We have seen the enemy, and it is us

medical insurance scam.jpgThe Washington Post’s Robert J. Samuelson has seen the problem with the American health care finance system — it’s us:

Americans generally want their health care system to do three things: (1) provide needed care to all people, regardless of income; (2) maintain our freedom to pick doctors and their freedom to recommend the best care for us; and (3) control costs. The trouble is that these laudable goals aren’t compatible. We can have any two of them, but not all three. Everyone can get care with complete choice — but costs will explode, because patients and doctors have no reason to control them. We can control costs but only by denying care or limiting choices.
Disliking the inconsistencies, we hide them — to individuals. We subsidize employer-paid health insurance by excluding it from income taxes (the 2006 cost to government: an estimated $126 billion). Most workers don’t see the full costs of their health care; a reported Bush proposal to add new tax subsidies would magnify the effect. A similar blindness applies to Medicare recipients, whose costs are paid mainly by other people’s payroll taxes. Despite complaints about rising co-payments and deductibles, out-of-pocket costs are still falling as a share of all health spending. In 2004, they were 12.5 percent; in 1993, they were 15.8 percent.
We’re living in a fantasy world.

Given our inconsistent expectations, no health care system — not one completely run by government or one following “market” principles — can satisfy public opinion. Politicians and pundits can score cheap points by emphasizing one goal or another (insure the uninsured, cover drugs for Medicare recipients, expand “choice”) without facing the harder job: finding a better balance among competing goals.

. . . [Thus] the real problem is us. We demand the impossible. The changes we truly need are political. We need to reconnect people with the public consequences of their private acts. We should curb the subsidization of private insurance. Medicare recipients, especially wealthier ones, should pay more of their bills. But these changes won’t happen because people don’t want to see the costs. We don’t have the health care system we need, but we do have the one we deserve.

Mr. Samuelson is spot on, so read his entire piece. My sense is that making care available to people regardless of income is an achievable goal, although American society will probably always struggle with the problem of inducing an optimal number of citizens to take personal responsibility for preventive care. But what really makes health care finance reform difficult is the political preoccupation with keeping citizens insulated from the true cost of health care through providing subsidies in the guise of health “insurance.” Until that changes, Samuelson is right — politicians will continue to play political football with the perks of the existing disjointed health care finance system without facing the knotty problem of balancing the competing goals of a well-conceived system.

3 thoughts on “We have seen the enemy, and it is us

  1. The real problem with health insurance is that it is not insurance. If fire & casualty insurance worked in the same way health insurance works, you could replace the carpet in your house, or paint the walls, and pay only a modest deductible.

  2. ìMost workers don’t see the full costs of their health careî
    That is because they are oblivious to reality. An employer is only going to pay so much for the employeeís services. Any money directed to oneís health insurance will simply be taken out of the gross earnings. General Motors inadvertently did a tremendous amount of damage by providing health insurance to its employees. They did this solely to get around the nationally imposed price and wage controls. This well meaning con game unfortunately continues to this day.

  3. As a taxpayer just under age 40, I can’t help but think that this will all turn out very badly for my age co-hort. By the time I reach retirement age, I fully expect that these bloated government programs won’t exist any longer.
    On the other hand, I will have spent a lifetime paying into a system I had no reasonable chance in participating myself.
    The last time I got one of those Social Security statements in the mail, I wanted to scream. All that cash, which I had been paying into the system since I was 16 would have looked like a nice little nest egg had it been in a 401K or an IRA. Instead, Uncle Sam just spent the cash, and I’m sure to be left holding the bag.

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