Hill:
You wrote:
"However, that's not the fault of the free market. Is it merely a coincidence that our health-care industry is simultaneously the most heavily-regulated/subsidized, as well as the most dysfunctional? "
Are you asserting that the health-care insurance industry is the most heavily-regulated/subsidized of all industries?
JCB:
This is a thought-provoking question. Subsidization and regulation are not entirely quantifiable because comparing different types of subsidies and regulations across different industries amounts to an apples-to-oranges comparison. So I'll admit it was a bit rash of me to claim that health care is the most heavily-regulated/subsidized of all industries. Instead, I probably should have said something like "...among the most heavily-regulated/subsidized...." I would say that health care is currently the most dysfunctionally regulated/subsidized of industries in our country, in that the severe market distortions caused by those regulations/subsidies are rapidly bankrupting us, while destroying the quality of available care. We have a lot of problems of various kinds in many other industries, but these pale in comparison with the threat posed to our economic and physical well being by our current health-care system.
Hill:
I am not so sure you read the question carefully, so I'll ask this again: Are you asserting that the health-care insurance industry is the most heavily-regulated/subsidized of all industries?
JCB:
You're correct that I inadvertently overlooked the word "insurance" in your question. As in the case of the health-care industry as a whole, I would not claim that the health-insurance portion of that industry is necessarily the single most heavily-regulated/subsidized of industries. However, I would say that it is among the most heavily-regulated/subsidized. Here's a link that provides an overview of health-insurance regulations by states and the federal government:
http://www.allhealth.org/briefingmaterials/HealthInsuranceReportKofmanandPollitz-95.pdf
In addition, the government has nationalized huge sectors of the health-insurance market through Medicare, Medicaid, and various other programs. In these sectors, health-insurance is not merely regulated, but is completely controlled (i.e., owned and operated) by the government and is massively subsidized in a manner that is completely unsustainable.
Hill:
You have yet to show the insurance industry is heavily subsidized by the federal government.
Please show the federal agency that provides these subsidies and the amount that is paid directly to the health insurance industry on a yearly basis.
Of course Medicare, Medicaid and other federal or state health programs exist. The reason Medicare, for example, exists is that seniors simply cannot afford what health insurance companies would charge them for health care. But that's not the question here.
We'll get to the regulations later.
JCB:
There are no direct subsidies to the health-insurance companies, as far as I know. The subsidies I was referring to are the enormous sums of money paid to health-care providers by Medicare, Medicaid, and other similar programs. The reason for the huge cost and spending increases we're seeing in the health-care arena is the market distortions caused primarily by the government subsidies, as well as by various ill-advised regulations:
http://www.newsweek.com/id/202015/page/1
"A new report from Obama's own Council of Economic Advisers shows why controlling health costs is so important. Since 1975, annual health spending per person, adjusted for inflation, has grown 2.1 percentage points faster than overall economic growth per person. If this trend continues, the CEA projects that
* Health spending, which was 5 percent of the economy (gross domestic product) in 1960 and is reckoned at almost 18 percent today, would grow to 34 percent of GDP by 2040 -- a third of the economy.
* Medicare and Medicaid, the government insurance programs for the elderly and poor, would increase from 6 percent of GDP now to 15 percent in 2040 -- roughly equal to three-quarters of present federal spending.
* Employer-paid insurance premiums for family coverage, which grew 85 percent in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040 (all figures in "constant 2008 dollars"). The huge costs would force employers to reduce take-home pay."
The Goldhill article I mentioned in a previous e-mail (i.e., the one you said you didn't want to read) provides good explanations of the nature of these many of these distortions:
http://tinyurl.com/yendgv9
As Goldhill points out, "...it is no coincidence that the great inflation in health-care costs began soon after [Medicare and Medicaid were created in 1965]. "
Your explanation, on the other hand, is that costs have increased due to unbridled greed on the part of the health-care industry, including, presumably, the health-insurance industry. (At least that's my understanding of your view. Please correct me if I've mischaracterized it in any way.) If that's the case, why aren't we seeing similarly skyrocketing costs in most non-health-care-related industries? Are those industries simply less greedy? Why would they be? What is it about health care that attracts unusually greedy people? Also, why wouldn't cost increases be even worse in industries that are less heavily bridled (i.e., less regulated) than health care? Take veterinary care, for example. I think most people would agree that veterinary care is far less regulated than health care. Americans love their pets almost as much as they love their friends and relatives. Even more so, in many cases. So why aren't we seeing even more serious cost increases in veterinary care than we are in health care? Or, consider forms of insurance other than health insurance. If greed is causing the price increases we're seeing in health insurance, why is it that we aren't experiencing similarly mind-boggling increases in premiums for life, homeowner's, or auto insurance? Are the non-health-care-related insurance companies less greedy for some reason?
http://www.newsweek.com/id/202015/page/1
"A new report from Obama's own Council of Economic Advisers shows why controlling health costs is so important. Since 1975, annual health spending per person, adjusted for inflation, has grown 2.1 percentage points faster than overall economic growth per person. If this trend continues, the CEA projects that
* Health spending, which was 5 percent of the economy (gross domestic product) in 1960 and is reckoned at almost 18 percent today, would grow to 34 percent of GDP by 2040 -- a third of the economy.
* Medicare and Medicaid, the government insurance programs for the elderly and poor, would increase from 6 percent of GDP now to 15 percent in 2040 -- roughly equal to three-quarters of present federal spending.
* Employer-paid insurance premiums for family coverage, which grew 85 percent in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040 (all figures in "constant 2008 dollars"). The huge costs would force employers to reduce take-home pay."
The Goldhill article I mentioned in a previous e-mail (i.e., the one you said you didn't want to read) provides good explanations of the nature of these many of these distortions:
http://tinyurl.com/yendgv9
As Goldhill points out, "...it is no coincidence that the great inflation in health-care costs began soon after [Medicare and Medicaid were created in 1965]. "
Your explanation, on the other hand, is that costs have increased due to unbridled greed on the part of the health-care industry, including, presumably, the health-insurance industry. (At least that's my understanding of your view. Please correct me if I've mischaracterized it in any way.) If that's the case, why aren't we seeing similarly skyrocketing costs in most non-health-care-related industries? Are those industries simply less greedy? Why would they be? What is it about health care that attracts unusually greedy people? Also, why wouldn't cost increases be even worse in industries that are less heavily bridled (i.e., less regulated) than health care? Take veterinary care, for example. I think most people would agree that veterinary care is far less regulated than health care. Americans love their pets almost as much as they love their friends and relatives. Even more so, in many cases. So why aren't we seeing even more serious cost increases in veterinary care than we are in health care? Or, consider forms of insurance other than health insurance. If greed is causing the price increases we're seeing in health insurance, why is it that we aren't experiencing similarly mind-boggling increases in premiums for life, homeowner's, or auto insurance? Are the non-health-care-related insurance companies less greedy for some reason?
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