Will private health care remain available?
Topics: Health
17 Sep 2009
From: Ervan Darnell
I see that the current Senate bill tries to pay for parts of itself by
taxing drugs, insurance, and medical devices [1]. That's a curious
way to cut costs. The bill already stipulates what must be covered
and what kinds of discretion in pricing are allowed "tobacco use, age,
and family composition." and nothing else, and even those have tight
bounds set by legislation. Pre-existing conditions must be coverd as
well. There is no product left to compete on, no room for insurance
to ration health care in a vaguely sensible fashion, and no individual
incentive to avoid dangerous behavior (except smoking, apparently
smokers are one minority it's still okay to attack). The government
has specified exactly what insurance must look like (especially if the
Boucher plan of taxing better plans stays).
One of the questions I've had in this is whether or not people will be
allowed to buy better medical care. As I argued previously, the
Boucher plan makes it increasingly difficult to buy your own good
insurance. That still leaves open the possibility of buying the
medical care directly (but not insurance). In a way, this is almost
better, if it were allowed to exist. The government stiuplated plan
is crap, it's de facto impossible to buy insurance outside of that,
and everyone gets used to just buying their own health care out of
pocket.
But there is a trap here, if insurance is to be taxed to pay for
medical care (a ridiculous idea on its own merits), then not buying
insurance becomes ever more rational. It's already rational to not
buy insurance to the degree that insurance is forced to cover diseases
one is not at risk for. Buying your own medical care skips part of
the tax. The government will be incentivized to prohibit buying
health care outside of the insurance system. Well, the current plans
force everyone to buy insurance (or be on Medi*), so in a way that's
just a tax to pay for the system. Maybe it will stop at that, but the
incentive is in place for individuals to consume unregulated medical
care as approved medical care will be ever more expensive because of
the built-in taxes and the incentive is in place for the government to
further regulate delivery to prevent people evading taxes.
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p. 213-220 of http://finance.senate.gov/sitepages/legislation.htm
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