Thursday, April 22, 2010

Health Costs

We're not done yet because the battle over the future of health care has only just begun. If Republicans really meant what they said in the pre-Obamacare debate, then it's possible that we could see wholesale changes in the law. I certainly wouldn't be opposed to repeal, but the politics of it all is troublesome- the thought of future Democratic and Republican Congresses doing and undoing would be problematic for both consumers and businesses.

But now that Obamacare is in the pipeline, I've seen most of the intelligent discussion over the future health care resolve around costs - And it's an issue I wish we had spent more time on before. So much of the discussion leading up to the passage of Obamacare revolved around the cost to taxpayers in terms of tax dollars, with little attention paid to the costs to taxpayers as consumers. From some voices on the left I've heard that the new legislation will help to reduce costs, but other voices (I'm thinking specifically of a podcast I listened to from the Economist) think that the cost cutting measures truly needed in the United States have only been delayed.

As I've been thinking about the issue of health care costs over the last couple of days it occurred to me that the entire premise of this debate is wrong .. or at least, misguided. After all, why is it so important that we reduce health care costs? From an individual perspective, we should pay for as much health care coverage that we as individuals find valuable. And even taking the point of view of society as a whole, the value of this nebulous concept of health is potentially limitless. After all, would 17% of GDP (or 30% or 40%) sound like too much money if all that money covered cures for cancer and a significantly better quality of life for all Americans? As I said, I'm just not sure we can put a cap on the value of health.

But even if your goal is to reduce health care costs, I can't possibly see how those costs are going to be reduced through bureaucratic top-down regulation. There are two ways I see to reduce costs, and those are 1- literally ration care from the top down or 2- make individuals responsible for their own health care decisions and health care spending. A true market-based systems allows individuals to make decisions about their own health care spending. A single payer system leaves those decisions to the government to make for society as a whole. But the system we have in the United States hides costs in layers upon layers of bureaucracy, hiding costs from consumers and the new legislation only entrenches the third party payer system and serves to further hides costs. For those who doubt the idea that government is moe powerful than private industry, consider this: It would be relatively easy for the government to mandate lower costs from health care providers. If they did, the system would have to adapt. But private insurers don't have this power. There's enough competition between insurance companies to ensure that no one insurer can mandate health care providers lower costs. So what am I saying? God help me, but I wonder if single payer (or better yet some sort of public option-private hybrid) would have been preferable to what we're saddled with.


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