I wasn’t going to write another post about health care, as I’m sure that I’m not the only one who is tired of the endless back-and-forth on the subject. But then I happened to read this amazing article in The Atlantic by David Goldhill. I am declaring it required reading for anyone who wants to really understand the issue of health care reform.
Goldhill is that rarest of breeds, a Democrat with an industry-based understanding of economics. Thus, he succeeds in doing what most Congressman and Senators who will vote on health care reform will never do – understand exactly what is wrong with our current health care system. Don’t be fooled by the misleading title of the piece. I initially feared it was going to be a polemic fueld by anger and grief over the death of a loved one. In fact, the death of Goldhill’s father serves only as introduction and context to explain how and why Goldhill got to spending so much time thinking about health care reform.
Essentially, Goldhill argues that our current insurance system, heavily regulated and subsidized byt the government through Medicaid and Medicare, is responsible for driving up costs and suppressing the competition that would bring them down. It distorts the normal function of a market economy by making the insurance company, or the government the consumer instead of the patient, thus hiding the true cost of care from the beneficiary and further distorting the patient’s decision making. And the result is shared economic ruin:
“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.
It’s no different for families. From 2000 to 2008, the U.S. economy grew by $4.4 trillion; of that growth, roughly one out of every four dollars was spent on health care. Household expenditures on health care already exceed those on housing. And health care’s share is growing.
By what mechanism does society determine that an extra, say, $100 billion for health care will make us healthier than even $10 billion for cleaner air or water, or $25 billion for better nutrition, or $5 billion for parks, or $10 billion for recreation, or $50 billion in additional vacation time—or all of those alternatives combined?
The answer is, no mechanism at all. Health care simply keeps gobbling up national resources, seemingly without regard to other societal needs; it’s treated as an island that doesn’t touch or affect the rest of the economy.”
The type of reform currently being debated will not solve any of these problems. Instead, Goldhill proposes to do away with comprehensive health insurance completely. All medical care will be funded in one of three ways: 1) Routine medical care will be paid for out-of-pocket by the consumer, in a market where costs are lower because of competition and wages are higher because workers aren’t paying for everyone else’s sniffles through taxes and premiums; 2) Predictable major expenses will be funded by mandatory health savings accounts, with workers allowed to borrow against future contributions; 3) Truly unpredictable, large-scale expenses will be paid for by a uniform, nationwide standard program of catastrophic health insurance, subsidized by the government for the poor.
I am not necessarily happy about the mandatory nature of some of these items or the role of the federal government in administering them. But it is impossible to argue against Goldhill when he says, “It will do a better job than our current system of controlling prices, allocating resources, expanding access, and safeguarding quality. And it will do a better job than a more government-driven approach of harnessing medicine’s dynamism to develop and spread the new knowledge, technologies, and techniques that improve the quality of life. We won’t be perfect consumers, but we’re more likely than large bureaucracies to encourage better medicine over time.”
Whether you agree or disagree with Goldhill, it’s important to understand the nature of his argument. Please read his essay. Read the whole thing, I know it’s long, but there is too much important content that I can’t summarize here. Heck, print it out and take it to the beach with you. It will probably be the most educational and important thing you’ve read in months, including all of my bloviating 🙂 By the time you’re done, you will be better educated on health care than most of the people who will eventually vote on it. In fact, I’m going to e-mail my Congressman and Senator a copy, too.
Sanity Injection 