Monday, July 16, 2007

Anti Universal Coverage Club

I had to take a break from reading The Chomsky and bopped on over to Cato at Liberty for a little bit of sanity. The Cato blog is still a bit too partisan for my taste. To my delight, a Michael F. Cannon at Cato has started an Anti Universal Coverage Club.

I want to be a part of the club.

IMHO, The health care problem is largely the creation of the insurance industry. It is the insurance companies that jack up the price of health care and limit access to service. The AMA and other elitist bureaucracies also add to the problem by creating a scarcity of doctors.

Accepting that the health care crisis is caused by the insurance companies, then universal care is the complete backward solution. Universal care simply transfers more power into the hands of the people who caused the problem.

Putting it another way: The insurance companies are corrupt. Each year they gain power and each year are less happy with our health care system. Giving these wanks absolute power in the form of Universal Coverage leads to absolute corruption.

The current health care crisis fails the most basic back of the envelop test. Health care is primarily a human to human service. The service is greatly enhanced by information. However, the primary cost of a human on human service is labor. If there is a large number of people being locked out of receiving a human to human service is an indication that something artificial is interfering with basic economics. The three artificial things in our present socio-economic structures are the AMA (which is set on preventing people from getting educated as doctors), the legal community which is very good at take a piece of everyone they sue, and the insurance industry.

One could also throw into this mix all of the centralized health care monopolies and bureaucracies which seem more adept at looking after themselves than the patients who are under their care.

The cost of information has dropped dramatically. The efficiencies of production have freed a large number of hands for health care. The one and only one reason that we would be seeing so many people blocked from access to health care is that there is something false in our economy. The artificial elements are the insurance bureaucracies, artificial shortages of doctors, a corrupt legal system and excessive taxes. Get rid of those things, and back of the envelope calculations show we would be in health care manna.

Anyway, I need to get back to reading Chomsky. I will be in a super bad mood until I can start reading something more positive and down to earth like the Death Hallows. Yes, bright and happy literature like the Death Hallows will be a welcome relief from The Chomsky.


Scott Hinrichs said...

I think you are not giving the centralized health care monopolies enough credit for their part in the problem. Although Americans rejected Hillary-care in 1993, the government has steadily been quietly expanding the percentage of the population covered by government health care programs since then. These players substantially distort the market and disrupt the provider-consumer relationship.

I do not necessarily agree that insurance companies are intrinsically bad players in the market. The auto insurance industry, for example, seems to function relatively well for consumers; even though, it creates a buffer between the service provider and the consumer. It works reasonably well because the consumer also has a direct relationship with the insurance provider.

Health insurance companies are problematic because consumers have limited choices and limited chances to influence the health insurance market. Why? Because our tax system rewards employers for providing health insurance. Employers are most interested in keeping health insurance costs down. Quality and flexibility of insurance products are not main concerns. Health insurance providers market to employers. The actual insured individuals have limited options. The employer creates a market-stifling buffer between health insurance providers and their consumers because employers operate from a perspective of different concerns.

If we were to eliminate the tax incentive for employers to provide health insurance in favor of providing the incentive directly to individuals, a more direct relationship between consumers and insurance providers would emerge. New and innovative products focusing on quality and flexibility would emerge, much as they have in the auto insurance industry. (I'm not sure I would actually favor a subsidy for purchasing health insurance, but it might be a compromise required to get legislation passed.)

I don't think insurance companies are all bad. They are just responding to the market conditions in which they find themselves, thanks to government regulation.

y-intercept said...

You have a very strong argument about the fact that insurance is provided by employers. Health insurance is not an asset held by individuals, it is an asset held by employers. Quite frankly, most individuals would not buy the policy given by their employer even if it were offered at the same price.

The reason we feel locked out of health care is because insurance is not an asset that we own, it is something forced on us and that is outside our control.

I suspect that people favor Universal Care because they feel that making it universal and making it something controlled by government would put it into the public domain and make it something they control. However, this sense is simply an illusion. When health care becomes the domain of a centralized government bureaucracy it is even further outside of our control.

The alternative solution is to find a way to transfer ownership of the asset from centralized players back into the hands of individuals. If this were ever done, then it would truly empower the individual, thus empowering the people than could ever be achieved with a centralized bureaucracy.

Matthias said...

As someone who is about to move from a job with heathcare benefits to a contracting position without healthcare, I have to say that I think it would benefit everyone involved if healthcare benefits worked more like a 401k where the employees picked a plan and the empoyer matched the contributions.

In negotiations for my new job, I discovered that the actual cost (to my current employer) of the healthcare benefits I get are worth thousands more than I would pay on my own. They seem "free" to everyone I work with, but that's only because we don't ever see the cost in our paychecks.

As a (soon-to-be) contractor, I can now see those costs, since I'm getting paid the money and then need to find the health insurance myself. Given my condition (mid 20s single male with no history of health issues), I'd rather keep the money, or at least go on a high-deductible HSA-type plan.

y-intercept said...

BTW, the reason I don't put the monopolies at the top is that they are relatively new; so it is difficult to determine if they are a cause or manifestation of the problem. Many of the monopolies were assembled as investments by the massive insurance firms.

Scott Hinrichs said...

This is true. A couple of years ago I listened to an orthopedic doctor in the ER rant about the immorality of allowing insurance companies to build and operate hospitals.

I guess I was thinking more about the government players in the system that distort the market.

Matthias' idea about health insurance working like 401k plans has some merit.

y-intercept said...


Good luck on the new job. The HSA accounts are a lot like 401Ks. If millions of people switched to this type of account, then we would see a full turn around of health car.

The problem at the moment is that people who use HSAs (which are outside the power structure) end up having to pay more for health care than those inside the system. The last checkup I had cost $350 because I paid cash. A half hour visit with a doctor really shouldn't cost more than $70 or so.

If enough people were using HSAs, then there would be a market to counter to the monopolists.