Seriously, I love competition and market-driven solutions, but if you get shot you don’t have time to compare your choices and pick the most efficient hospital.
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You want competition? Let’s try to compete with some of the public systems that work, let’s compete toward making it more cost-effective to do business in America.
My response:
This is the typical rhetorical device used in these arguments. You justify the third-party payment system for normal health care by taking a catastrophic event and say that it needs to be covered by a third-party payer.
What we call “health insurance” in this country is really two things. First, it is guard against catastrophic medical events, and it doesn’t do a very good job at this because it’s not a true insurance product (see next point). Second, it is a stupid third-party payment system for normal, predictable, elective medical events. What is the value-add for me to pay $x/month to a third-party which then pays about 30% less than $12x/year to my health care provider for my annual physical? There is no value-add because there is no reduction of risk (which is the point of the premium on insurance).
If you want to solve the price inflation problem, you need to do two things. First, you need to separate catastrophic medical event insurance into its own insurance product, and you have to have individuals pay directly for predictable health care items, some of which will allow for lower premiums on their catastrophic insurance because they are correlated with lower chance of catastrophe (just like how your car insurance works). Second, you must remove the tax credit on health “insurance” premiums. This is always marketed as a benefit to the consumer, but it is not; it is a benefit to the insurance industry because their premiums are cheaper to the consumer without affecting the insurance industry’s profit margins. This effectively increases demand without them lowering their prices. It’s a brilliant way for them to rake in the cash.
