A health care manifesto

Principles:

1. There is no such thing as an entitlement to other people's money. There is no right to health insurance provided by other people's money.

2. Any subsidy is paid directly to the beneficiary, not the provider.

3. No tax deduction to employer; as with subsidy, any favorable tax treatment goes directly to the consumer.

4. Default position is "As little regulation as possible -- allow market forces to direct behavior." Each regulation is reviewed annually and must be affirmatively voted for renewal.

5. No automatic program increases. Each program must be reviewed annually. A vote of both houses is required to renew the program.

6. No deficit spending. If voters are not willing to accept additional taxes, then they are not willing to support additional expenditure. No exceptions.

7. There is no such thing as an entitlement to other people's money. There is no right to health insurance provided by other people's money.

Here's my health care reform manifesto:

1. Leave us alone! Laissez-nous faire!

1. Property rights.

2. Contracts

Healthcare should be free, as should food, clothing, shelter, cars, HDTVs, cable TV, iphones, and space travel.

What about government? Shouldn't that be free too?

My Health Care Reform Manifesto:

1. The true cost of a health plan should not be hidden from the individual.

2. Individuals deserve the same tax benefits as corporations when purchasing a health plan - the preferential treatment given to employer sponsored health care reduces employees' choices, causes employee "lock-in", and both reduces the availability and increases the cost of private health plans to individuals.

3. Only the individual can choose the balance of cost and coverage that is appropriate for him or her.

4. Rules should require more transparency regarding a health plan's cost, coverage level, and limitations rather than obfuscating them through labyrinthian regulations.

5. Only the individual can decide whether a treatment is worth its cost.

6. Individuals should have the choice to purchase true health insurance; individuals should not be forced to chose between plans that spread the costs of ordinary health care across all members and no coverage at all.

7. The most effective way to provide assistance to those unable to afford health care is through measurable subsidies or tax credits to those in need rather than through government control over prices or coverage terms.

8. We have an obligation to ensure everyone has access to a minimum, basic level of health care, but not an obligation to provide everyone with the highest quality health care available.

Re #8 - Who is "We" who have the obligation? Can "society" have an obligation? I don't believe so. I believe it is only the individual who has a moral obligation, and he cannot be coerced into honoring it.

While I think most of your points make sense, I still have comments about several:

2. I agree that preferential tax treatment should be eliminated. But I don't believe that will end employee "lock in". Despite anecdotal claims to the contrary offered by commentors, few individuals can obtain at comparable rates anywhere close to the coverage they've come to expect through employer-provided health insurance.

3. Customized insurance plans would have much higher administration costs per insuree. IMO, individuals or families will still take advantage of group buying power and the standardization that implies.

5. While that is true, the contract between the insuree and the insuror will determine whether such treatment will be reimbursed.

6. I do not understand what you mean by "true health insurance". Spreading risk across a population is included in many definitions of the word "insurance".

8. I do not understand why you believe "we" are obligated to ensure everyone has access to health care. Who do you include in that term 'we"?

3. Customized insurance plans would have much higher administration costs per insuree. IMO, individuals or families will still take advantage of group buying power and the standardization that implies.

John, I think those costs could come down significantly if insurers could compete across state lines and achieve some economies of scale in the individual market. Also, offering a few packages that would offer some flexibility, but not exactly an ala cart menu would bring down costs. Ala cart could be made available, but at a higher cost to cover the higher administrative costs - it would be the consumer's choice. I think that might also address the issues you brought up in #2.

8. I do not understand why you believe "we" are obligated to ensure everyone has access to health care. Who do you include in that term 'we"?

If I may add - it's also important to define what is meant by "health care", "minimum", "basic" and "access".

I really like this idea and I like the principles so far.

I might add: Trade-offs exist in any system. Though, that's more truth than principle.

I also might elaborate on incentives matter. I liked your comment on the Bernanke piece that "profits encourage risk-taking, losses encourage prudence." I think that so few people understand that is the source of the problems we face. So we get risk-taking without prudence, or stupidity.

