Health Insurance Revisited

So my father-in-law and at least one friend have asked me to explain why I feel that Obamacare will wreak havoc on the health care system as it currently stands. I have also been asked to explain why I believe a capitalist-based system would be better. So, in my very non-professional, non-expert, and very biased way, I shall attempt to do so.

First: why is Obamacare so bad? I have a number of reasons. Here they are, in no particular order:

1) Pres. Obama's plan is to force employers to provide health coverage for all of their employees.

Those employers who have small businesses with a certain number of employees will be exempted from this requirement. Individuals who work for such companies, or work in jobs that do not provide coverage (because the employee is part-time, etc), as well as those who are below a certain income threshold, will be able to buy into a government-run plan (that is somehow different from Medicaid, although I am not sure how).

What is the result of these plans? Businesses will plateau growth in an effort to bypass the requirements. Health care plans are very costly, especially for smaller companies with limited cash flow. So, to avoid having to pay into these plans, employers will simply stop hiring at the threshold that has been set.

2) The new plan will be paid for by taxing those families/individuals that make over $350,000 a year (the so-called "rich").

It should be pointed out that business owners include their companies' profits in their own personal income statements. So the idea is that anyone with a lot of money can afford to pay for others' health care. This is totally a Robin Hood mentality of taking from the rich to provide for the poor. Of course, most people make less than $350,000 a year, so they won't have to worry. But what about those who make just a little bit less than that, but have growing companies with growing profits? If they cross that magic threshold, suddenly they are the ones paying. The solution? Artificially stifling growth to keep the income below that threshold. Of course, stifling growth will stifle expansion, which means hiring fewer people, or even putting a freeze on hiring. This is problematic, though, since not being able to expand and hire more people isn't really a great way to get out of a recession.

3) A government-run plan is a terrible solution.

If you look at the news lately, you won't find much that is positive about government-run programs that involve lots of money. Social Security is on the brink of bankruptcy. Fannie Mae and Freddie Mac were major contributing factors in the financial crisis. The debt is reaching its limit, and the deficit has been skyrocketing for about a year now. Our government, to put it simply, has a terrible track record when it comes to fiscal responsibility. And I don't blame any political party for this. The Republicans claim to be fiscally conservative, but, since Pres. Bush, this has not been the case. At least the Democrats don't lie about wanting to spend all of my money. We have two parties that, as my father-in-law likes to put it, are the same child of two different mothers. Both act like Robin Hood, and believe that stealing from the rich to give to the poor is a good idea. Never mind that the wealthiest people in the world contribute the most to charities, provide the most jobs, and build the most homes. They have money, therefore they must be evil! The ideal seems to be a society of middle-to-low income earners. So much for the American Dream.

Yet, somehow, we are supposed to trust this same government to provide the money to guarantee that my doctor will give me the best possible care, because someone is going to pay him for that care. I sincerely doubt it. I see a future in which doctors will do the bare minimum because that is all they are getting paid for. Thus, we find ourselves ALL receiving sub-par care, instead of 250 million people happy with what they have.

There are more reasons, but I have to leave for work soon, so I'd like to discuss some of the solutions I see, which is my part two.

1) Why are health care costs so high?

Health care is expensive because malpractice insurance is expensive. Malpractice insurance is expensive because we live in a sue-happy society in which every slightest mistake can result on a multi-million dollar verdict against he who erred. Someone has to pay those premiums, and it isn't going to be the doctors. So we have malpractice insurers charging doctors huge amounts so that the insurer can pay the punitive damages. The doctors pass these costs on to the patients, who rely on their own insurers to pay the bills. The bills are going up, so the premiums go up. Somebody somewhere has a lot of money but it isn't me, and it isn't my doctor, so it must be the insurer. Well, actually, no, it is probably the lady down the street who sued her doctor because she got the flu and he didn't tell her to not run around licking bus hand-holds.

The solution? Cap tort claims. Stop the barrage of inane lawsuits and restore accountability to the individual. Tort reform will work wonders in lowering the costs of care.

2) How will a free-market approach make things better?

I am a firm believer in a truly free market. I abhor the idea of government regulations. I believe that many of the problems facing businesses today can be traced to government meddling. However, if the health care industry was left to the devices of the free market, we would see quite a few changes.

Companies would be competing with each other to provide the best possible benefits at the best possible price. There would be a range of options available. Every provider would have a "base plan" that provides for the basics of health care: routine visits, emergency care, immunizations, hospitalization, basic prescription medications. Then there would be the middle plans, that cover all the basics, plus some extras, such as a wider variety of prescription medications, specialised care (such as visits to the ENT, ob-gyn, etc). Of course, there would also be the premium plans, that would cover everything and anything. Costs would be on a rising scale. You want premium care? You pay a premium price. You just want the basics? Okay, it won't cost as much. But there is something for everyone. What about those who are willing to risk that they will never get too sick? Well, they can pass, if they wish. But if they suddenly find themselves severely ill, they should have to pay more for emergency coverage.

Much like Wal-Mart carries an array of items with varying levels of quality, your insurance provider would do the same. But, just as Wal-Mart, Meijer, and Target are in stiff competition to offer the best price for everything, the insurance companies would do the same. Prices would stabilize, but some companies would be known for having the "better" plans. So they would succeed. The companies that are charging too much for too little would falter and fade. But the industry would survive.

3) Allow for the interstate trade of health insurance. If the government really wants to see competition within the industry, they would let people pick from any of the health insurance providers in the nation. Instead, there is currently a block on interstate trade, so that, as an individual who works for a company based in Illinois, I can only buy health insurance from an Illinois provider. If companies could trade across state lines, there would be more competition.

In summary, I agree with the premise that we need to reform our health care. And I agree that we need more competition. I disagree with the proposed methods of reform, the suggested ways to create competition, and the plans for taxing the rich to pay for it all.