Friday, May 12, 2017

Turn the Individual Mandate on its Head

   I would turn the individual mandate on its head. Given a chance to reform out health system, rather than requiring everyone to buy insurance, I would require health providers to sell to everyone.
   My thoughts on this were reinforced a couple days ago, as I thought on how it is a principle of economics that those marketing a product, are sometimes influenced by those buyers who will pay the most -- and that drives prices up.
   If they could get $20 from the rich for a pack of bubblegum, they'd do it. But, the rich don't want bubblegum that bad, so bubblegum doesn't end up costing $20.
   Health care might be another matter. The rich want health. And, they will pay what they have to get it. If it costs $60,000 for a surgery, they'll pay it. And, that drives the price of the product up.
   Now, truth be told, even the rich don't pay out of their own pockets for health care. They buy insurance, like the rest of us. So, you might suggest my theory that the rich drive up the cost of health care is false.
   Insurance, you might argue, actually does the opposite. By removing the rich from directly paying for health care, it reduces costs. If they were paying out of their own pockets, they would pay whatever it took. But, they are not paying out of their own pocket. They buy insurance. The plans they buy can differ -- they might opt for something called concierge medicine, and set up something called S-corps and LLCs and they might opt for high deductibles, but they buy insurance.
   That they buy insurance does have some buffering effect from driving costs up by being willing to pay whatever it takes. But, consider this: insurance companies are as rich as the rich people who we are talking about. They might not be as willing as the rich individuals to pay whatever it takes, but they do have the money to do so.
   And, that does drive prices up.
   The poor become the rich when you have insurance. When they need a $60,000 surgery, the insurance company comes up with the money. The poor person could never do that on his own.
  So, it might seem that keeping insurance is a way of keeping the poor covered, and therefore a good thing. And, perhaps so. But, we should consider that there might be another way of going about it. If the insurance companies are rich and the fact that they are rich drives prices up, should we take insurance out of the picture?
   I said I would turn the individual mandate on its head, but I did not say that meant insurance companies would be required to sell to everyone. No, I said health care providers would be required to sell their products to everyone.
   There's a difference between the hospital being required to take what the insurance company can pay and being required to take what a poor person can pay. A big difference. What if we had the mandate that hospitals must sell, but we booted insurance out of the equation?
   It is a solution I toy around with. I think I like it. And, will go to bed thinking about it.

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