I believe that as in most political discussions language matters, and in this one the statists dominate the language. We ought to stop using the term "health care system," because it implies some sort of monolithic enterprise and an element of central control. Rather, we ought to refer to the health care and health insurance "markets" and thereby clearly signal what it really ought to be, a free market. And we ought to name the interventions of the state for what they are, intervention and interference with the operation of the markets.

There is a word dropped from your last bullet.

I think the "spend your own money not someone else's " is not going to be a rallying cry many people sign up to! Unfortunately.

I think what you also want to say is: "Less regulation" "No more paying for exotic coverage you don't need" and "Cheaper Health Insurance Premiums due to Robust Competition"

Other than medicare and medicaid, when does someone spend other people's money for health care? Workers enjoy a tax benefit with employer-provided health insurance, but it is a small one.

When an airline guarantees its fuel prices through hedging, we do not say they are spending other people's money. How is contracting for a fixed price for health care different?

90% of the money spent on health care in the US is paid by a 3rd party. Of course, when it is employer-provided health insurance, it is in fact the insured's own compensation being spent, but that is not apparent to the great majority of consumers.

I was just (1) quoting the main post, (2) recognizing that people would RATHER spend someone else's money that their own and (3) suggesting a manifesto that says "spend your own instead" will be less likely to persuade.

I'm not sure what Mark meant exactly, but he may be talking about the "public option" - which is really just an expansion of medicaid. Also, when a 55 year old married couple are forced by mandate to buy insurance that covers acne, pregnancy and infertility treatment, they are effectively subsidizing those procedures.

Airlines aren't forced to buy insurance (options and futures contracts) which hedge them against price moves in the pork belly and wheat market, in addition to price moves in jet fuel.

Methinks,

I was asking what was meant by "spending other people's money", not about mandated coverage.

I just remembered that many, if not most, medium and large companies avoid state mandates by self-insuring their employees. I'm not so sure that state mandates are the culprit for the bundle of maladies included in group health insurance plans.

Companies that self-insure could offer cafeteria style benefits packages to workers. But I don't think many do so at the level you are implying by your examples. My guess is that the overhead to administer such packages exceeds the savings the company would realize.

John Dewey,

That may be true for large companies that can self-insure, but for the rest of us, it's not possible to avoid state mandates.

I guess the point I was making is that when you're forced to buy coverage for something that you have a 100% chance of never needing, then you're just subsidizing everyone else in the insurance pool. Do you disagree with that?

No, I agree somewhat.

Let's separate the issues of mandates and group insurance benefit standardization. Those are two different issues, as I see it.

I agree that mandates are wasteful, and that they drive up insurance costs.

Standardization of group insurance packages reduces administrative costs. But it doesn't cost the employer any more to provide pregnancy benefits to anyone who cannot use them. That's because actuaries have already discounted the total price to the employer.

What's really happening with group insurance is group buying power and sharing of costs. Those who use few of the standardized benefits end up subsidizing those who use many of them. But that's almost always the case with insurance, right?

The issue is that if an insurer is permitted to provide a policy with just a basic level of benefits, it will cost necessarily much less than one that covers every last thing. Some consumers would purchase that policy, because it would be less expensive. Instead, the states require many unnecessary elements of coverage, jacking up the cost, so the consumer cannot afford any policy. The state needs to permit the freedom of contract - a consumer and a business ought to be permitted to enter into any voluntary contract that does not involve the infringement of the rights of another citizen. Then the market would do what it does in any free market: develop the products and services that people want and need and offer them at competitive prices.

I agree that state mandates force health insurance spending higher. I'm in complete agreement that these should be eliminated.

Such mandates are not the only reason employees have benefits they do not need. Employers choose standardized packages for their employees becaues the overhead is much lower than it would be for individually-tailored packages.

After passage of ERISA, states could no longer mandate coverage for companies which shose to self-insure. I haven't found recent statistics. In 1993, 49% of workers covered by employer-provided health insurance worked for firms that self-insured. As I understand it, liberals in many states are furious about the ERISA laws which prevent them from controlling the lives of others.

I see your point.

