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Economics

Healthcare is Hard

Healthcare is hard.  Anyone who tells you otherwise is selling something.    

Before we talk about solutions, let’s elucidate goals.  My goals are these:

  1. Universal basic healthcare
  2. Freedom to provide and purchase additional healthcare
  3. A system which controls costs
  4. A dynamic system which encourages innovation including ever better drugs, procedures, and care at ever cheaper cost

We must acknowledge one painful reality: no system is perfect.  Every system has tradeoffs.  We want a system that minimizes tradeoffs, rather than promises some fantasy level of perfection.

We should carefully study other systems around the world, but remember we have our own idiosyncrasies.  A recent paper has suggested that the high cost of US healthcare is due to five factors: traffic accidents, guns, obesity, cigarettes, and drugs. Switching to a national health system or Medicare for All does not cure these problems.

The plan I favor is AEI’s Best of Both Worlds plan, which combines elements of both market and government. One fault of our current system is that healthy people pay more to subsidize the unhealthy.  Often this means healthy people leave the system completely which doesn’t help anyone.  The AEI plan charges them at cost so they stay in the system.  To guarantee universal coverage, the government subsidizes a free basic plan and offers premium support for lower-income people who need more.  The plan would remove barriers to offering longer-term plans, and gets rid of the employer deduction.  Taken together, these provisions would offer universal care at a price society can afford.

Regardless of the plan we adopt, we need to remove regulations that make healthcare even harder than it is.  Examples include:

  1. the employer tax deduction
  2. state licensing requirements which restrict out-of-state and foreign healthcare workers
  3. restrictions on nationwide insurance offerings and long-term health insurance contracts
  4. certificate of need restrictions, which hamper hospitals from expanding

Healthcare is hard. That said, if we can simplify the system through reforms big and small, and ride new technology and market innovation, perhaps it is manageable.  But regulatory change will require politicians to put in a little thought, rather than just spout slogans.

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