Common Sense on Health Care

John Stossel has been listening in on my conversations. Or we have both been consulting with the same common sense on health care.

Why has health insurance become such a big issue for everyone? Paying for it is hugely expensive...and that is the "discount" price. The health insurance company pays the rest. And the situation is getting worse all the time.

At some point it became clear to me that at least a large part of the answer to this problem lay in the word "insurance." You buy insurance to protect you against the unlikely possibility, but nonetheless the possibility, of a ruinous disaster. If your house were to burn down, if you were to wreck your new car, or if you were to require extensive treatment for a serious and debilitating illness, you would be ruined financially. But though these things are unlikely to happen, and because everyone faces and fears the same possibility, everyone pays a small amount into what becomes a large pool and agrees to compensate any contributor who might find himself in one of these unhappy circumstances. We call this "insurance." It's a prudent way of managing risk communally.

It is of essence of insurance, however, that it pertains to risk and rarity. Your home insurance does not cover leaky faucets, lawn care, or even replacing your shingles. These are common and predictable expenses. Roofs are even expensive, but you know that they last only 20 years so you save accordingly. So too, your car insurance does not cover gas, oil changes and scheduled maintenance visits. You don't buy insurance for clothing and groceries. Even though these are necessities, it is the responsibility of neither your employer nor the government to provide you with insurance to cover these things. You pay for all of these expenses out of your regular income. It is why you have income. If you have difficulty in paying for one or a number of these these things, you have to prioritize, budget more wisely, generate more income, and so on.

So why do we treat medical insurance differently? We demand that it cover not only reconstructive surgery and cancer treatment, but also vaccinations, check ups, eye glasses and dental fillings. And people get angry if these things are not covered. One's employer is considered evil for providing "lousy" health coverage that does not cover these minor benefits. But what should be minor expenses have become quite expensive precisely because everyone is paying for them through insurance instead directly of out of their own pockets.

Stossel does a great of job of explaining this:

Almost daily, we're bombarded with apocalyptic warnings about the 47 million Americans who have no health insurance. ...America's health care problem is not that some people lack insurance -- it's that 250 million Americans do have it. ...

Insurance is a lousy way to pay for things. Your premiums go not only to pay for medical care but also for fraud, paper-work and insurance-company employee salaries. This is bad for you and bad for doctors.

Read his brief column, "A Move in the Wrong Direction," which reflects on Hillary Clinton's proposed new national health care plan.