An excellent article in many ways, though ultimately disappointing. He spends 5 pages explaining in considerable detail how government interference is preventing the free market from operating properly. But then on page 6 he proposes not a restoration of a free market but a different coercive government-controlled system. He's a smart guy; the system he proposes would probably be better than what we have now, but would be far worse than a truly free-market system. I like his idea of using catastrophic coverage coupled with personal savings. But he wants to force people into a single-payer catastrophic insurance program. I wouldn't trust this kind of single-payer, government-mandated program because there'd be no competition. It'd be far superior to allow private corporations to compete for that insurance market. In the previous pages he kept touting the advantages of a competitive marketplace, but then he proposes to do away with competition for the catastrophic insurance. He likes health savings accounts, as do I, but he wants to force people to have them, which is far too coercive for my tastes.
Still the first 5 pages really are excellent. I agree with 99% of what he says in those pages. He makes many insightful observations. For example:
"All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results." [Emphasis mine.]
"To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy."
[I take exception with his belief that it's the government's role to protect the poor and to cover us against true catastrophe, but otherwise it's a great quote.]
"Yet spending on health care, by families and by the government, is crowding out spending on almost everything else. As a nation, we now spend almost 18 percent of our GDP on health care. In 1966, Medicare and Medicaid made up 1 percent of total government spending; now that figure is 20 percent, and quickly rising. Already, the federal government spends eight times as much on health care as it does on education, 12 times what it spends on food aid to children and families, 30 times what it spends on law enforcement, 78 times what it spends on land management and conservation, 87 times the spending on water supply, and 830 times the spending on energy conservation. Education, public safety, environment, infrastructure—all other public priorities are being slowly devoured by the health-care beast." [Great statistics. Incredibly scary.]
"The housing bubble offers some important lessons for health-care policy. The claim that something—whether housing or health care—is an undersupplied social good is commonly used to justify government intervention, and policy makers have long striven to make housing more affordable. But by making housing investments eligible for special tax benefits and subsidized borrowing rates, the government has stimulated not only the construction of more houses but also the willingness of people to borrow and spend more on houses than they otherwise would have. The result is now tragically clear." [Excellent analogy.]
"Society’s excess cost from health insurance’s administrative expense pales next to the damage caused by 'moral hazard'—the tendency we all have to change our behavior, becoming spendthrifts and otherwise taking less care with our decisions, when someone else is covering the costs." [That whole section on moral-hazard economy is brilliant.]
I could go on and on about how good those first 5 pages are! But I need to get some sleep. Anyway, I really appreciate your making me aware of that article. Thanks!
E's response to my take on the article: Ah, the art of cherry-picking. Watch out, you might find yourself a seasonal laborer and without health insurance at all. I can practice this fine art as well but I don't have time this morning, I have to get to my wage-slave job, that...gives me virtually unlimited health care. I'd prefer the government just pay me directly out of pocket as it would be cheaper for the taxpayer and other people could get their share. I will try to get to the picking tonight. I came away from re-reading the article excited about his proposals. The private insurance industry would be gone!
Still the first 5 pages really are excellent. I agree with 99% of what he says in those pages. He makes many insightful observations. For example:
"All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results." [Emphasis mine.]
"To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy."
[I take exception with his belief that it's the government's role to protect the poor and to cover us against true catastrophe, but otherwise it's a great quote.]
"Yet spending on health care, by families and by the government, is crowding out spending on almost everything else. As a nation, we now spend almost 18 percent of our GDP on health care. In 1966, Medicare and Medicaid made up 1 percent of total government spending; now that figure is 20 percent, and quickly rising. Already, the federal government spends eight times as much on health care as it does on education, 12 times what it spends on food aid to children and families, 30 times what it spends on law enforcement, 78 times what it spends on land management and conservation, 87 times the spending on water supply, and 830 times the spending on energy conservation. Education, public safety, environment, infrastructure—all other public priorities are being slowly devoured by the health-care beast." [Great statistics. Incredibly scary.]
"The housing bubble offers some important lessons for health-care policy. The claim that something—whether housing or health care—is an undersupplied social good is commonly used to justify government intervention, and policy makers have long striven to make housing more affordable. But by making housing investments eligible for special tax benefits and subsidized borrowing rates, the government has stimulated not only the construction of more houses but also the willingness of people to borrow and spend more on houses than they otherwise would have. The result is now tragically clear." [Excellent analogy.]
"Society’s excess cost from health insurance’s administrative expense pales next to the damage caused by 'moral hazard'—the tendency we all have to change our behavior, becoming spendthrifts and otherwise taking less care with our decisions, when someone else is covering the costs." [That whole section on moral-hazard economy is brilliant.]
I could go on and on about how good those first 5 pages are! But I need to get some sleep. Anyway, I really appreciate your making me aware of that article. Thanks!
E's response to my take on the article: Ah, the art of cherry-picking. Watch out, you might find yourself a seasonal laborer and without health insurance at all. I can practice this fine art as well but I don't have time this morning, I have to get to my wage-slave job, that...gives me virtually unlimited health care. I'd prefer the government just pay me directly out of pocket as it would be cheaper for the taxpayer and other people could get their share. I will try to get to the picking tonight. I came away from re-reading the article excited about his proposals. The private insurance industry would be gone!
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