An Accurate Diagnosis

Arthur Laffer has one for health care reform.  According to Mr. Laffer's diagnosis  the "health-care wedge" has gotten way too big.

'The health-care wedge is an economic term that reflects the difference between what health-care costs the specific provider and what the patient actually pays. When health care is subsidized, no one should be surprised that people demand more of it and that the costs to produce it increase.  Mr. Obama’s health-care plan does nothing to address the gap between the price paid and the price received. Instead, it’s like a negative tax: Costs rise and people demand more than they need.'

So what would reduce the health-care wedge?  Market based incentives will help.

'Rather than expanding the role of government in the health-care market, Congress should implement a patient-centered approach to health-care reform. A patient-centered approach focuses on the patient-doctor relationship and empowers the patient and the doctor to make effective and economical choices.

A patient-centered health-care reform begins with individual ownership of insurance policies and leverages Health Savings Accounts, a low-premium, high-deductible alternative to traditional insurance that includes a tax-advantaged savings account. It allows people to purchase insurance policies across state lines and reduces the number of mandated benefits insurers are required to cover. It reallocates the majority of Medicaid spending into a simple voucher for low-income individuals to purchase their own insurance. And it reduces the cost of medical procedures by reforming tort liability laws.

By empowering patients and doctors to manage health-care decisions, a patient-centered health-care reform will control costs, improve health outcomes, and improve the overall efficiency of the health-care system.'

Mr. Laffer says his research shows that a $1 trillion increase in federal health subsidies will accelerate health-care inflation.  Health-care expenditures will continue to rise. which will put the brakes on economic growth.  And on top of all that some 30 million people will still be uninsured.

But let's be realistic.  The objective of Obama and the Democrats is not health care reform.  The objective is an enduring progressive congressional majority that they hope to achieve by forcing Americans into a dependence upon progressive government for life supporting medicines and medical care. 

Comments

[Geoff Brown]

I would argue with Mr. Laffer on a key point: Congress should enact nothing at all. Insurance operations, as a matter of contract law, have been the purview of the states and not the federal government. There is no constitutional or historical role for the federal government in overseeing how people select, pay for, and utilize healthcare or healthcare financing tools like insurance.
I need to be a little careful. In the rain of healthcare costs, I have an excellent umbrella as a military retiree. I have moderate copays and deductibles and I have a pretty low "catastrophic cap" per year, something I've never even reached 25% of. I also dislike being the object of most healthcare myself so I see a doctor only when I have a significant problem that I can't manage myself (try doing your own hernia repair surgery).
If I did need to provide for my own healthcare costs, I think I'd do what I do with my car: high deductible, manage most costs myself. But it's only fair to note that an office visit these days can hit a couple of hundred dollars in a hurry. A practice's costs are high: facility, utilities, staff. It's possible that, if people could afford less, doctors would charge less. But I'm leery about that working. It hasn't done much good that I can see in dental care, although it's been very effective in laser eye surgery and some cosmetic medicine.