Nobody asked me how to solve the cost of health care and health insurance, but I have an answer.
History:
Employers lobbied congress during the depression to provide health insurance as an employee benefit because they could not offer pay increases due to wage controls. Congress authorized employers to take tax deductions for providing employee health care plans. And so, many employers continue to this date to provide health care insurance to their employees and take a tax deduction for doing so. If your employer provides health care insurance you probably are grateful for it, utilize it, and are generally happy for it, though your share of the cost has increased over time. Your boss still takes a tax deduction for his share of the cost, but you cannot do so.
Under this model the cost of providing health and medical care to people is not paid for by the recipients of the services. Generally speaking, when the recipient of products and services is also paying for it, costs for those products and services is lower. This is because the payor demands more for his money, and is more thoughtful and cautious when making spending decisions. When a third party pays for services, the recipient does not care how much it costs.
Ask yourself, when someone buys you dinner do you eat the higher priced menu items? If some pays for your vacation, do you spend their money with the same degree of caution your would your own, or do you simply care less?
Proposal:
Congress should pass a law that provides for the following. First, stop authorizing this type of employer paid benefit plan and remove the tax deduction for it. Second, pass along the savings to the employer directly to employee pay checks. Third, allow individuals to shop for health insurance the same way they do car, home and life insurance.
If you go to the doctor under the current model, and he tells you you need a test or procedure, you simply schedule it and someone else pays for it. If you are told to get an MRI on your knee, do you call around and ask what various providers charge for an MRI? Or do you go to the provider your doctor tells you to go to? If you wreck your car, you get three bids and decide which shop will perform the repairs. Why? Because you will be paying your car insurance bill, and the rate is set by the cost of repairing your car.
Cost/Benefits:
The cost of health care will eventually go down because patients will have more control over the amount and type of care they receive and pay for. When it comes out of your pocket, you're more concerned about how and how much gets spent.
The suggestion I make for purchasing health insurance is to let people buy their own, set their own limits, deductibles and schedules of what gets paid, and let them pay the related premium and take a certain level of risk they are willing to take. That works very well to control costs, but some who are hit with that catastrophy won't have a policy to cover it.
If that catastrophy happens there are choices to be made. As a matter of policy we must be willing to make hard choices. Those include, allowing service providers to provide the service at reduced pricing or free of charge, or rejecting services or requests for service.
