Hunter: Thanks for the reply! There are two issues in your post I’d like to address, and I will do so in separate blog posts. First, this passage stood out:
When you have poor insurance that you pay a lot for because you don’t have employer-provided coverage, you worry a lot about whether they’ll reimburse things you really need, like tubes for the ears of a child with frequent, raging ear infections. You wonder whether they will pay for something utterly necessary, like the anesthesiologist. You feel outraged that you pay so much and still feel like you got your insurance card out of a box of cracker jacks.Here’s what I think is the key question: How is it that the poor can afford so many other of life’s necessities—food, clothing, shelter, a car—and, generally, get pretty good quality when they buy those things? (It’s also worth noting that they can afford some of life’s luxuries like microwave ovens. TVs, computers, etc.) Is it that the poor have their priorities messed up? Possibly, but that, at best, only explains a small portion of why they don’t buy health insurance. I think the biggest problem is that in the U.S. we don’t have much of a market for health insurance.
Now, I’m betting that a number of liberals are jumping up and down saying, “Are you kidding? Relative to most other nations, we have a much bigger private market for health insurance!” Yet deeming that we have a market for health insurance because we have more of a market than countries with far greater socialist health insurance systems is like claiming Ben Wallace of the Chicago Bulls is short because, at 6’9”, he is the shortest center in the NBA. The point of comparison is way off.
The proper comparison is with that of other markets; specifically, other insurance markets. In how many other markets does government tax policy not only give a tax break for purchasing the product, but also gives that tax break to the employer, not the employee? None, but we have that in health insurance. The tax law insulates health insurance companies from a lot of competitive pressure because they only have to compete for the business of a few million employers, instead of competing for the business of many more millions of employees.
Next, in how many markets are you unable to buy a product out of state? I can buy loads of other insurance products—car, homeowners, etc.—in another state, but, thanks to federal and state law, not health insurance. This also insulates health insurance companies from competition, and the big insurance companies like it that way. Hence the Big Blues’ opposition to the Shadegg Bill.
Thus, in health insurance we have a market where, thanks to tax law, insurance companies compete for the business of a limited number of customers and, thanks to federal and state law, don’t have to compete across state lines. That’s not much of a market at all.
If we had a true market in health insurance, we’d have far more competition, and that competition would, of course, lead to lower prices. You’d have a lot more policies within the reach of people who are poor, and the quality of those policies would be much better. Granted, you might not be able to afford the same care that, say, Paul Krugman can afford. But, it would be more like the market for cars. You won’t be able to buy a Jaguar, but a Honda Civic, which is a pretty good car, is within reach.
Thanks to screwed up government policy (but I repeat myself) we don’t have many “Honda Civics” among health insurance policies. The next post will come after lunch.
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