I was very bothered the other night in the debate to hear Obama, the champion of “change” try to scare voters by saying that McCain wants to do away with the tax break that employers get for providing health care. IF ONE IS EVEN A PASSING STUDENT OF OUR CURRENT SYSTEM, ONE MUST ACKNOWLEDGE THAT THE CURRENT METHOD OF EMPLOYER-FUNDING IS THE REASON WE ARE IN THE MESS WE’RE IN. I write that in all caps, because, if you don’t agree with that, there is no point in reading further.
I have to start with first principles. These are mine, not someone else's, though I am sure others believe them as well. They are not the only first principles I could list, but they are the most apt to this problem:
1. I believe that a free and open marketplace provides the best odds for distribution of resources in a market/economy.
2. I believe that individuals, given enough information, will make decisions that are in their best personal interest (this would include health care decisions, as well as financial decisions, among others).
I will stipulate these facts vis a vis the health care situation in the United States, and agree that addressing these issues would go a long way towards solving the problems many people see in the health care industry:
1. Health care costs are rising out of control, outpacing increases in wages, and even the inflation rate, and that this is a decades-long trend that any solution must reverse.
2. There are far too many people (who are not in transitory situations), who are without health insurance, and this number must be reduced, to zero as a goal.
3. A pure free market insurance solution will seek to apply higher costs to the sick.
Looking at the range of solutions, they are bracketed by a purely consumer based solution, where we all pay what the services actually cost, out of our pocket, and a completely government-run entitlement system, where we pay nothing at the time of service, but the system is funded by the government (through our tax dollars, deficit-spending, whatever schemes the government needs to devise to pay the providers). The answer lies somewhere in between these two extremes.
For me, in evaluating the health care position of a candidate, I care whether the plan adheres to first principles, as well as how well it will address the realities stated above.
Neither John McCain, nor I, are advocating turning each individual loose to handle health care costs on their own, negotiating with doctors separately. Obviously, insurance companies bring the power of a collective to bear, and use that power to influence the prices they pay to doctors, hospitals, drug companies, etc. I don't think anybody with a serious proposal is suggesting anything other than using the insurance model for health care. I advocate having a system that encourages a national market for health insurance among many insurers, while at the other extreme are those who advocate a single insurer, the US Government.
My core disagreement with Obama's plan, is that the ultimate result is government will put itself in competition with private insurers, and due to its size, continuing demands from constituents, and Congress's insatiable appetite to buy votes, we will find ourselves with a single payer system. I realize "government run healthcare" is an invective to some, but, recall, I started this thread after Obama said that John McCain wanted to raise his taxes via the elimination of the employer health care tax credit, a statement that is arguably untrue.
Where the government is making decisions for us, we lose freedom. Since this is ultimately about freedom, the question voters should be asking themselves is, "Who do I trust to make decisions about my health care? Government bureaucrats, or myself?" You might say, how is that different from today, with the role of government bureaucrat played by a private insurance company?
The difference is, in the government case, you have no alternatives to choose from and decisions will be made by a government who is prepared to enforce its decisions at the point of a gun. In a thriving, free-market system, the disgruntled consumer would switch to another insurer. In a government-run system, are you going to throw the bums out? That doesn’t seem to have worked with most of the crises of our time.
I responded to his specific comments:
[Him] I think we can agree that the current system for health insurance and health care is broken. The discussion is how best to address it. Also note that I'm not convinced the Obama plan is the best plan.
[Jay] The current system of employer-funded health care is, indeed, if not broken, seriously flawed, and has been since its inception. Growing out of the Blue Cross days of the 20’s and 30’s, it was developed and expanded during WW2, in an environment of wage controls; offering health insurance as a way for employers to attract employees and retain them was later encouraged by the government through tax policy. Thus, we have our problem today. It was interesting to hear Obama praise this system in debate 2, and attempt to scare people that McCain wants to change this system. Some change there.
[Him]The first thing to point out is that "government run health care" is often thrown about like an invective.
[Jay] If everyone agreed the government ran things great, we wouldn't see it as an invective? I point it out and will continuously point it out, because I believe this is absolutely NOT the path I, nor the majority of Americans want to follow. As much as we know what caused this current mess, we do not want to replace it with what will ultimately be another, equally bad for the consumer, and really, really, really bad for the taxpayer, mess – which is what a single-payer, government-administered, system will be.
[Him]Since McCain has benefited from government run health care for just about all his life, it must not be all bad.
[Jay] Whoa! Do you think McCain went into the military and then public service because of the quality of the health care? I can tell you, having experienced the military health system firsthand, that most assuredly is not why he did it (maybe it had more to do with two generations of sailors before him?). Maybe he did go into politics for the health care. Having lived in DC, and been part of the DoD complex, I know what the Federal Employees Health Benefit Program (FEHBP) is, and, actually, as a model for the solution, it may be close to what we actually want. The interesting thing about that, is during the Hillary-Care fiasco, at one point the Republicans were proposing (I think it was Phil Gramm, that wascally McCain advisor) that we extend the FEHBP to all Americans, under the guise that if it were good enough for Congress, it ought to be good enough for the rest of America. Of course, that is ancient history, and we still would have had to figure out the funding issues.
[Him]Furthermore, many other countries have found ways to improve the health care of their citizens through some sort of government intervention.
[Jay] And many have ended up with rationing (ending up with long waits for services) and price controls, and a two tiered system that sees the wealthiest either going off-shore, or paying doctors (in some cases illegally) under the table. I'm curious to hear the good examples.
[Him]So we need to stop using that phrase like some kind of scare tactic.
