from John Cochrane at The Hill, Here’s what healthcare looks like in a perfect world:
It’s wiser to start with a vision of the destination. In an ideal America, health insurance is individual, portable, and guaranteed renewable. It includes the right to continue coverage, with no increase in cost. It even includes the right to transfer to a comparable plan at any other insurer.
Big cost control comes from the only reliable source — rigorous supply competition. The minute someone tries to charge too much, new doctors, clinics, hospitals, and models of care spring up competing for the customer’s dollar. Access to health care comes like anything else, from your checkbook and intensely competitive businesses jockeying for it.
he original sin of American health insurance is the tax deduction for employer-provided group plans — but not, to this day, for employer contributions to portable individual insurance. Insurance then became a payment plan to maximize the tax deduction. It became horrendously inefficient as people were no longer spending their own money.
Worse, nobody who hopes to get a job with benefits then buys long-term individual insurance. This provision alone pretty much created the preexisting conditions problem.
Cross-subsidies are a second original sin. Our government doesn’t like taxing and spending on budget where we can see it. So it forces others to pay — it makes employers to provide health insurance. It forces hospitals to provide free care. It low-balls Medicare and Medicaid reimbursement.
The big problem is that these patches and cross-subsidies cannot stand competition. Yet, without supply competition, costs increase, the number of people needing subsidized care rises, and around we go.
The illusion that market forces do not work in health care is nonsense, We have spent decades subverting market forces and then declare that it does not work. The problem with our health care is that market forces only work too well, and the system has responded to the adverse incentives created by poorly analyzed and poorly executed solutions. If you pour money into a market, mandate an increase in demand, restrict the supply and reduce competition, then you will get the mess we have.