~by jfxgillis

Okay. So here’s the thing about the health care industry in the USA, especially the insurance sector. It stinks. Everyone knows it. Everyone feels it. We pay more for what we get, and we get less for what we pay for, than virtually any other developed country by any systemic measure. Even people with gold-plated policies they have by virtue of highly remunerative employment know those policies are overpriced even as they benefit from them.

The old World Health Organization rankings rated us 37th in the world. Granted, there’s honest dispute about that, but still, massaging the figures in our favor doesn’t get you that far up the rankings. We still stink. And the Commonwealth Fund’s ranking of 19 developed countries puts us dead last. And I do mean dead.

I believe in USA Number One!! and all, but I could live with it if we were say, fourth or ninth, or maybe even just outside the top ten, but  being number one only in per capita health care expenditures while last in health care outcomes isn’t just atrocious. It’s irrational. It’s a mystery. The odd thing is, the resolution to the puzzle doesn’t seem to be amenable to ideological explanation. On the one hand, we spend more on taxes on provision of health care through the public sector than many of the nominally more socialist countries ahead of us on the Commonwealth Fund chart. On the other hand, our health care is more dominated by the private sector than any other country on the list. Both Left and Right can agree that there’s something weird about being last in outcomes and first in expenditures. [Read more →]

Just very briefly – “deregulation” does not mean the stripping away of all rules or the desire to enter into a state of anarchy.  So when I speak of “deregulating” the health care industry, I’m mainly talking about removing rules that prevent competition and create monopoly or that are expensive but provide no real benefit.  So removing restrictions which prevent insurers from competing force insurers to compete is a way to “deregulate.”  Other regulations which keep insurers from ripping people off, or remove barriers which prevent people from even purchasing insurance to begin with make much more sense.  Regulation should increase choice not decrease it, though ironically it is much easier to write rules that limit choice than to write rules that help increase it.

We’re not speaking in black and white here – or at least I’m not.  Some libertarians or anarchists would probably take a very different view than me.

The way I see it, you can follow a guiding philosophy only so far as it is practical to implement.

So you take the concept of market solutions to its practical limit – and this is hemmed in by historical realities, political realities, the electorate, etc – and then you make a compromise that can also be practically implemented. Give consumers choice over who they pick to provide their own health care via the aforementioned deregulation.  Kill the monopolies and create a real competitive market for health insurance.  Then give consumers even more choice by offering means-tested vouchers, whether or not there is a public option, so that all across the board people can make decisions about their own health care.  Spur competition.

Then you have to start making compromises because of all the basic facts that are impeding a real market from taking off (entrenchment of current industry players, high cost of premiums and the distortion created by decades of employer-provided insurance and so forth).  Write smart, simple regulations that prevent insurers from denying coverage.  Offset this by mandating that Americans purchase or acquire health insurance, and set rules for the “basic” plan that all insurers have to offer.  It’s not perfect, but in the real world, no compromise ever will be.  Imperfection is the nature of compromise, and the unintended consequence of imperfection can sometimes be really good results.

In the end this all comes back to the difference between “small” and “limited” government – or the scope of government involvement vs merely its size, and to the ways in which government does intervene into both our lives and, somewhat redundantly, into our economy.

“Monopolies are not innovative, whether they are public or private.”  ~ Megan McArdle

“One is the loneliest number that you’ll ever do
Two can be as bad as one
It’s the loneliest number since the number one.”  ~ Three Dog Night

A fairly obvious example of government-created monopoly is the public utility.  You likely have one of your own.  Or rather, you have one water utility; one gas utility; one provider of electricity.  You used to have only one phone provider as well.  It was a monopoly known as AT&T, created by the government.

So the gas utility, for instance, is the only game in town.  Its prices are tightly controlled – but if they go up you pay whatever they tell you to pay.  Government “regulates” this, ensuring that they can’t gouge customers too completely, playing the part of “good cop” to some degree.  That is what is seen.  What is not seen is the simple fact that if there were competing gas companies in town and one raised its prices, you could opt for another.  If one did not provide you with decent service, you could move on to another – much like you can do now with your cell phone.  Or your supermarket.

At a friend’s work recently they discovered a gas leak.  The utility shut off the gas for safety reasons and evacuated the building.  A while later the repair guy came in and took a look at the leak and said he’d be back at eight the next morning.  Knowing that he worked for the only game in town, knowing that shoddy customer service hardly mattered when the consumer was at the mercy of the supplier, and that no competitor could profit from their poor customer relations, he did not respond to pleas that it be fixed now so that business could continue.

“I’ll be back at eight,” the gasman told them.  That was that. [Read more →]