $30K w/o benefits and someone similarly situated who makes $25K + $5K in fringes have the same liability. A switch to a consumption tax would probably be best, if for no other reason than that I might have some control over my exposure to the tax.

Those who wring their hands over the uninsured are ignoring that there is at least one demographic, young healthy adults, for whom buying health insurance is a lousy deal. Even if it is provided as a benefit, they may rarely use it, and would prefer the cash. Some of their older coworkers get much more out of their insurance in a given year. YA's would be better off with a catastrophic plan, which they could purchase themselves. The HSA or MSA model is probably best for them now, but not enough employers make those available. More senior employees find comprehensive plans more to their liking.

Kevin

Matt|10.26.04 @ 3:50PM|#

The New America Foundation has been touting this idea for a while. For those who read that kind of thing, they have prepared some wonktastic white papers.

The incidental advantage of divorcing Americans' health care from their employment is not to be overlooked. If offered a choice from among several inadequate and costly plans, I'll take the one that lets me sell as much or as little of my labor as I want without having to worry about whether I'm a "with benefits" or "without benefits" employee.