Imaginary view from my office
Healthcare costs represent almost 20% of the U.S. economy, a much higher percentage than seen in other first-world countries. And we’re not getting our money’s worth (judging from average lifespan, for instance).
The Republicans just rolled out a healthcare reform plan to replace Obamacare and address other issues. I haven’t read it. But I have zero confidence in those clowns being able to solve this problem.
Denninger has sussed out a plan that you may enjoy considering if you’re a policy geek. In brief:
- If you sell “insurance” to anyone in a given state, you must accept all persons in that state on the same terms and at the same price. to open. For acute conditions where adverse selection becomes most important this restriction resolves the problem.
- All “insurance” companies must offer a true insurance policy covering only unlikely-but-catastrophic events on the same terms as their “full service” policies.
- All health providers must publish a price list and may not bill or accept payment at anything other than that price; doing so becomes a violation of Robinson-Patman and exposes the provider to civil suit for treble damages.
- No event caused by the provision of your treatment may be billed to you. Period.
- If you show up without insurance or ability to pay with a life-threatening condition, you will be treated, but the hospital cannot cost-shift the bill – it instead bills The Federal Government.
“Five points and a fully free-market solution that brings affordable health care coverage to all who can buy it, yet protects those who cannot, while, to the greatest possible extent, forces everyone to bear the cost of their own decisions.
If you choose not to be insured and pay cash you are free to make that choice. If you have a catastrophic illness or injury, insist on treatment but have no means to pay then you are subject to attachment of wages and assets by the IRS, a debt that is only discharged by your death.
Simple, fair, free-market and this path will dramatically control costs as free market competition will be forced to the forefront among health providers who will be compelled to make available their pricing schedules to everyone before they show up for treatment and are presented the bill.”
One of two bridges over the Colorado river in the Grand Canyon near Phantom Ranch
Karl says that U.S. healthcare and health insurance are way too expensive because of:
- monopolistic practices
- collusion among the major players (e.g., insurers, labs, Big Pharma, politicians, doctors)
- ignored violations of the Sherman, Clayton, and Robinson-Patman Acts (15 USC)
- ignored violations of state consumer protection laws
- absence of market forces
Eliminate those problems, and you’d cut the cost of healthcare by 80%, the point at which you would need only catastrophic health insurance coverage, if at all. We’d have enough money left over to stop our federal deficit spending and eventually retire the entire federal debt. According to Karl.
What are examples of an absence of market forces?
- Have you ever seen health insurance companies or hospitals compete on the basis of cost? Doctors rarely do it, either (and only when insurance isn’t involved).
- Have you ever tried to get a firm estimate on the total cost of a proposed procedure before you have it done? Good luck with that.
- The consumer of healthcare services usually isn’t the one paying for it. Your insurance company or the government (e.g., Medicare) is paying. You’ll get no thanks for your time spent shopping around for the best deal.
- Scorpion antivenom costs $100 in Mexico, but if you get it in an emergency department in the U.S., you’ll be billed $40,000 for it. And don’t think you can go to Mexico and stock up then sell it to emergency departments for $150—that’s illegal.
Karl sings the praises of the Surgical Center of Oklahoma. They post their prices up front, work on a mostly cash basis, and eliminate the bill-padding and wasteful bureaucracy of other facilities. Their prices are a fifth of what others charge.
One possible fly in Karl’s ointment is that insurers are exempt from federal antitrust laws per 1945’s McCarran-Ferguson Act. Only a handful of industries are exempt. Karl doesn’t mention that. Nor does he talk about the cost of medical malpractice insurance and defensive medicine, wherein doctors order excessive testing to protect themselves from lawsuits.
I appreciate Karls’ efforts. He’s a smart guy with many good ideas.
Steve Parker, M.D.
For the argument, click through for an article at The Heritage Foundation. A quote:
The United States does not have a private-sector health insurance system, let alone a functioning competitive market for insurance or health services. In fact, the federal government has been the dominant force in American health care for decades, long before the recent massive expansion of the government’s role in the 2010 Patient Protection and Affordable Care Act (PPACA) [Obamacare]. Through overly restrictive policies, Medicare, Medicaid, and tax subsidies, the federal government has dominated the operation of the U.S. health care system for the past half-century. It is primarily federal policies that are responsible for driving up costs and making health insurance unaffordable for so many Americans.
You’ll read how Democrats helped deregulate the airline and trucking industries, leading to lower consumer costs.