This is going to socialize whatever little we have left in medicine,that is not socialized,doctors rights are going to be violated again,and the quality of heathcare will be dismal since doctors ahnds will be tied behind there backs,by numerous amounts of redtape.I would ask all doctors who dont have the altruist morality coursing thier viens to quit the profession and let the muchers and thier agents find someone else to violate.

healthcare is not a right.Our founding fathers defined what rights are,they are moral course of action,action to the persuit of life,liberty,propert and Happiness,not to ones property,or knowledge like what our entitlement system is currently doing to the producers.Heathcare is no different from any other commodity in the business arena,profit is part and parcel of the industry,and fro government or any other person to try and take this away is violating the rights of doctors,nurses,and the share holders of the insurance companies.Get government out of healthcare completely,and let freedom in then if there some people who cannot afford healthcare for some reason on a permanent or temporary basis let them rely on voluntary charity.

Health care isn’t health insurance

It's not that the administration doesn't understand that. This all started out with health care reform. Then, pollsters discovered that the vast majority of Americans like the health care in this country, but don't like health insurance companies. That's when the rhetoric switched from "health care reform" to "health insurance reform". Works well since most people become absolutely apoplectic about spending money out of pocket for any medical procedures while thinking nothing of dropping hundreds of dollars on a pair of shoes, bar crawling and cable TV.

Incentives matter

Unfortunately, the United States is opting more and more for coercion rather than incentives.

It seems people don't even hate their own insurance. They hate the ethereal insurance companies that they've been told are creating problems for other people.

It's not often you hear actual statistics on reimbursement denial rates by insurance companies--let alone a comparison to denials by, say, Canada's government system. Let's see a list of those things that US health insurance typically covers versus those same things Canada denies. And then let's discuss what your options are once denied in US versus Canada.

You'd think even then Americans' distrust of the abstract "insurance companies" would be tempered by the obvious fact that their premiums are a function denials.

What difference does it make if Medicare (Canadian) covers a patient's hip replacement surgery, if the patient cannot get an actual surgery performed?

Do you have a link on that? Not that I don't believe you, but it's always nice to have references.

Thanks.

SUCH a good point.

I wonder if those statistics are available and I wonder if they're broken down by procedure.

Don't forget Arnold Kling's maxim -- liberty is absence of monopoly.

How about rules for the approach to reform, regardless of its content:

1. Keep it simple and easy to understand.

2. Do things in small steps.

3. Do the small things first, and see how they go.

4. Have a several months long process for each step, to allow the idea to circulate, and give reporters, pundits, and voters time to ponder it and respond to it.

5. Make sure an election shall intervene before too much of the program is implemented--to help ensure the course is what voters really want.

6. Place in the legislation specific goals that if not met, will result in automatic expiration of the legislation.

7. Make Congress prove its competence by first fixing Medicare and Medicaid.

U.S. Constitution, Art 1, Sec 5, para 2. "Each house may determine the rules of its proceedings,"

Try making someone do something when you've already given them permission to "determine the rules of his own proceedings".

Until congress is brought back under control of the people through an amendment to the constitution specifically fixing that flaw, it is pointless to talk of change or reform, slow or fast.

Who pays attention to the Constitution anymore?

http://news.yahoo.com/s/nm/20090826/us_nm/us_ke...

Even the death of a scumbag like Teddy K. won't mean a thing, won't even cause a hiccup in the corruption. They will just replace him with another "liberal lion" and the beat will pound on.

This reminds of the claim that "charity will replace welfare". Actually most Conservatives and Libertarians don't want charity to replace welfare. That is to say, charity is only for the truly down&out and even then it should only be a 'hand up' not a 'handout'. Traditionally, didn't charity only help people when they were utter broke and had nothing but the clothes they wore? In othe words, people were expected to deplete their saving then sell off their assets before they could claim any charity? Thus billion upon billion of welfare promises will NOT replaced by the equivalent voluntary donations as most people aren't going to voluntarily fund someone else's cosy full-time retirement. Is this where Libertarians chime in that the taxpayers had no obligations to pay the S.S. 'I.O.U.s' because they didn't write them, the government did hence there's nothing wrong if these 'loans' get defaulted?

So too, with healthcare? People should only really need health insurance against sudden, potential catastrophic health disasters not routine check ups and 'sports' equipment? The other health stuff can be paid straight out of peoples' pockets in a mere user pays fashion?

