Better Healthcare: Free-market Solution Would Lower Insurance Cost

Son: You said you had some healthcare solutions.

Dad: Unfortunately, solutions take time and the political will to sell and implement them. I'm not sure politicians have the will to do that. They think they get votes by promising more, not in curtailing costly entitlements. The only healthcare plan that would please everybody is the one that the other guy pays for. A lot more is said about solutions than is actually done! With that said, there are things that could help.

Son: Like what?

Dad: We're required to show evidence of insurance to get a drivers license. We should be required to show evidence of major medical insurance coverage when we file our income taxes. To help offset the cost, give a tax deduction for most and tax credit incentives for the poorest Americans.

Son: You said insurance costs too much.

Dad: A major medical plan would cost less because it would only pay when treatments are very costly. With everyone having to purchase a plan and companies competing for the business, the price would come down. Like with utilities, you'd also need a commission to keep insurance company profit and coverage parameters reasonable.

Son: Why would insurance companies cover people they won't now?

Dad: All would be required to cover all citizens without exclusions. Like the successful Swiss plan, we'd establish a national high-risk fund that all insurance companies contribute to that protects companies from suffering heavy losses in any given year.

Son: Would employers still provide a healthcare benefit?

Dad: We should phase out reliance on employer-based insurance and get the people making the choices on their own doctors and health insurance. The money corporations spend now for healthcare should pass to employees in higher salaries. The added income would be offset by the tax deductions all Americans could take.

Son: Why is that better?

Dad: Now, six-out-of-seven healthcare dollars are spent by third parties. Those consumers don't benefit from cost-consciousness. Market forces work when people make the choices. Milton Friedman used to say, "No one spends other people's money as carefully as he spends his own." Competition has already worked for elective procedures-for facelifts, breast enhancements, hair grafts-those prices keep coming down because they're not covered.

Son: I wouldn't know.

Dad: You know about eating! When something's free, you waste more. Would you eat more at an all-you-can-eat buffet or if I gave you a $20 bill and the choice of ordering off a menu and keeping the change? When your choices make a difference in what you keep, there's incentive to not overeat. We need that in healthcare.

Son: How would people know which insurance to buy?

Dad: Like Romney's Massachusetts plan, a marketplace resource can be created that gives people access to more choices, better information, and lower costs in selecting their health insurance plan. You can go online and search for the best price on almost anything. Why not healthcare insurance? Shopping for the best policy would lead to lower prices. No matter what qualified policy you choose, by owning your own policy you wouldn't have to worry about losing your coverage when you change jobs or if a company goes under.

Son: What if there are a lot of bills to cover?

Dad: To help save for those occasional big bills, enact and encourage health savings accounts. People can set aside money, tax free, in accounts to be used for medical expenses not covered by insurance. They exist at the federal level and in 48 states - but not California. You can ask our Democratic state legislators why.

Son: For those who don't have savings?

Dad: We don't need doctors for everything. In some states nurse-practitioners can open clinics to treat colds and other minor ailments. In California, they can have independent practices but need an MD to sign their protocols.

Son: I have good health habits; I don't need much care.

Dad: You're right. In Switzerland, a healthy lifestyle saves you money on premiums. People might care more about their fitness and weight if they experienced the benefits-a higher quality of life and lower healthcare costs.

Son: Would you cover medications?

Dad: Yes. Medications may be expensive, but they're often the treatment of choice and help us avoid more expensive, invasive treatments. It should be covered, but we should avoid price controls. Controls destroy the incentives for creating new drugs. The high cost will also keep people focused on using generic drugs and avoiding unnecessary medications.

Son: Anything else?

Dad: You could add national tort reform to help control frivolous medical malpractice lawsuits, standardized forms and digitized medical records to cut down administrative costs and increase efficiency, and, of course, a shared database of healthcare best practices.

Son: Dad, all this ain't going to happen.

Dad: You're probably right. It's not bad enough yet. Right now, "Free" healthcare can still be sold to people naive enough to believe healthcare can be paid by someone else. It won't last.

Byline: Dr. Terry Paulson is a psychologist, speaker, author and host to the politicaltalk.org Blog. The column first appeared in the Ventura County Star, December 10, 2007, p. B-6. Contact him at terry@terrypaulson.com.

Comments

[WrenryGerware]

Good for people to know.

[Zimri]

Well written article.