Jan 8, 2017 0
Kevin Williamson puts some reality on the Health Care Issue: The Health-Care Double Bind in National Review
The way to cut this Gordian knot is to treat insurance like insurance.
Insurance is not a way to pre-pay for health care, though we insist on treating it as though it is. Properly understood, insurance is not a health-care product at all: It is a financial product, the purpose of which is to mitigate the risk of incurring large and unexpected costs, whether that is damage to an automobile (your car insurance does not pay for oil changes) or health-care costs. It is necessarily prospective, which is to say, forward-looking. No one can say whether you’ll have a heart attack tomorrow or get brain cancer in 20 years, though our actuaries are really very good at determining how many people out of a million will have a problem like that in any given year, and what it will cost to treat them. But we insist on trying to bend insurance into a retrospective product, as though it were possible to play the odds on something that already has happened. So long as we try to push off the obligation for paying for preexisting conditions onto financial firms — which is what insurance companies are — we are simply using those companies to launder health-care benefits that are in reality publicly financed, in part or in total.
It would make much more sense to do the opposite of what the pollsters would advise: Keep the unpopular mandate — strengthen it — and do away with the popular preexisting-conditions rule, replacing it with stronger regulation protecting people with insurance from losing their coverage once they become sick or grow old. For the people without coverage? Medicaid stinks, but in a reformed version it is the most obvious solution, a way to pay directly for health-care services rather than paying insurance companies to pay for services, as though putting a financial middleman in the equation were going to improve things.
Ultimately, health-care reform that treats insurance as insurance means that Americans will simply pay out-of-pocket for most of their medical needs, with insurance in most cases picking up the cost of catastrophic accidents and illnesses. Empowering consumers to do this means creating a real market with real prices, which simply does not exist now: Try getting three competing quotes on a 2017 Honda Civic and then do the same with an appendectomy and see which market has real prices. That will be a long and difficult reform project, one that will not be achieved through a single piece of legislation, or indeed through legislation alone.
If the underwriting no longer segmented the high risk from the normal pool the cost would be mitigated. Perhaps normal rates would rise 20% and the high risk could be insured, but they still must acquire the coverage. I suggest vouchers for the poor, but for those who can afford coverage and then choose not to – there should be consequences.