Cecil James said:
"These answers would make sense if we were talking about marketing hamburgers or toothbrushes. Healthcare is a different animal."
Health care is no different than any other professional service (CPA, Lawyer, Mechanic, etc.). There is
nothing special about health care provision that somehow makes it "immune" to market forces. If you care to try to identify the economic qualities that make health care provision different, I'm all ears.
Cecil James said:
"The majority of the costs are incurred by a small percentage who need expensive treatments."
This is true, but keep in mind we're generally not talking surgeries here. We're talking chronic conditions; heart disease, cancer, diabetes, hypertension, etc., that require constant medication or professional monitoring. [1] Both medication and professional care are things that can be efficiently "shopped around" for in a private market.
Cecil James said:
"And once again, the data, if anything, shows that costs are lower when the market is more regulated."
The data does
not show that
costs are lower. The data shows that
spending is lower. The famous RAND Health Insurance Experiment also showed that when consumers shoulder more out-of-pocket expenses (i.e. perform cost benefit analysis themselves) they spend 30% less with statistically insignificant changes to health outcomes. [1] Moving to a more market oriented approach to insurance and health care will lower both
spending and costs.
Cecil James said:
"People don't carelessly decide to get cancer treatments because they're not footing the bill. I suppose you could make them foot the bill and let them pay out of pocket and end up losing their mortgage, but that brings its own list of problems."
No one carelessly decides to get cancer treatments, but they also don't perform any cost benefit analysis on the types of treatments they receive. The "latest and greatest" doesn't always pass a cost-benefit analysis compared to the "older but still effective" treatment. Also keep in mind that private insurance would continue to cover rare unforeseen expenses like cancer. Additionally, people with chronic pre-existing conditions would be able to get private insurance that covers "everything but" in order to have emergency coverage as an alternative to high premium for high risk coverage.
Cecil James said:
"Also, the fact that companies can pool numerous plans into one large pool also brings down insurance. "Shopping around" for the most part would leave people to pay larger amounts into smaller pools. It would especially hurt high risk patients since they would either be denied, or pooled in with other high risk shoppers and pay exorbitant costs. "
Un-tethering health insurance to employment would indeed see high risk patients pay more for premiums, and low risk patients paying less for premiums. Keep in mind that the very nature of insurance is risk pooling, and insurance agencies strive to cover the most people while maintaining a manageable risk profile. Thus the more healthy people in a plan the more high risk people the insurer can accommodate. Consider those auto insurance commercials that advertise directly to high risk drivers. If health insurance was more like auto insurance this would happen as well. In the extreme cases a direct subsidy to the high risk individual (perhaps in the form of vouchers) could be used to offset the high premiums associated with the high risk.
Cecil James said:
"I don't doubt one could shop around and find cheaper heart surgery, but generally one still couldn't afford to pay out of pocket and I'm not sure that someone in need of heart surgery would have time to research before deciding on their purchase. Besides, it's in theInsurance company's best interest to work with providers who give them a discount in order to stay competitive. "
They may not shop around for heart surgery per se, but they certainly would shop around for insurers who covered their prefered hospital. Again, private health insurance would still be covering heart surgery as an unexpected occurrence.
J
[1]
http://www.ahrq.gov/research/ria19/expendria.pdf
[2]
http://www.rand.org/pubs/research_briefs/2006/RAND_RB9174.pdf