HEALTH CARE FOLLIES

Robert J. Samuelson continues to hammer President Obama (justifiably, in my opinion) for his failure to speak truthfully about the costs of his health care reform proposals.

What is most frustrating about the debate is the unwillingness of so many people to recognize that we already ration health care on the basis of price (which is how we ration so many things in our capitalistic society), but the rationing of care on the basis of price is made infinitely more complex than other transactions because of the presence of a third-party payer (the insurance company, or the government insurance program), and the fact that the third-party payer is chosen for most of us by yet another party, our employer, or the government. When I need a plumber to fix the pipes in my home, I call one, he gives me an estimate, if I don't like it I can haggle, or call around for a better price, or I can just hire him and pay him when the work is done. When the plumbing in my body needs fixing, I go to a primary care physician, one I picked from a list of such providers that my employer's insurance company chooses for me, he diagnosis the problem and either sets a course of treatment, or refers me to a specialist for treatment. I pay a small portion of the bill for his services (a co-pay), but the majority is picked up by the insurance company. I don't haggle with him about price, nor can I shop around for a better price. The plumber who fixes my house plumbing is in competition with other plumbers in his area, but he also has lower overhead because he does his billing directly with the customer. Thus, his prices are kept in check. The doctor's fees are kept in check only by the third-party payer, not the customer directly. It is the complexity of this system (and I haven't even addressed the doctor's insurance costs, his overhead, the cost of his training, the amount he spends on handling the paperwork for patients covered by various insurers or the government, etc.), along with the increasing expense of more technologically driven care (more MRIs, more drugs, etc.) that causes our health care costs to continue to rise, without any of the direct market restraints provided in other areas of our economy by consumer behavior. Add to this the fact that, unlike my house plumbing, I'm much less likely to be able to live without fixing my internal plumbing (if it can be fixed) for any extended period. So health care costs rise, the people who are really paying most of the bill (the insurance companies, the businesses that buy those insurance plans for their employees, the bureaucrats who run the government insurance plans, and the representatives of the taxpayers who pay for them) resist paying for services they don't get directly, and thus the tug-of-war between the providers and the payers, with the actual recipients of the services (you and me) caught in the middle.

Wouldn't it make more sense to simply let individuals pay directly for the medical services they receive, and buy insurance plans to cover them for the more expensive services? Wouldn't it make sense to get our employers out of the business of covering our health care, and the government too, for that matter, except for the most destitute among us? Wouldn't that re-establish the relationship between the providers of the service and their customers when it comes to paying for the services?

Perhaps that just makes too much sense to ever come to pass.