Saturday, September 26, 2009

Marilyn vos Savant Reforms Health Care

A short excerpt from her book Of Course I'm for Monogamy (1996):

What went wrong with health care? With too much government involvement and too little consumer education, we've disconnected this vibrant industry from the free market. If this is the case, there is a relatively simple solution that not only would achieve much of the political goal; it would help health care blossom. In no other industry would we complain about virtually unlimited sales expansion combined with equally-unlimited product potential. This is a boom scenario.

Does the health-care industry profit at our expense? Yes. And so does just about every other industry, including farming (food), garment manufacture (clothing), and building (shelter). As we earn money and then spend it, everyone profits at the expense of everyone else. That's what capitalism is all about.

Following is a ten-point outline for health-care reform:

- Deregulate insurance companies so they can sell policies with much higher deductibles, and educate consumers to understand why low-deductible policies are actually budget plans instead of the simple safeguards against unforeseen catastrophe that all policies once were. Paperwork, administrative costs, and profits for insurance companies may constitute 25 percent of health-care costs overall.

- Deregulate health-care forces that are competitive. For example, Certificate-of-Need regulations require that no more goods or services be provided in an area unless proved to be absolutely necessary. (So physicians can't perform, say, too many expensive CAT scans when machine time is strictly limited.) But this contradicts all free-market experience. Scarcity creates high prices that will even increase according to demand. It is abundance that lowers prices. Radios, videocassette recorders, and computers all plummeted in price - and became increasingly sophisticated - as they became plentiful and manufacturers competed with each other. (So when CAT scanners become s plentiful, everyone will be able to afford CAT scans whether they need them or not.) That is, competition drives quality up and prices down.

- Deregulate insurance companies so they can sell a variety of customized policies ranging from no-frills coverage to luxury coverage, all tailored to individual and family desires, much in the same way that food, clothing, and shelter are on the market. People who don't want coverage for acupuncture, herbal medicine, hairpieces, drug abuse, and marriage counseling wouldn't have to pay for it the way so many do now. Even important categories such as childbirth and AIDS coverage could become optional.

- Provide incentives for health-care professionals (such as hospitals) to advertise so they can market plain-to-fancy goods and services both to insurance companies and directly to the consumer who has no insurance. We can have both perfectly acceptable (and lower-cost) medicine and highly sophisticated medicine, the way we have both fast food and fine food. In other words, highly sophisticated medicine costs far more for little additional value and people would be free to choose it if that's the way they want to spend their money (via expensive insurance or their own wallets), but it would be wasteful to provide it as a matter of course.

- Reform Medicaid and Medicare so that the government must reimburse individuals for expenses and change the tax laws so companies can once again sell policies that are guaranteed to be renewable, regardless of health or employer, like health insurance policies in the 1950s.

- Deregulate insurance companies and change the tax laws so companies can offer "coverage from conception" or "coverage from birth" as options - which would effectively cover every individual with all conditions if the mother chose it - and begin a campaign to educate future parents about why this expense should come before any other expense that is not a necessity for life. The great majority of children would likely be covered (as they are now). Of the minority that were not, nearly all would be healthy enough to be insurable at a later date. The remaining few who are uninsured and uninsurable could be covered by subsidized high-risk pools; twenty-eight states currently have them.

- Deregulate insurance companies so they can reject a new applicant for health-related reasons, freeing the companies for cost-competition. According to the U.S. Department of Health and Human Services, these people (who have been rejected for insurance for medical reasons) currently total only 900,000 - fewer than one-half of 1 percent of the population [in 1996 - JohnJ]. These individuals would also be covered by subsidized high-risk pools.
In the future, elective unborn- and newborn-coverage combined with guaranteed-renewable coverage has the potential to eliminate individuals who are otherwise uninsurable. But before that, if health care is allowed to become a free market, the price of goods and services may fall like the prices of cameras and televisions, putting ample care within reach of nearly everyone. In the meantime, however, a special government program could be piggybacked onto Medicaid for the rest of their lives only (no new individuals would be added after enactment of the law), serving as a temporary bridge to the new system.

- Educate consumers about why the purchase and maintenance of medical insurance should come before even nonessential purchase. (Nearly 40 percent of the uninsured have incomes over $30,000. [Again, 1996 - JohnJ]) Social disapproval could be directed toward those who buy goods and services like cable television, restaurant meals, and vacations, but fail to purchase and maintain health-care insurance for themselves and their dependents.

- Allow American citizens to choose to be uninsured and spend their money on other things, if they wish. (There is a large young-and-healthy group already doing just that - nearly 60 percent of the uninsured are below the age of thirty.) For the vast majority of people, this will be perfectly acceptable. (About half of all health-care spending is on medical bills of $5,000 or less.) Also, hospitals are already required by law to treat emergencies regardless of ability to pay.

- And finally, numerous studies have shown that although people consume about 50 percent more medical care when it is totally free, as opposed to people who have a deductible of about $2,000, this additional spending has no noticeable effect on health. Apparently, much of our health-care spending is a complete waste of time and money. This suggests that if the federal government expands "free" care, we will have even more waste than we do now and with no improvement in health. After all, we must remember that there is a distinct limit to how much we can improve our health with current technology, no matter how much money we spend on ourselves. If we have a head cold, spending a million dollars won't help us get better any faster, and if we have terminal cancer, neither will a million dollars prevent us from dying.

All emphases in original.

Compare her plan to, say, Cato's. Needless to say, Marilyn vos Savant's many books are highly recommended.

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