I had meant to write several days ago about the terrifying health care bill making its way through the Massachusetts legislature at an alarming speed.
Fortunately — of all papers! — the USA Today has given it a good start (link).
Although the goal of universal access to health care is laudable, this bill only entrenches a misguided, 60-year-old employer insurance system, in which medical consumers are almost completely shielded from the real costs of their treatment — especially the taxpayer-subsidized plans, with zero deductible. There are few or no direct incentives for people to control their usage of the medical system. It’s a market with infinite demand and finite supply, and the only people who feel direct price pressure are the taxpayers and the uninsured.
In theory, consumers eventually feel the pain of rising health care costs via their insurance premiums (and taxes) but in practice of course most don’t. Just as mandatory income tax withholding has made high tax rates more palatable by preventing employees from ever seeing the money in the first place, employer health care insurance has had the same insulating effect. In 2005, the average premiums for family health coverage eclipsed the gross earnings for a full-time, minimum-wage worker. Did your employer ask how you wanted to spend that $10,800 per year? How many of you actually know how much your health insurance costs? Now that you know, do you still feel that it’s a good value? Do you know what your alternatives are?
And many people, when faced with the realization that they’re paying almost $11,000 this year for insurance, see no reason not to take full advantage of any available services, whether they need them or not. For virtually no incremental cost, one can order an $1800 suite of diagnostic tests. In this perverse market, neither doctors nor patients ration themselves. Hospitals are incentivized to do — and charge — as much as the insurer will allow. Patients, given the option of more thorough or expansive care at no extra cost, would be foolish not to make use. The system is designed to fail.
The Massachusetts bill does nothing to control costs. The politicians hope to add millions of people — even those of us who don’t believe in this system — to the rolls of state-approved insurance plans. Now free from financial responsibility, those people can make unbounded demands on an already overloaded system. After all, they’re not paying for it.
Some current projections point to national health care spending reaching 20% of GDP by 2015 (link). I wonder how high that has to rise before people abandon the idea that all citizens can have their wildest health care fantasies come true.