Professor Cole's Finance Blog

As we debate the costs and benefits of the various "health insurance" reform plans, let us agree on several issues:

First, let us agree that "health care" is freely available to all Americans, at great cost to those of us who pay taxes and pay for health insurance. No American can be refused treatment from an emergency room at a U.S. hospital. In fact, no one can be refused emergency room treatment, U.S. citizen or not. Consequently, only about one in twelve emergency room patients actually pays his or her bill. We pick up the cost for the other eleven. Beyond the direct monetary costs we bear, we also suffer because of horribly overcrowded emergency rooms, where waiting times for initial treatment routinely reach four hours or more. 

Second, let us agree that this is an incredibly inefficient and expensive way to handle health care for the uninsured. Surely, there are more efficient options. By covering the uninsured with a government subsidized plan or routing them to ambulatory care centers instead of emergency rooms, we can significantly reduce both the costs of emergency room treatments and the ridiculous waiting times for emergency-room treatment.

Third, let us agree that "rationing" currently, and always, willl take place. Under our existing system, bureaucrats at insurance companies are responsible for rationing decisions; under a single-payer system, government bureaucrats would be responsible for rationing decisions. In every possible scenario, someone will be responsible for deciding what drugs and treatments will be paid for by insurance and what will be the financial responsibility of the insured. No country is wealthy enough to provide gratis the most expensive and experimental medical treatments available to all of it citizens. Somone must make the tough calls, but who?

Fourth, let us recognize that our current system, where we rely upon our employers to provide health insurance, is the result of unintended consequences from earlier government regulation. Back during WWII, the U.S. government imposed wage-price controls. In response, employers looking for workers offered free health insurance as non-wage compensation. It worked, but led us to a system post-war where U.S. employees increasingly obtained health insurance from their employers. No other developed country followed this model. Unintended consequences of government regulation are insidious and long-term, so we must be careful with any major overhaul of the current system.

Fifth, let us recognize that true "portability" of health insurance will never be available so long as employer-provided health insurance is the norm. If your employer provides your health insurance, your employer is choosing your plan and you are not. Should you decide to change employers, you will not be able to continue your old plan; you will be forced to choose a new plan chosen by your new employer. This is simply a fact and will not change under current proposed changes, unless we go to a "single-payer" government plan. In that case, everyone will have the same government plan and we will have true portability, but we will not have any "choice." Whatever is offered by the single payer is what we will have. Look to Canada for what this will look like. Canadians routinely come to the U.S. to obtain care they cannot obtain under the single-payer Canadian plan; this will not be an option for U.S. citizens unless they want to fly to Costa Rica, Singapore, or some other country for treatment.