Fixing Health Insurance in America

Editor’s Note: Originally published August 2016 at The Roots of Liberty. Slightly edited.

Obamacare is in a death spiral. This was predicted, years back during its conception and inception, by many. It is, today, despite the unassailable reality, being ignored by many.

Those who warned against its enactment (myself included) also predicted that, when it fails, there would be no retrospective laments about how government meddling failed yet again. Instead, we predicted that we’d hear the standard lament of the statist: that government didn’t go far enough in its meddling. This, despite the long history of failure and horror that dogs statism (e.g. the USSR, Red China, Cuba, Cambodia, Chile, Vietnam, Laos, Congo, East Germany, and, most recently, Venezuela), and despite the steady failures of Big Government, including, recently, the $800B “spendulus” that was supposed to fix the economy.

So, while many keep their heads in the sand, many others are now starting to make the expected noises that health insurance in America should be “single payer.” In other words, we should socialize medicine, because, well, Government is Good, and because the rest of the world has done so.

In the interest of brevity, I won’t go into the myriad failings of socialized medicine in all those “rest of the world” nations. If you’re naive, ignorant or tendentious enough to believe that it actually works well, there are mountains of deconstructions available. If you don’t want to be bothered looking for them, I’ll collect them on this blog at some future date.

Today, on the cusp of Obamacare’s demise (one that came far faster than most people expected – we figured it would survive Obama’s tenure, at least), I present the changes (borrowed heavily from John Mackey and others) that would improve health insurance and health care in this country. Do all these things, and insurance will become cheaper, easier and more accessible. Health care will improve markedly, patients will be far better served, costs and inefficiencies will decrease dramatically, and more people will receive better coverage and treatment than ever before.

1 – Level the taxation playing field. Today, employer-provided health insurance is treated as an expense to the employer but is not considered as income for the employee. This means that the money spent by the employer is untaxed. By contrast, health insurance purchased by individuals is paid for with after-tax dollars. This must be corrected. Philosophically, the special treatment should go away, but that’s a political non-starter, so the tax break should be extended to individuals. See #2.

2 – Enable employees of companies that provide health insurance to buy their own policies instead of taking what the company provides. Currently, there’s no way for an employee to tell his employer “give me the money you’re spending on my insurance.” As a transitory measure, the money the employer would spend on an employee’s insurance could be voucherized or deposited in a Health Savings Account, allowing the employee to go out on the open market and buy the insurance he wants.

3 – Eliminate coverage mandates. People should not have to pay for coverage they don’t want, and lobbies for various medical disciplines should not be able to use the force of government to force insurers to cover those disciplines for everyone they insure. This would allow the young and healthy to buy cheap catastrophic insurance. It would also enable the creation of “lifetime” insurance, a la whole life insurance, where you could buy into a policy at a young age and at a price that will stay the same forever.

4 – Use Congress’s proper role as regulator of interstate commerce to lift prohibitions against cross-state-lines insurance purchases. Expand the playing field, expand the market, give consumers more choices, create more competition.

5 – Put consumers back in control of the money paid. Currently, people rarely find out the details of what’s being paid to their doctors by their insurers. Without the consumer managing the payments, there is nothing but the good intentions of regulators to control things. There are multiple ways this could be implemented.

6 – Voucherize Medicare. Introduce competition into the system, since that’s the only thing that effectively introduces efficiency and manages costs.

7 – Eliminate the community rating mandates. The free market can far better figure out how to improve things by rewarding some behaviors and punishing others.

8 – Break from the presumption that health insurance must be a service contract. As I noted in #3, a catastrophic policy would be enough for many people, allowing them to simply pay for whatever basic services they want. This echoes #5. By putting payments under consumer control, we’re less likely to see providers charging $30 for two Tylenol.

9 – Implement tort reform. So much that providers do nowadays is defensive in nature, adding tremendously to costs. Most patients don’t care, because they don’t ever see those costs directly, but their premiums certainly reflect all that extra spending.

These changes, all of them in the direction of liberty and free markets, would do wonders to fix the current system and the myriad things that are wrong with it. They’d finally address the damage caused by the government’s first interventions way back in World War II, damage that included the link between employers and insurance, the pre-existing condition problem, the portability problem, the mandates problem, the state-lines problem, and the lack of access for the self-employed, the unemployed, and the between-jobs people. They’d also better serve the poor, by making insurance far more affordable and by enabling those who help the poor do so far more efficiently.

Why won’t our politicians do all this? Because they don’t trust free markets. Because they can’t imagine giving up control. Because there are countless special interests that benefit from strict control at the greater cost to the whole, special interests that are more important to politicians than the people are. And, finally, because voters have been conned into believing that government can do a better job managing health care and health insurance than free markets can, despite the mountains of proof that free markets are better than central planning. People have been convinced to give up control over this huge aspect of their lives by a hollow and disproven promise that a few best-and-brightest can sprinkle some pixie dust on the health care system in the nation and make it fart out free, high quality care for everyone. They’ve ignored P. J. O’Rourke’s warning “If you think health care is expensive now, wait until you see what it costs when it’s free.”

Obamacare is nearly 400,000 words long. The regulations written to implement it add another 11.5 million words. This essay is 1100 words. Obviously, it’s only a boilerplate, needing substantial fleshing out and codifying into legislation, but it removes government from the mix in a wholesale fashion. That makes it easier, simpler, and far less inscrutable. That’s how government should be. A lighter hand, less meddling, and more trust in people and markets. That’s how to fix things. That’s the way out of our mess.