[Jay] I am resisting the temptation to launch into a tirade that “government-run health care” has now entered the lexicon as verboten. How about not scaring them about McCain’s plan?
[Him]One problem with free-market health insurance is you lose the bulk buying benefits of a group policy like you get with an employer (be it private or the government).
[Jay] I think you are confused by what I (and others) mean. No serious person is suggesting we do away with private insurance. We’re suggesting that the United States government not become the primary insurer of most Americans (it already is for seniors, military retirees, and the poor).
As Barney Frank might say, this is a shibboleth. You seem to assume we're all going to negotiate directly with our doctors. There are obviously still going to be insurers. They'll be private insurers, not the single payer that many government-sponsored (how's that sound) proponents favor. One of the changes McCain wants to make is to allow consumers to be able to cross state lines and buy health insurance. This would allow us all to seek the insurer who's plan most closely matches our needs and pocketbook, without being tied to some of the cost-creating legislation that some states like to add. Just as states like SD and DE make it easier for credit card companies to operate in their states, other states would become clearinghouses for health insurers. Ultimately, you’d see rationalization in these plans as consumers settle on the minimums acceptable to them. This would go a ways towards introducing free-market forces into a system largely devoid of them.
[Him]My recent MRI would have cost me $1200 out of pocket, but my health insurance company had negotiated a rate of only $630. The same is true for a private (or COBRA) insurance plan, it would cost me thousands of dollars more than the one with AT&T.
[Jay] The point is that bulk creates negotiating ability. Sure, I agree, but, without competition, don't we just create the New AT&T, only this time run by bureaucrats. I think we can all agree the consumer is much better off after telcom deregulation. Much the same would be true if we allowed the free market a greater hand in health care.
[Him]I personally hate the effects of the whole "Consumer Driven Health Care" movement. What it does is cause you to sometimes avoid a procedure or medical action if the cost is too high. And I'm not talking about elective surgery. Awareness is good. Choosing to avoid medical care because of cost is not.
[Jay] Perhaps the devil is in the details here. And, you need to recall that CDHP’s are a relatively new invention, and still limited by regulation. Democrats in Congress have successfully fought to place limits on what qualifies as CDHP’s and when you can use an HSA. Conservatives have long proposed that those very large deductibles and out-of-pocket expenses that it takes to today qualify as a CDHP/HSA be reduced, making them more attractive to consumers. This is another free-market reform we could achieve today. Regardless of WHO has thwarted this (Democrats), Conservatives and Libertarians want to see these plans made more available and more attractive, by decreasing those deductibles and out-of-pocket maximums, and increasing the amount of money people can put into HSA’s.
Part of the reason I don't use the AT&T HSA plan is really the reason you cite here. The out-of-pocket expenses are too high for me, joining it with two kids and a wife. If I was 23, it would be a no brainer though. However, because HSA's are limited in number, they are also limited in what kinds of plans qualify for them. A more friendly Congress to consumer choice could help alleviate the problem you mention, by lowering the amounts on the plan to qualify for HSA, and increasing the amount of money you can put into an HSA. These are reforms and things conservatives have pushed for. However, in that these plans force the consumer to think twice about going to the DR for the sniffles, going to the emergency room for a little cut, or deferring care for items they shouldn't be wasting expensive doctor’s or ER time on, I think that's a good thing. I know when we were growing up, we didn't go to the Dr. for everything. People are conditioned to do that now, because the cost is shielded from them.
Do you have firsthand knowledge of someone who has avoided a medical care because of their participation in a CDHP? Or, is this theory?
[Him]No I do not agree with you that competition is the key to solving this problem.
[Jay] I know. I believe in the free market, and you may not. The fact that a purely free market would surely charge the sick more for insurance is a problem that we have to come to grips with when applying purely free market solutions to health care. That is the largest problem to purely free market solutions and is why this is such a difficult problem. But, I think we can design a system that maintains as many free market principles as possible and address the cost issue for higher-risk people, the portability problem, and the coverage problem. I’m not arguing as a Libertarian, who might just say – “let them eat cake.”
[Him]Here's a nice (and fair) analysis of their two proposals:
[Jay] I looked at the site. It seems a reasonable analysis of the plans as they stand today. I like the voting, obviously this site is hit by those on the left much more than those on the right. Even on the funding issue, where there is NOTHING good said about the Obama plan, the "voters" still give it an overall passing grade. Either the site is hit by partisans, or, people are willing to pay ANYTHING for what Obama is offering. At any rate, the analysis doesn't go far enough to suggest the ultimate result of Obama-care, which will be a government run single payer system.
[Him]Universal coverage is critical to any plan I would support, but I am concerned about what the Obama plan would cost.
[Jay] It would cost a lot. It would eclipse Medicare and Medicaid immediately and would rival social security. Plus, it would ultimately put the government in charge. You may trust your government to do the right thing, I don't. I see Obama's plan as a step towards socialism. The United States is not England, Canada, France, or Cuba. I will reject arguments that we should be more like them. We are the greatest country on earth precisely because we are not like them.
[Him]I would like to see the best of both plans, and other ideas, combined - but the likelihood of the country coming together is pretty slim.
[Jay] It won’t happen as long as Obama continues to scare people by telling them lies about McCain’s plan, as he dis in the debate and does on his stump speeches (I watched one yesterday, it was maddening listening to the misrepresentations).
More References for you:
- on rationing in England
- more on english rationing, and this is a socialist site complaining about rationing in England, and trying to blame it on a profit motive in the National Health Service.
- A dated, but still relevant paper on the dangers of price controls and rationing in the Health Care industry.
- James Capretta’s blog