A health care problem analysis and solution.

Careful and constructive thoughts on health care from a smart blog reader. From a historical and small business owner perspective, he writes the following:

 ________________

Insurance, whether health, home auto or in Black Jack is simply a

product based on odds. Anyone who sells insurance does so at their

gain and at the affordable cost of many while a few buyers reap life saving

gain. Where health insurance has gone wrong is in two places.

First is when it became misconstrued as a benefit instead of a product. From ebri.org, "When wages were frozen by the National War Labor Board and a shortage of workers occurred, employers sought ways to get around the wage controls in order to attract scarce workers, and offering health insurance was one option. Health insurance was an attractive means to recruit and retain workers during a labor shortage for two reasons: Unions supported employment-based health insurance, and workers' health benefits were not subject to income tax or Social Security payroll taxes, as were cash wages.

Under the current tax code, health insurance premiums paid by employers are deductible for employers as a business expense, and are excluded, without limit, from workers' taxable income." When health insurance became a benefit it modified the demand side of the curve. Few employees pick one employer over another solely due to differences in health benefits and even if they do they usually only consider short term copayments and deductibles instead of the more appropriate benefit of catastrophic relief. As a self-employed I understand this best and have chosen a policy lopsided to the opposite direction of most employer plans.

The second interference to the Keynesian laws is when health insurance became an entitlement. "Prior to the creation of Medicare and Medicaid in 1965, health-care inflation ran slightly faster than overall inflation. In the years since, medical inflation has climbed 2.3 times faster than cost increases elsewhere in the economy. Much of this reflects advances in technology and expensive treatments, but the contrast does contradict the claim of government as a benign cost saver." WSJ, October 20, 2009.

When you throw in the fact that unlike other forms of insurance, sometimes lack of health insurance and certainly lack of health care is terminal, the result is that the health insurance/care industry has difficulty following the natural laws of supply and demand, made even worse by the two unnatural supply and demand actions cited above.

My suggested solution is that we establish the bare minimum standard of health care that only provides a humanitarian level of service, difficult to define but I think it can be done if emergency room doctors and nurses are the primary architects of the plan. Most hospitals already have a definition and already fund it. Ask an emergency room care giver what they would recommend for our national health care policy. I have and the answer is really quite clear. I have no issue with nationalizing these types of plans. Add to that a change in tax code to tax all employee benefits just like their wages and then let the free market work.

_____________________