Wednesday, August 08, 2007

An Interesting Solution to Healthcare

This may be the solution to the leftist-engineered "health care crisis." Simply move the system more a capitalistic system. While I don't think all of Kling's ideas are doable (such as removing licensing requirements with full disclosure), many of the ideas are rather sensible.

As someone who is a student of personal finance and economics, it has long been clear to me that you insure for things that would be extremely harmful to you financially absent insurance and that you do not insure for the "small things." Insurance is just too expensive to insure for all of the little things. That is why you keep deductibles high. That is why you do not buy the insurance offered to you by the cashier at your electronics store. Insurance for those items is simply too expensive and you are only making insurance companies richer by doing so.

But when it comes to healthcare, we through common sense out the window. Americans tend is to overinsure by insuring for all of the little things and health insurance is a prime example. So that we can "get our money's worth" from our insurance, we go to the doctor too much. We have too many tests run, etc. After all, "the insurance will pay for it." This system gives us no incentive to shop for lower priced services or to be discriminating when being tested for every little thing. Accordingly, demand for services increases and prices rise. There is no incentive for providers to provide lower cost services under this regime.

Mr. Kling leaves out one important element of a comprehensive reform package: tort reform. While there are advantages and disadvantages to a "loser pays" system, I think the advantages far outweigh the disadvantages, particularly in a medical malpractice setting. At a minimum, judges should be given discretion to award fees to the winner, even if it is not automatic.


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