Wednesday, June 17, 2009

Health Insurance Seminar

Recent opinion columns provide excellent guidance to gentle readers still unsure as to how health insurance reform ought to proceed versus how it is actually proceeding.

At the Gray Lady, token center-right columnist David Brooks aptly summarizes Obama's political strategy for passing a reform bill. With Brooks we affirm that nothing coherent or relevant is likely to emerge from this slapdash process, only the yield of a political trophy for the President.

Across Manhattan at WSJ the editorial board notes well the absurdity of claims that proposed reforms will make American businesses more competitive. Health insurance costs, whether paid to insurance companies as a present or to the government in the future, are for businesses just part of the total cost of having an employee. Over the long term money paid for health insurance thus becomes money that would otherwise be paid to the employee. So it's not American competitiveness that's losing out but American personal incomes. Hence, the solution is not to shift insurance to government but to shift insurance and decision-making about costs to individuals.

And so Holman Jenkins of WSJ offers the final unit of the seminar, a hypothetical look back at what would happen if the Republic took a different course than the kind proposed by the President. Specifically, if overall income tax rates were lowered but health insurance were taxed as income (and remember that tax-free health insurance benefits historically are a consequence of working around wage controls during WWII), individuals would be incentivized to find bargains and providers to compete on cost and effectiveness. That is, conventional market forces would be restored to health care, over time with the usual improvements in efficiency.

Thus endeth the seminar.

6 comments:

JB in CA said...

The same sort of arguments, of course, could be used in support of privatizing public education; but if I recall correctly, SWNID is against that. Why one and not the other?

Jon A. Alfred E. Michael J. Wile E. SWNID said...

We're not necessarily against privatizing public education. We are in favor of vouchers for poor kids in failing schools, which is a privatized approach to education. We don't think that there's anything about the problems in the present education system that demand a wholesale privatization.

Of course, we aren't advocating wholesale privatization of health insurance either, just that the consumer of health care become the payer of health insurance, making the insurance tied to individuals instead of jobs and putting the patient in better control of costs.

The problems that face the public education system are not of the same cause as the problems facing health insurance, either. And of course, being a doctor and being a teacher--healing and educating--are very different matters, whatever similarities they have. So the comparison is not terribly direct, in our view.

We don't believe that the marketplace is a panacea. But we think it's more effective and cheaper than central-command planning. Solutions that tend toward the market are solutions that hold inherent promise of partly correcting distortions in costs and value created by nonmarket approaches.

Christine said...

It would be indescribably wonderful if health insurance could be divorced both from employers and from the government.

However, I seriously doubt that will happen. Too many people have too much at stake in this. And really, many employers would just love to go to single payer and wash their hands of the entire mess. It seems they would rather be taxed (or more accurately see that someone else is taxed) than pay their employees enough to purchase their own insurance.

My family is currently in the COBRA boat. When that runs aground, I suspect we will look into a high-deductible policy unless I have secured a job with benefits.

The health benefit issue is one huge barrier to entrepreneurs in the US. The self-employed can't afford to pay the high rates.

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