Private individuals and organizations are much more efficient and effective at providing the 'hand up' that is appropriate than is the government, for a number of reasons. The economic and moral distortions of entitlement programs result in their applying to a much larger population and costing much more than they would if the government were not involved.

<In othe words, people were expected to deplete their saving then sell off their assets before they could claim any charity?>

--Compare this to the current circumstances where an elderly person is incentivized to deplete his estate in order to get his fellow citizens (Medicaid) to fund his assisted living.

<Thus billion upon billion of welfare promises will NOT replaced by the equivalent voluntary donations as most people aren't going to voluntarily fund someone else's cosy full-time retirement.>

-- Exactly! Only people who are really needy ought to receive the largesse of their fellow citizens, and that ought to be voluntary. Obviously it would be billions and billions less than is being confiscated now and turned over to other citizens -- that is a very good thing.

<So too, with healthcare? People should only really need health insurance against sudden, potential catastrophic health disasters not routine check ups and 'sports' equipment? The other health stuff can be paid straight out of peoples' pockets in a mere user pays fashion?>

Why not? Why shouldn't people pay for their own routine medical care? What is different about medical care -- which consists of goods and services -- and any other category of goods and services that we expect routinely to pay out of pocket?

My favorite thing to keep in mind about health care...

The most fundamental reason for high health care costs in the US is that we as a society are overinsured.

We are insured through our employers because that insurance is bought with pre-tax money, so far more is purchased than is desired. We are insured through blind Medicare remunerations with little or no attempt to manage expense. And, between these, we are inured to think that health insurance should cover simple doctor visits rather than actual financial calamities.

The solution is a massive decrease in the use of medical insurance by removing the wildly inappropriate public subsidies of health care for the middle and upper classes.

Unfortunately, Obama and Congress are headed in exactly the opposite direction. It is tragic, really.

And thing to keep in mind number 2...

Just as with Social Security, Medicare has foisted a great many sins on the nation to hide the impression that some old people might need to be on welfare.

"because that insurance is bought with pre-tax money, so far more is purchased than is desired.

Not sure that "far more" insurance is purchased due to the tax-exempt status afforded health insurance benefits. Of those 2007 income tax returns with at least $10K income:

62% had marginal tax rates of 15% or less;

18% had marginal tax rates of 25%;

The value of favorable tax treatment is just not that large.*

If Americans are overinsured, it is not due so much to the tax status of employer-provided benefits. These seem more likely reasons for overinsurance:

- state coverage mandates;
- the one-size-fits-all packages negotiated by employers and unions.

* I intentionally did not include payroll tax rates in determining marginal tax rate effects. IMO, if employer-provided health insurance benefits had been taxable all along, Congress would have enacted lower social security tax rates than they felt compellled to in the 1980's and 1990's.

The actual tax benefit to the employee is not the determining factor in the attractiveness of the benefit. Have you ever told an employer that you would prefer to take the equivalent of the value of the health insurance in cash compensation? They look at you like you have two heads -- nobody asks that. Although I'm sure it happens more and more often. People look at the insurance as a 'free' benefit, and generally have no idea what the cash equivalent would be. Further, it doesn't occur to most that they could purchase insurance themselves, and no doubt in most states that coverage would cost more than what the employer is paying.

The bottom line, therefore, in order to reform the market, the employer's tax deduction must be removed. It would then cost less to give the employee a cash raise than to provide health insurance, and the market would move away from the foolish structure where the employer provides the coverage 'free' so that the consumer overconsumes health care.

I think you meant to say that the employee's tax shield, not the employer's tax deduction, needs to be removed. Employers are going to deduct all compensation to employees, whether that compensation is cash or benefits. The uneven treatment of health insurance is this: when employees purchase health insurance on their own, they do so with after-tax dollars; when their employer purchases health insurance for them, that benefit is not included on the employees' W-2 statements and they pay no income taxes.

Precisely. Thanks for the assist.

Health "insulation" isnt health insurance.

http://www.cato-unbound.org/2007/01/08/arnold-k... (love this article)