There was an old woman who swallowed a fly

on Dec 18 in health care tagged by Trevor Hicks

I haven’t had much to say on health care reform lately, but I thought this article by John Calfee illustrated nicely the central problem in the Democratic proposal:

A good way to understand how this all should work is to begin with guaranteed issue— that is, the requirement that all insurance plans take on everyone who applies regardless of pre-existing medical conditions. That is a recipe for high premiums. The fix is community rating: everyone is charged the same rate. But many healthier enrollees would drop out, and premiums would spiral upward with no natural stopping point. If reform stopped there, insurance would cost more instead of less, and the ranks of uninsured would go up instead of down.

So the next fix is mandates. Individuals will have to buy insurance they don’t want, or employers will have to provide insurance (subsidized by tax laws) that many of their employees do not want to pay for. Those who balk will pay a penalty on their next tax return. If too many healthier consumers pay fines instead of premiums, upward pressure on premiums will increase because higher-risk consumers will be left in the insurance pool. But let’s assume the White House is right in saying this won’t happen.

Still, regulation could not stop there. If consumers could buy cheap, bare-bones insurance, the mandate would be gutted. Hence another fix. A new federal commission will set minimum insurance benefits. Most states already do that, and the result is usually a long list of benefits, whether consumers want to pay for them or not. Federal standards will probably be high, too, as evidenced by the quick addition of breast cancer screening over age 40 to the Senate bill. Mandated benefits, of course, increase insurance premiums.

So far, we have guaranteed issue, community rating, individual and employer mandates with fines for non-compliance, and minimum insurance standards—with each measure designed to fix the harm caused by its predecessor.

I really, really hope this bill fails.  I think it will be an expensive disaster that will be very difficult to undo.  If we’re going to go down the path expanding government health care then let’s do it the right way - I’d much prefer a French or Canadian style single payer system than this hybrid monstrosity the Democrats are trying to foist on us.

I honestly favor reform, but I don’t think I’m letting the perfect be the enemy of the good as they say.  I’m letting the bad be the enemy of the good, this bill is not a step in the right direction or an incremental improvement.  There are two primary goals we should have in reform, increasing access to health care for the poor and lowering the fiscal burden on the federal government for health care.  This plan further entrenches the perverse incentives in the system that inflate spending and while it does have some benefit for the worst off, that comes at the expense of liberty crushing and expensive mandates that will burden the middle class quite heavily.  The Democratic plan I think moves us away from both goals.