Saturday, January 01, 2005

The 2% solution-part two

The first major proposal Miller makes is in health care. Basically, he calls for a system of subsidized insurance not connected to employment. This is similar, although he doesn't mention it, to the Swiss system, which basically only provides help to those who need it. Personally, I've never understood the Canadian and British systems of pretty much just nationalizing health care in the interests of helping the poor, yet affecting the majority who didn't need help in the first place. Perhaps at the time it seemed like the simplest solution, to just create a single-payer system, but in hindsight, and in comparison with other universal health care systems, single payer seems pretty clunky.

The main legitimate objection that one would make to such a plan is that it would simply cause insurers to just keep on jacking up their rates, as well as cherry-pick the very people who don't need insurance. Miller addresses this by calling for community rating, as in everyone pays the same for insurance of the same type regardless of health history, age, sex, etc. The price differentials in insurance would be because of bells and whistles, not essential coverage. For example, a rich man might choose the best insurance, which would give him a private room in a hospital and no waits for non-emergency procedures, while the poor slob making minimum wage would get a gurney in the hospital hallway and Canadian-style waits in weeks for non-emergency procedures. I think people obsessed with equality of outcome might be offended by all this, but why? Everyone gets the care they need under this plan.

The genius of this plan is that it doesn't cost all that much. First, it would get health costs off of employer's backs. Second, it would mean we could end Medicaid and Medicare, and replace it with the new subsidy program. There is already something like $1.3 trillion out there between business and government costs that can be reallocated towards subsidies. The extra cost comes from insuring those not currently covered by any source. Miller estimates this would cost about $80 billion a year in today's dollars.

I say it's a great plan, except Miller doesn't really address why we have a health care "crisis" in the first place: ever-increasing medical costs. The main reason for higher health care costs is new procedures and drugs. This is actually a good problem to have, which is why I put the scare quotes around the word "crisis". One thing I think would work is to start out with 2004 insurance, as in the customer gets every procedure available in 2004 for a certain cost. His insurance costs will not go up. However, every year he wanted to upgrade his insurance to cover brand new procedures he could, or if he's about ten years behind, upgrade, say five years.