In my Forbes.com column this week, I suggest that the field is wide open for a leader of imagination to employ a back-to-basics approach, explaining to Americans how markets are superior to centralized government control especially in health care. I suspect Americans are much more amenable to this message than Beltway Republicans know. They’ve been drinking the DC Kool Aid for too long to perceive this.
Today’s article in the Wall Street Journal by John Cochrane (an early inductee into the Power Line 100) puts the case perfectly. If you read only one article today, make it “What To Do When Obamacare Unravels.” The problem with the marketplace for health insurance has been in front of us for a long time, and Obamacare merely completes decades-long government distortions of the sector. It’s not really health insurance at all: it is more accurately thought of as pre-paid medical spending, and it makes as much sense as if you procured gasoline and oil changes through your auto insurance policy. The problem of pre-existing conditions that has heretofore plagued access to health insurance would be like maritime insurance that you lost at the sight of the first storm cloud.
Take it away, Prof. Cochrane:
Only deregulation can unleash competition. And only disruptive competition, where new businesses drive out old ones, will bring efficiency, lower costs and innovation.
Health insurance should be individual, portable across jobs, states and providers; lifelong and guaranteed-renewable, meaning you have the right to continue with no unexpected increase in premiums if you get sick. Insurance should protect wealth against large, unforeseen, necessary expenses, rather than be a wildly inefficient payment plan for routine expenses.
People want to buy this insurance, and companies want to sell it. It would be far cheaper, and would solve the pre-existing conditions problem. We do not have such health insurance only because it was regulated out of existence. Businesses cannot establish or contribute to portable individual policies, or employees would have to pay taxes. So businesses only offer group plans. Knowing they will abandon individual insurance when they get a job, and without cross-state portability, there is little reason for young people to invest in lifelong, portable health insurance. Mandated coverage, pressure against full risk rating, and a dysfunctional cash market did the rest.
There’s more, but here’s the argument that ought to be part of some candidate’s stump speech:
Sure. We can have a single government-run airline too. We can ban FedEx and UPS, and have a single-payer post office. We can have government-run telephones and TV. Thirty years ago every other country had all of these, and worthies said that markets couldn’t work for travel, package delivery, the “natural monopoly” of telephones and TV. Until we tried it. That the rest of the world spends less [on health care] just shows how dysfunctional our current system is, not how a free market would work.