Immediately after posting, I ran across this article that makes the case against insurance better than any other I’ve read. If you’re serious about the health care debate, you should read it.

An Andrew Sullivan reader needed a (seemingly) straightforward outpatient procedure. Her bill was almost 300% of the estimate. She complains that “the price of health care procedures is nothing but a dart thrown at numbers on a dart board.”

Of course the provider has acted in bad faith, but I think the entire insurance system is the real culprit. Providers over-bill because a) someone else is paying (in her case they knew she was insured) and b) they know they’ll get away with it (who are insurance companies going to complain to?). A mechanic will have you sign off on some percentage above the written estimate, and clearly itemize your charges; because the competition will also. If you get ripped off, you won’t come back and you’ll try your best to make sure others won’t either. Also, it’s my hunch that medical providers who see you walk in the door as a future fight with an insurer (who might not pay them)–rather than as a direct customer–probably aren’t going to be as motivated to make you happy.

Another Sullivan reader is baffled trying to predict the cost of a child delivery…also due to an incredibly complex insurance system.

Of course it’s not practical for everyone to know the cost of most medical procedures, but in the system we have now, almost no one does, and that’s a great environment to produce costs that rise past their real value.

Update: Even more evidence that prices are screwed up by the insurance system.

Health reform is absolutely necessary, and I support efforts to prevent insurers from ripping off customers and making care more accessible to those who need it, but HR3200 means mandatory insurance for even smaller and more common procedures, which seems exactly the wrong direction to go if our goal is to control costs and encourage competition among providers.

Although undoubtedly there’s a level of anti-government propaganda in this piece, Stossel’s “Sick in America” is something every proponent of more insurance should watch:

Here’s a pretty inspiring interview with inventor Dean Kamen, who says the focus on long term costs of the health care system (and fears of rationing) is all wrong, and that we should put more money into innovations that more than payoff later.

I’m sure in 1920 if you asked actuaries to say what percentage of our GDP are we going to spend taking care of people with polio, they’d say: “They get polio, it goes to their lungs, they sit in iron lung machines, they could live a whole lifetime with three people watching over them. We can’t support them all.”

But what did it cost to deal with everybody with polio? Oh, $2 apiece.

Simple cures for diseases like diabetes (high cost in aggregate) and Alzheimer’s might be just down the road and would radically change the cost of care. So how do we pump up innovation? In this Ezra Klein article, MIT economist Amy Finkelstein says, “If you cover people with insurance it increases their demand for health care and that will create a larger market for innovations. That’s certainly what I found happened with Medicare.” (No evidence provided but she does have a lot of publications on Medicare and insurance markets.)

So even if costs rise (and long-term costs appear scary today), the increased coverage that some kind of HC reform (private or public) would provide is likely to raise demand and spur more innovation, not less, increasing our chances of finding treatments that will lower costs in the long run? It’s an interesting hypothesis anyway.

I have to agree with USA Today’s editorial on Cash for Clunkers (via), but they don’t even mention opportunity cost. Even with the minor fuel economy savings, “helping” people into loan payments further redirects money away from local economies and family savings. I feel for the auto workers, but the auto industry has enjoyed riding the wave of the housing bubble (buyers relying on home appreciation to offset auto depreciation) and the wave has crashed.

So this seems like a bad deal for buyers, local businesses, the environment, and the taxpayers who’ll pay for it.

Anti-new car propaganda:

• Why You Shouldn’t Buy a New Car
• Don’t Do It! (Cars are not invenstments)
• Drive Free, Retire Rich doesn’t include used car risk, but should still work

I’m warming to some of the free market health care ideas. Even if we move towards more government sponsored coverage (which seems politically inevitable) it seems like some of these principles could help to increase competition and push costs down, regardless of who’s paying. Continue reading  

Radley Balko is a thoughtful libertarian blogger who provides particularly awesome coverage of criminal justice system misconduct. You should read it. In Reason magazine he’s issued a challenge for “lefty bloggers” to define their limits “on the size, cost, and influence of the federal government.” I think this has the potential to be an interesting exercise, but in another way it feels kinda cheap. A few lefties will bite, say dumb things, and libertarians will jump all over them in the comments and we’ll have really pushed the debate forward… I don’t consider myself “lefty”, but I guess I do find the conversation of how to provide a safety net and upward mobility for the poor more important than a debate over what level of taxation on the clearly rich represents “tyranny”. Continue reading