A Reader's Question on Health Care
By Arnold Kling
It seems to me that you are saying two different things about healthcare:
1) the way we think about health care and paying for it is out of whack.
2) the government is not (is not going to be?) an efficient manager of the health care system.
Whether I accept both premises, or only one (and which one) is very important. It is not inconceivable that the first is correct and the second is incorrect. In that case, we would want to restructure payments, but we could create a system in which the government was still the “single payer” (or non-payer as the case may be).
I raise this point because of the mounting evidence that insurance companies really are kind of evil–I know you’re probably cringing as I say that. Did you catch Wendell Potter’s interviews with Bill Moyers and/or Geurnica Magazine? Here’s a former executive basically saying “we only make money by taking premiums and denying coverage when possible, and we only respond to Wall St and investors who want us to maximize money.” To me, that’s a problem. I don’t see why the government managing the risk pool, doling out vouchers to poor people or outright paying for all their medical expenses, and cutting out the profit layer of the insurance companies is a bad idea.
Let me start with the issue of the evil of health insurance companies. As a matter of theory, I agree with my co-blogger, Bryan, that in a competitive market health insurance companies would not be evil. Those with bad reputations would lose business, and those with good reputations would obtain loyal customers.
As a matter of practice, the market for health insurance does not work that way. The individual health insurance market has been killed by a thousand cuts–or more precisely, 50 cuts, as each state regulates private health insurance and many of them (such as Maryland) pretty much regulate the insurance companies out of business.
The only functioning insurance market is the employer-provided health insurance market. There, it is up to the employer how the insurance company behaves. If the employer wants the insurance company to pay claims, that is what it does. If the employer wants the insurance company to play hardball, then that is what it does.
Now, on to the larger point. I am not a fan of employer-provided health insurance, of Medicare, or of Medicaid. That makes me totally unacceptable politically. For a politician, to question any of the major status-quo institutions in health insurance is like a soldier popping his head out of a foxhole surrounded by enemy machine guns–you just get your head blown off.
The fact is that radical health care reform–either single-payer or market-oriented–is off the table. In theory, it could be that moving in the direction of single-payer could produce a more efficient system than what we have now. But note that David Goldhill’s great screed in the Atlantic says that insurance company profits amount to about 1 percent of all health care spending, so that’s not a big deal. The real efficiency would come if and when the government gets evil and denies coverage for procedures it does not think are cost-effective.
The really radical move would be toward market-oriented health care. See John Mackey. See Crisis of Abundance. See Goldhill.
I continue to describe what is happening now as a non-debate over non-reform. Both sides are fighting harder to entrench the status quo than for any meaningful change. Maybe the Democrats will take our already-socialized system and make it a few degrees more socialized. Maybe they won’t. From my perspective, it’s much ado about nothing. I certainly don’t think that keeping the existing private health insurance system in place is anything to write home about.