Keynescare
So the talking point for the past several weeks, and probably for the next several months is Paul Ryan’s budget proposal and his evil, vicious, grandma-killing plan to end medicare, send the poor to concentration camps, spike the punch, and tie little Billy’s shoestring’s together, etc. etc. etc..
Ryan’s plan isn’t bad, at least compared to what we have going on right now. But honestly it’s only a partial fix. Me, I tend to prefer an even more “radical” position. How about we stop letting government interfere in the medical sector and stop distorting prices and the distribution of services altogether? How about that? So, keeping in mind that politically speaking, at least some level of government support and intervention is necessary in medical markets, I present Keynes was Drunk’s EZ Health-care Overhaul Plan.
First off we need to do away with medicare, medicaid, S-Chip and every other government run program. These programs do not help the poor in any way. They merely disguise the way in which the poor suffer. For example the current “Mrs. was Drunk” has Medicaid and several chronic health issues, yet there are almost no doctors anywhere near here that accept Medicaid as a form of payment and the quality of care of the few that do is quite poor. I’d rather set my own broken bones then go to the trouble of finding a doctor who will take Medicare and hope he doesn’t injure me further.
Mrs. was Drunk also pays for Medicaid in numerous other ways including, but not limited to: being priced out of the private insurance market, having lower wages and less job prospects as the government must increase taxes to finance is massive debt which is chiefly entitlement debt, in more costly medical prices as doctors and hospitals shift costs to deal with lower Medicaid compensation rates, and in the costs of having chronic illnesses go only untreated. Oh yeah and also payroll taxes that if she didn’t have to pay she might be able to afford, you know, like, private insurance maybe.
Secondly, states need to quit mandating that insurers provide coverage for this ailment and that disease and the other condition. By forcing all insurers in the state to offer certain coverages, state governments effectively insulate in-state insurers from out-of-state competition while also driving up insurance costs as insurers have to raise premiums to support the new coverage. Is it any wonder why most state markets are dominated by two or three big insurance companies?
Thirdly, government needs to eliminate the tax breaks for companies that give their employees health plans. This has destroyed the individual insurance market, cartelized the insurance industry, and caused untold economic damage. Health insurance must be decoupled from employment and must also become actual insurance again and not a mechanism for transferring costs or a tax-free way of giving employees fringe benefits in lieu of taxed wages.
This kind of plan only works when the economy is dominated by a few very large corporations and unions and when insurance agencies are small and numerous. Maybe that was the case in the 1950s but certainly not today.
In place of all this needless bureaucracy and insane economic mismanagement I propose that we simplify the process for creating a health savings account. Every single person in the country should be able to walk into their bank, open a savings or money market account, and sign a paper declaring it a health savings account. Every person should be able to make annual contributions to this account of up to 10,000 dollars tax free, provided they use any funds withdrawn on medical services. After 5 years of the tax year in which a contribution was made that money, along with any interest accrued on it gets released from the obligation to be used only for medical expenses. In other words if you stay healthy you get a tax break.
Ideally, this will create an environment in which most people will be able to purchase a very cheap catastrophic insurance plan and then maintain health savings accounts out of which they pay normal health costs like doctor’s visits, Rx drugs, emergency room trips, etc.. Because government price distortions are eliminated medical costs should plummet, returning these basic and normal medical services back to realm of affordable prices where they once resided. Once upon a time going to the hospital didn’t entail six figure costs.
But what of the poor who might not have the money to contribute generously to these savings accounts or those who have chronic conditions aren’t covered by catastrophic insurance coverage but who will experience high health-care costs indefinitely? Mrs. was Drunk fits into both these categories.
Well first of all, much of the government largess of the last 80 years has come at the expense of private largess. By removing government from the area of taking care of the poor and unfortunate we create room for private charities, free hospitals, mutual aid societies, and other non-profit, tax-exempt, entities to take root in it’s stead. Welfare is nothing more than fetters of gold upon the poor. Once removed people will find their own, better, ways to take care of themselves. And, generally speaking, developing a network of private charity and mutual aid is good for communities and families. Growth of government inevitably means a decline of community and civic virtue. If you don’t believe me, when was the last time you visited your grandmother in that nursing home that Social Security pays for?
But, as I said earlier, politically there is no really viable way to get the government out of the health-care industry completely. And, indeed it’s not even really necessary that that be the case. As long as government actions don’t distort price signals beyond the normal level of “noise” a little government intrusion is accceptable. So, to that end, I would be willing to support a government subsidy, based on income, to defray high health care costs. Such a subsidy should be fairly generous but used only as a last resort, after the resources of each individuals medical savings account has been exhausted, and such subsidies should have to be partially repaid, if ever possible, and closely monitored for fraud.
Such a plan would finally allow the markets in the health-care sector to function properly. Insurance would return to it’s traditional meaning: a hedge against risk, and no longer be a system for shifting around and dispersing costs. A lot of needless bureaucracy would be done away with both in the government and private sector dealing with insurance claims and administrative work. The current system, where people have little incentive to save for medical costs would be reversed and people would have plenty of reason to save and to keep themselves healthy. Nearly everyone would have access to catastrophic health insurance which would become essentially like a commodity and be very cheap. Consumers, bearing the true costs of health care, would force prices down and encourage a more efficient allocation of medical resources. And the poor and chronically ill would find new avenues open to them when once only the dismal hell of government health insurance was their only choice.
In short, effecting a programme along these lines would utterly transform the health-care industry for the better and most Americans would probably find a programme like this to be perfectly reasonable. Yet what politician, of either party would ever dream to propose such a plan? Come on Paul Ryan, if they’re going to clobbber you anyway you might aswell get clobbered for something good.
