Uwe Reinhardt posted this insightful Economix post last week in which he bores in on the key issue to be resolved in reforming the U.S. health care finance system:
I could easily offer every American family a health insurance policy it could afford, simply by varying judiciously the annual deductible, the coinsurance rate, upper limits on items ostensibly covered by the policy and exclusions from coverage of sundry services or products ó for example, mental health services or certain specialty drugs.
The policy might be a sham; but it sure would be cheap.
Health insurance is just a means by which needed health care can be made ìaffordableî to Americans when they fall ill. Therefore the proper target of health policy should be the familyís total outlay on health care, including out-of-pocket spending. That total outlay on ìneeded health careî should be made ìaffordable.î
Which requires us to define concretely, for practical purposes, what we mean by ìhealth careî and ìaffordable,î pedantic as that may sound. Politicians should be forced to be utterly clear about it. [. . .]
President Obama could make this idea practical by using a visual device such as the table [above]. In that table ìdisposable incomeî is defined as all personal income from whatever source minus all personal income tax payments and other government deductions. The numbers are annual. . . .
Professor Reinhardt makes a good point about the disingenuous nature of health insurance. As I noted here, most forms of health insurance ñ particularly the employer-based kind — insulate consumers from understanding the truce cost of their health care choices. As a result, most consumers ñ and virtually all legislators in Washington ñ have no idea on what amount of health care costs are ìaffordable.î Most insureds are pleased that someone else is footing the bill and simply donít want to lose that perk.
Health insurance is largely the product of bad governmental policy (wage controls during World War II) and, as is often the case with such policies, there are unintended consequences that are even worse than the misdirected governmental policy. In this case, we have two generations of Americans who have been largely insulated from needing to know the true cost of some of their most fundamental choices and needs in life.
Such ignorance is now hindering reform of the fractured U.S. health care finance system. But any health care finance reform that does not rely at least in part on reigniting a consumer market to control costs will likely be even more expensive and less satisfying than the current system.
a non-sham, inexpensive policy could be constructed in a single afternoon in a smoked filled room full of a few knowledgeable people. this would require that we, as a people, agree not all of us will receive the same care. for years, professor rheinhardt, a knowledgeable person, has enjoyed various high-visibility platforms from which to offer such pragmatic leadership and for as many years he has failed to do so. a bright fellow, he would probably best help the effort by never writing about it again. ts
Man, you MUST be kidding. Since when did we get to have any input on how our health care is managed?
I don’t know, J.D. I have an HSA for my family that is wrapped by a policy to cover catastrophic illness or injury. I have plenty of input on how my family’s health care is managed.
Economy is growing again but still we have many more jobless people – health insurance should be implement considering all section of people .
Actually, Tom, I was kinda thinking about the way it is done when you work for a company, like the one I’m working for now, or the huge, multinational, conglomerate, chemical company I worked for for thirty years.
They find a policy, you get a couple of dinky options that amount to very little real difference no matter which you choose, and that’s it, buddy.
Also, I was thinking about how so many people squealed when the pols were trying to push the kaka down our throat that Davar imagines will be so farging wonderful, and how little they listened. Just like for the stimulus – which sounds more like a phych 201 lab than I really like to imagine.