How to Solve Healthcare in the US
I don’t think we should provide everyone health insurance. There, I said it. This also means that I disagree with the Affordable Care Act.
I know. I know. What a terrible, and terribly unpopular, thing to say — right? But hear me out.
I don’t think we should provide everyone health insurance because I don’t believe it is the role of society to make individuals — whether they be people or corporations — robust to volatility. All insurance is by definition designed for this purpose.
Instead, society should serve the purpose of protecting the weak/unfortunate while enabling the strong/fortunate to create value; it is not to prevent people from entering into poverty, only to help those who are there. For example, if the sole breadwinner of a family were to die without life insurance the government has no responsibility to compensate that family for their lossed financial security — we are not going to make sure they can still shop at Whole Foods — only to provide them services should they enter poverty.
This being the case, why would society be obligated to provide everyone financial security in the form of health insurance? If you can’t afford health insurance and get diagnosed with cancer then yes that’s catastrophic for you but I don’t think society is any more obligated to help you out than the guy who loses every penny he owns due to a financial crisis. This is because in reducing the fragility of the individual we necessarily transfer that fragility to the system.
If you call a banking institution “too big to fail” their fragility transfers to the system so that when they fail it produces a financial crash which we all pay for. If you prevent forest fires, making individual trees robust against volatility, kindling will pile up so that a spark which would normally be contained will destroy the entire forest. If individual cells in your body aren’t allowed to die off then you do.
We are promoting similar systemic dysfunction by attempting to guarantee the financial stability of individuals, which, by the way, is the majority of what the Act accomplishes since there is not yet any reduction in healthcare spending or emergency room visits attributable to it — this large randomized experiment done in Oregon is evidence.
The Act’s dangerous effect on the system can be seen in the way health insurance companies responded by merging at an alarming rate. It’s a fact that any time there is great centralization there is great danger: if a structure is only held up by a few supports then the loss of any individual support will bring the whole thing down, but not so if there are many supports.
You might argue that everyone has a right to certain basic necessities, and perhaps this is true, but if you’re not willing to provide all necessities to all people at all times, which we’re not because we’re not socialist, then you can’t use this as an argument to provide only one necessity. Besides, even before the ACA we did provide health insurance to the poor and probably always will.
You might also point out the horrible situations where people are dying because they can’t afford to be sick. As terrible as those situations may be, this train of thought sensationalizes the particular; it doesn’t look at the bigger picture and therefore can’t be used to inform policy. However, it does lead into my next point.
The real issue in healthcare is, of course, that the prices are absolutely out of control. Therefore the solution involves bringing down these costs, not paying them for everyone. Two vital components in accomplishing this is to reduce the consumer-level health insurance scope and government healthcare spending.
Let’s get one thing straight: insurance is designed to protect you against the catastrophic, not to pay for your routine services and products such as dental cleanings, insoles, and eye glasses. Notice how your car insurance policy doesn’t help you buy gas and new tires. Part of the reason health insurance costs are so high is because they pay for all of these ancillary things.
If we return health insurance back to insurance in the real sense of the word, which looks like having high deductible policies combined with tax-free health savings accounts, then you’ll see healthcare competition rise and prices fall since consumers will be spending their own money.
Additionally, a key attribute of any market bubble is unrestricted flow of credit which we see in healthcare in the form of near infinite government spending. Parts of the Act are designed to reduce this spending, such as linking reimbursements to patient outcomes rather than services rendered, and more measures such as these must be introduced.
These two broad imperatives — reducing the scope of insurance policies and government healthcare spending — will help reduce healthcare prices through increasing the amount of skin in the game for consumers.
Above all, we should be keen to avoid systemic dysfunction by keeping fragility where it belongs: with the individual.
P.S. I have no idea what’s in Trumpcare yet so I’m not commenting on it.
