Health insurance as cake
Two excellent articles from Arnold Kling on what should be done about the cost of health insurance, which, as he points out, really means the cost of health care:
The cost of health insurance has been rising, leading to well-publicized problems in the employer-provided health insurance system and increasing numbers of uninsured. But blaming insurance companies for that is like saying that the calories in a double-fudge chocolate cake are all in the icing.Of course many what many advocates of "reform" really want is wholesale rationing of care. But they don't think it's fair that some would pay for care outside the system, so they need to go to single payer to disallow that.
The cake of health care expenses consists of health care services -- doctor visits, surgeries, and all the rest. The icing consists of health insurance -- administrative costs, profits and all that. In dollar terms, the icing represents less than ten percent of the iced cake.
Many proposals to reform health care finance mistake the icing for the whole cake.
Kling makes eminently sensible proposals for catastrophic coverage (covering care >10,000K per year per person), pointing out that current policies are akin to car insurance that pays for gasoline and oil changes.
I agree, but also think that at some point we must recognize that a system in which everyone is entitled to the care the richest/most desiring of care are willing to pay for is unsustainable. I'll try to post more on this later.
Kling proposes truly catastrophic coverage be mandatory and that other health care be paid for directly by consumers. This would certainly lead to an end to the current view that health care is a "free good." Right now, none of my patients has any idea how much a visit to me costs, how much skin testing is, etc. Why? Because they aren't paying.
I was a bit disappointed that Kling didn't address health care savings accounts (HSAs) which allow workers to accumulate health care dollars pre-tax and carry them over year to year (unlike the ridiculous current flexible spending accounts where you forfeit your money if you don't spend it, encouraging unnecessary expenditures) coupled with high deductible catastrophic coverage.