You will find nothing in my comments about regulating health insurance. That is not part of the logic I offerred.

I’m not objecting to those who would choose to not take advantage of group health insurance coverage. I’m not advocating government mandated coverage.

If third party payment and employment based insurance were less effective and less efficient, a free market would eliminate such arrangements. However, as I pointed out earlier, employer based group health insurance was growing in the decade before government interference was introduced in 1943.

“Currently, insurance companies deny care, mostly, on usually specious grounds”

That’s opinion, not fact. Surveys have shown that most Americans who are enrolled in group health insurance plans are satisfied with their coverage.

I just read that IBM last month removed the employee copay for routine primary care physician visits. They actively promote such medical care because they believe it ensures more serious problems are uncovered earlier. IBM believes that routine visits actually reduce the overall cost of providing health insurance coverage.

To break out the old analogy, imagine going to dinner with a large group of people you don’t know very well. You’ll order differently, and more expensively, if everyone agrees in advance to split the check versus if everyone pays his own way. That’s the damage of third-party payment in a nutshell.

I think your definition of cost is too narrow. I was not referring to merely production costs of the medical care provider, though I believe insurors indirectly control those costs. Wikipedia explains the business and economic use of the word “cost”.

My insuror does control the cost to my employer in providing health insurance to its employees.

Insurers provide help both directly and indirectly, though you may question whether the latter is really help.

My insurance company, UnitedHealthCare, provides these services among others:

- medical treatment cost estimator
- physician and hospital screening
- physician selection tips
- hospital quality and cost efficiency assessments

Insurors also indirectly help decision-making by limiting or denying coverage for treatments they have determined to be ineffective. When my insuror denies coverage for a specific treatment, it’s a red flag for me. The physician or hospital recommending such treatment will need to have a very good reason. Personally, I am confident that UHC is not going to risk legal action by denying coverage for an effective treatment.

You may argue that such information is available elsewhere at no cost. That’s fine, and anyone is free to accept such free advice. I have much more confidence that a multi-billion dollar insuror is going to provide quality medical advice.

You’re severely under appreciating the value the marketplace has driven into automobiles which makes it possible for you to even make that statement.

The consequences of purchasing a poor automobile are severe since vehicles often carry multiple people at high speeds while filled with toxic and flammable materials.

Yet, the marketplace has emerged to deliver safe and reliable autos of a standard that makes this relatively safe bet, even for the poorest quality cars on the road. And, nobody really has to know much about cars to get a good one.

Now, sure you can say there are safety standards and testing agencies that have contributed. But, overall, the reputation of a manufacturer is its most valuable asset and it builds on that asset by making the very dangerous act of propelling human bodies at 60 – 80 mph safe enough.

That’s the same logic that was used in the mortgage business. They can’t figure it out, but let’s loan them money and regulate it. That removed a strand of prudence from the system that led to bad stuff.

Individuals wouldn’t need to evaluate. Free market quality and ratings would become more transparent through “Consumer Reports”/rate-a-doctor.com style ratings. We’d rely more on referrals from friends and family members based on their experience and homework. The quality stuff would be market tested and evolve to wider acceptance and the non-quality stuff would fail.

Could that be because of third party payments? Few shop when they’re not paying, so there’s little to no need for transparency on prices and we take big assumptions on quality too.

I’m not sure I’ve ever had an insurance company assist me in medical purchase decisions. I can’t think of a single instance – and I’ve had some fairly serious health problems over my lifetime. Do you receive such advise from your insurer? I’m surprised.

Insurance companies are exercising cost control on behalf of all their customers when they deny payment for certain treatment.

I don’t disagree now nor have I ever disagreed that insurance companies provide a valuable service. I argue that cost control is not the benefit they provide. First of all, the cost of a service is not a function of what consumers are willing to pay for it. Thus, insurance companies don’t provide cost controls. The very important benefit they provide is dampening the volatility of health expenditures over your lifetime by spreading the risk across a pool of plan participants. The insurance company estimates your likely health care expenditures for a given period of time and then translates that into a monthly premium. This is indeed a valuable service.

I also think that underwriterguy makes a great point in the post below. There is less cost sharing than there should be and as the incremental out of pocket charge has declined in some plans, the demand for services has increased. In the face of necessary spending controls, this has caused shortages (inflation) which have already resulted in long waiting lines and substandard care by physicians. The difference in care received with plans that require more cost sharing and those that don’t (HMO’s for instance) is quite stark. State mandates also reduce cost sharing. I think I have to agree with underwriter guy on that one.

Not if you were the proud owner of a Ford Pinto in the 1970′s!!! And eating the wrong kinds of food can have some very nasty effects on your health.

I’ve really never noticed that my insurance provider ever plays a role in deciding what my medical treatment should be. All it decides is what it’s willing to pay for. All discussions of treatment options are always with my doctor and I’ve usually chosen an option not paid for by the insurance company. I feel very well informed without my insurance company weighing in – if that should ever happen. Frankly, John Dewey, I just don’t see how insurance companies are providing an advisory service. They reduce the volatility of medical expenditures over your lifetime and that’s valuable. So, I agree that insurance companies are providing a valuable service. However, as hard as I try, I can’t see how they’re giving any kind of treatment purchase advice – valuable or not.

Yes, remove the tax shields (or extend the tax shields to all insurance purchases; either way works), allow for interstate insurance purchases. Also remove the burdensome government mandates about what must be covered. I’m a guy; why should I pay for pregnancy coverage? I’m not an alcoholic and never will be; why must I subsidize AA treatments? And on and on.

Let the market work. If people still choose full-service first-dollar pre-paid medical plans from their employer, good for them. At least it’ll be a real choice.

Not sure who you are disagreeing with. I never made that claim. Friedman referred to shopping for food, for gasoline, and for clothing.

I do believe the consequences of poor medical treatment purchase decisions are far greater than the consequences of poor automobile purchase decisions. I am also pretty certain that the universe of medical treament options is far, far larger than the options available for vehicle purchases.

“I know little about building a house”

Consumers of dwellings are protected from their ignorance in two ways:

1. building codes and construction inspectors;
2. building inspection services.

Consumers could contract with parties other than insurance companies to provide information about medical treatments and about physician quality. But that does not mean insurance companies are not providing a benefit in doing so.

If you truly wish free markets, advocate removal of tax shields. Advocate interstate insurance purchases. But do not advocate removal of third party payment, which is a choice employee groups have made.