Monday, March 08, 2010

Health Care Free Market --Part I: Vouchers

Nothing gets a small government conservative hopping mad faster than saying an industry-- any industry-- cannot be fixed by the invisible hand of the free market. And, honestly, I tend to take that side on nearly every issue. Things like labor wages and education would all come to heel if more free market were allowed access. My personal experience, having been raised in Chicago with public schools that were inferior and costly due to social and disciplinary problems, saw the benefit of parochial schools. Although my mother paid higher city property taxes, she felt the need to shell out after-tax dollars to pay private school tuition as well. My school had excellent lower income students who did well and were able to attend only because they received a tuition grant or waiver. My thought was always that even more low income students would have benefited from private schools had there been a voucher program in Chicago. This is not to say that the public schools were not sufficient, but for those who have preferred private schools, why not offer them a choice and let the market decide?

Medicare is a Voucher System

Conservatives who favor school choice vouchers should view Medicare-for-all as the ultimate voucher system for individual choice in health care as well. So why do I favor single payer, Medicare-for-all, in medical care? Isn't that a complete disconnect? Answer: NO. In fact, Medicare-for-all, which is preferred by a majority of physicians and a vast majority of primary care providers, is the perfect mechanism to give choice. Every individual would be empowered to go wherever they pleased for health care and new life would be breathed into the marketplace, even reviving the moribund institution of private practice. Currently we force low income people into health care providers just like we do kids with inner city schools, but a Medicare card [NOT Medicaid! Please don't ever confuse the two] would free the individual to seek out quality care as they see fit.

Just Like Education

Damn, this sounds so paradoxical. But with further thought, medical care has many parallels to elementary education: 1) everyone needs it, 2) some people simply cannot afford it, and 3) the general welfare of the republic is improved by it. I always wonder why the exact same conservatives who are staunch advocates of school vouchers don't see the similarities with Medicare. Mistakenly, many conservatives advocate a voucher system to buy health insurance-- which really only adds another layer of bureaucracy between the patient and the doctor. I couldn't imagine a world where we have to first have a government bureaucracy to determine who gets an insurance voucher and then release this person-- maybe disabled, maybe low functioning-- into the insurance sales market. This seems like an impending disaster.

Instead, give everyone Medicare. Of course, instill the other free market mechanisms such as fee transparency for better price discovery, progressive co-pays for non-preventive care, and even supplemental private policies (NOT subsidized with federal money) for those who feel they want them. Take out all tax deductions for health care which would bring market prices down and provide more tax revenue to pay for the plan. If further funding is needed, consider a value-added consumption tax as proposed by other voucher advocates.

Medicare would make life easier for everyone

Medicare has a huge bureaucracy already in place that serves infirm, old and disabled people very well with extremely high consumer satisfaction and quality ratings. By adding everyone into the risk pool the economies of scale would increase and the cost-per-person would decrease. Several studies already show that Medicare has lower administration fees than private insurance companies. Problems cited with these studies are that they use "revenue" as the denominator and Medicare reimburses more dollars per live covered, it will always look to be more efficient. That's a valid complaint; so the answer is to first compare Medicare with private insurance head-to-head for a trial period in order to determine efficiencies. Allow 55 year-olds to to buy into Medicare in a pilot program and compare costs with privately insured 55 year-olds. My guess is that Medicare would blow Aetna and the others away... which is precisely the reason the insurance lobby is so adamant against such a trail, such as a public option.

Dealing with bureaucracy is the bane of patients and doctors alike; but the current system is unwieldy primarily because of the number of differing plans with various arbitrary standards, drug formularies and forms to file. Just by making the paperwork standard and electronic, life would be easier. In effect, we'd be reducing the bureaucratic morass by eliminating the multiple private bureaucracies.

Next Up

Ron Paul is a resolute free market proponent who has practiced medicine. In my next post I will discuss Dr. Paul's free market solution to health care costs and tell why his solution is defensible on an economic level, but not on a human or social level.

No comments: