On Health Insurance

Don, a magnificent article. The ONE thing that really bothers me about this whole thing is that I remember making this same argument- in primitive and truncated form- in a classroom in 1989. I remember it vividly and it was as true then, of course, as it is now. The arguments are louder now, etc. but that is because we are closer as a nation to current reform.

In the long run, insurance may be all that we are really paying for. That is, with the consequences of rationing and higher cost, many will not realistically have access unless they are very ill.

Side topic; has anyone else considered what mandatory health insurance will do to the housing and automobile markets? I mean, the money for health insurance has to come out of the personal budget somewhere, and I suspect that it will come mostly out of the prices that young people are willing to pay for homes and cars.

Yeah, but the ever wise government will fix that problem with subsidies, redistribution of income, etc. It will all work out swimmingly I'm sure, after all, our wise bureaucrats and elected officials are surely masters of all things.

I found that column to be very thought provoking that has been one of the thoughts I have had while trying to come up with an idea to some of the HC problems we have. I agree with the premise that some of our costs we should plan ourselves and that much of our coverage is maintenance and not unforeseen - which we really need to determine how much we should pitch in to cover our maintenance. I do think that most people would find that maintenance a little too much to pay and forego it, only cost their insurer a higher probability to paying the higher claim in the future.

Are health care providers forced to sell plans that cover all of these routine costs or do they do it on thier own accord? If laws require them is it mostly from the state governments or federal government?

Yes, insurance companies and their customers are, for the most part, forced into covering many things that you, the customer, might not want to be covered. You might like a lower premium instead. But much of the time, our betters have made those decisions for us because they don't believe we are smart enough to figure it all out on our own. It is mostly state laws that are responsible for these "mandates" in coverage.

So if one state has mandate laws that drive up the cost of health insurance and force you to buy a Cadillac insurance policy when you would prefer the lower premium of a Chevy, why not just shop around in other states that have fewer mandates?

Well, no reason except...it's not allowed. If you live in New Jersey and can't find the policy terms you want you might find something better in New York or Pennsylvania, but again our betters have predetermined that we are too stupid to make those decisions so they have made it illegal. For our own good, of course.

One hugely good thing that could be done to reform health care in this country would not involve any government spending at all. Just repeal the laws against purchasing health insurance across state lines. That would force states to compete for the business, and our betters in the states might be persuaded that we are competent to make our own choices.

Mr. Boudreaux's article is straightforward common sense, done well. But is it sadly true that common sense has become so uncommon as to make writing such as this stand out as exceptional.

I would argue that health care is already socialized -- people simply have differing degrees of access, with the greatest access given to those who can to pay and those with insurance plans. Insurance is the medium used to socialize the cost of providing to those who don't pay -- and that includes medicare and medicaid. The degree of cost shifting that currently takes place is mind-boggling, and the current plans only intends to increase it.

The column rightly asserts that people go to the doctor more often because all they pay is that pesky copay.
Another issue is the reason they see the doctor in the first place. Often times it is simply to get a signature that allows them to purchase certain chemicals that they already know they need, or that they could easily determine with the aid of the pharmacist.
In some cases that small copay for a signature, and the time lost from work to get it, combine to encourage a person to not seek those antibiotics that they and their pharmacist know that they need.

Along with breaking down barriers to purchasing insurance across state borders, allowing individuals to use their full compensation to purchase high deductible insurance with health savings accounts would be a great step towards real reform.
Another piece that is not often talked about would be eliminating many pointless trips to the doctor by giving patients and pharmacists more freedom in choosing what chemical to purchase.

"Often times it is simply to get a signature that allows them to purchase certain chemicals that they already know they need, or that they could easily determine with the aid of the pharmacist."

I was spending Christmas with my parents, and woke up one morning with my eye glued shut. After 10 minutes of dabbing at it with a wet kleenex, my mom said "You have pink eye." We went to the pharmacist at the corner drug store and he said "You have pink eye." I asked what I needed to treat it and he said I'd have to see a doctor to get a prescription. We went to one of those 24hr "Doc in a Box" clinics, and when I got to the receptionist, she said "You have pink eye." So I sat for about an hour in the waiting room before being called by a nurse, who, upon seeing me, said "You have pink eye." I was taken to another room to wait for the doctor, who appeared about 20 minutes later and said, almost as soon as he entered the room, "You have pink eye."

He then gave me a prescription for the medicine I apparently needed him (and him alone) to prescribe. Oh... and that'll be $75, please, for the service.

I'm sure it was for my own good.

Everything that you said in the article was true, however a point that you did not address was the paperwork costs of paying for all those "oil changes". In effect the cost of paying for the, say $35.00, oil change is about $10.00 to the garage and $10.00 to the "insurance company" thus changing a $35.00 oil change into a $55.00 oil change. This may be a greater cost factor than all the unneeded "oil changes" that are done because they only cost the $5.00 co-pay.

Walter E Williams has a nice article about the benefits of libertarian free-market health care that we've had for the past 25 years:

http://townhall.com/columnists/WalterEWilliams/...

Well, Prof. Boudreaux, if you want that you can have it.

Give up your Prof. career in that lousily governed country of yours, become an entrepreneur in lousily governed Europe, for instance in Brussels, and all you are obliged to buy when it come to health care insurance, is insurance against the so-called "big risks".
Works fine, you'd probably buy it from one of the cooperatives.

But now your articles come too late. Where were you with your strong arguments when your small government "friends" were in office for most of the last decade??
It never seemed to have bothered you at all that at least 15% of the people in your country didn't even have catastrophic health insurance, while a whopping 8% of GDP was spend by the taxpayer on an NHS called medicaid/medicare.

Since you decided to keep quiet in the old small government days, you should keep quiet now as well, esp. since you claim to hate partisan politics.

YAWN. Take your puerile rhetoric to some socialists who are gullible enough to swallow it, like brainwashed cultists quaffing on poison-laced Kool-Aid. (Oh yeah!)

This is a good point, but the analysis does not really go far enough. The fact of the matter is that many of the "big-ticket" treatments that we currently "insure" against are only tremendously expensive because they have evolved in an environment where treatment options were skewed toward the expensive and most of the costs were foisted on 3rd parties. If we had a genuinely free market and the consumer was in the driver's seat, treatment for most conditions would be a great deal more affordable than it is today. For example, treatments such as open-heart surgery would be rare to non-existent. Yes, it would be very expensive (most likely) to treat a new quadriplegic, a true insurable event, but this situation would very much be the exception, not the rule.

It is true that most health insurance contracts provide reimbursement for routine health care as well as catastrophic health care and chronic illness health care. But does routine health care account for very much of today's total health care spending? I've been unable to find data, but the anecdotal evidence provided over the past 35 years by my wife leads me to believe that routine health care is a very small portion of the nation's health care expenditures for the non-elderly population. If that is correct, then today's medical care insurance functions primarily to:

"protect the financial well-being of an individual, company or other entity in the case of unexpected loss"

But even that's not the whole story. Most health care practitioners believe that routine medical care actually reduces the overall medical costs of the nation. They believe, as do I, that routine medical care will enable medical practitioners to uncover serious medical conditions in early stages, when treatment costs are lower and survival rates are higher. Thus, the third party payer may actually reduce its costs by providing for regular medical checkups.

Of course, reduction in medical costs are not the only benefit to be derived from routine medical care. By uncovering medical conditions in early stages, medical practitioners can help keep patients functioning as employees and reduce stress employees incur when family members are seriously ill.

IMO, routine medical care provides benefits to the third party payer and the employer which make it economically justified as part of an overall medical insurance program.