The Health Care "Crisis", Insured Stupidity, et all

Why is health care so expensive? Paradoxically, it’s because it’s so cheap! We are grossly over-insured when it comes to health care. This is largely due our managing to shift the cost of our health insurance to others (employers and the government). We perceive a “free lunch”; so why not make it steak and lobster? But there is no “free lunch”, there never is.

Can you imagine the cost of auto insurance if it had to cover our vehicles as comprehensively as our health insurance covers our bodies? It would have to cover routine maintenance, fuel costs, minor repairs, all normal wear and tear, on top of any catastrophic damage. And how well would we care for our cars if insurance paid for all of these things? What would happen to the cost of an oil change if we were all free to demand synthetic oil and super premium filters for a mere $15 out-of-pocket co-pay?

I’ll bet you could never sell such a stupid idea to your employer. Only the government could push such an economically ignorant plan. Of course this was a logical response at its inception to another stupid government plan, Wage & Price controls. Since employers couldn’t raise wages to attract talented people, when the IRS ruled that employer provided health care insurance was tax deductible, employers turned to this form of Other Compensation. Now they’re stuck with it and face the prospect of being forced farther down this road with plans like Mitt Romney’s, requiring them to provide it whether they want to or not.

I talked to a friend yesterday, who has been without health insurance for some time. What strikes him as particularly surreal is his doctor’s inability to determine what amount he owes him for his services in cash on the day of service. He has no idea what the drugs he prescribes, the procedures he recommends, or the tests he requests, will cost my buddy. He can’t even price his own services. He is utterly clueless about the cost structure of his industry, and has little incentive to find out. The consumer can’t shop around, because the system is so dysfunctional.

I'd also like to touch on the “right” to health care. I know several newly minted physicians. One of my best friend’s sister is getting ready to start her residency requirements. I’ve met her roommates and classmates, aspiring doctors all. They are all superlative people. I’ve never met a better group of people. By what “right” do we propose to take the fruits of their long years of sacrifice and dedication to education? Don’t they have a right to the well deserved benefits accruing to their astronomical investment of time, effort and money? Do we really think these intelligent people will not respond to having their services hijacked in the name of manufactured “Rights” by those unwilling and unable to do what they do? Anyone capable of becoming a doctor is capable of becoming just about anything else they might choose. Creating a powerful disincentive can only be counterproductive in the long run.

The latest wrinkle in this long sad tale is the “New” idea of socialized medicine. The same people that have screwed health care up now use its being screwed up as justification to further screw it up. You know, because the government is just so efficient at running things like education, mail delivery, issuing licenses, and all the other many wonderful things they do. To paraphrase Dr. Thomas Sowell, “Why do those that think health care is expensive now think it will somehow be cheaper after we add a layer of government bureaucracy to it?”

Give individuals the money and access to health insurance. Then they are the paying customers. If an insurance company gives poor service, consumers can take their business to another insurance company. If a doctor charges too much, they can shop around. If the consumer demand existed for up front pricing, it would be available. Suddenly a $5,000 deductible doesn’t sound out of line, does it? Maybe if we had to shell out the $1,000 for a MRI, we’d be more amenable to the $300 CT Scan instead. If we all had to pay for our own insurance, the incentives would straighten things out in pretty short order. If health insurance worked like home owner’s insurance or car insurance, everything else would start making sense, too. The answer isn’t more government. The answer isn’t forcing employers to absorb the costs. The answer isn’t to confiscate the services of doctors. The answer is to return the costs and responsibilities to the consumer and let the magic of the invisible hand make things right again.