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Tuesday, August 07, 2007

Universal Seduction and Distraction

The provision of employer based tax preferred health coverage in response to WWII wage and price controls has been with us for over 50 years. Medicare and Medicaid with their growing set of rules and regulations have been around for over 40 years now. The cumulative effect of these items have driven us further from a market based approach to health care than most people realize. Reforms that move us in the direction of consumer driven free market based care and insurance are more likely to help improve things as compared with a more regulated or collectivist approaches. Arnold Kling presents a pretty good article describing the calls for universal coverage to be a distraction:

The main proponents of "universal coverage" want to throw more money at the current health care system, which strikes me as unwise. I believe that the "universal coverage" mantra is dysfunctional for the same reason that "more money for public schools" is a dysfunctional mantra for education. When your current approach is digging you into a hole, the sensible thing to do is not to dig faster. It is to stop digging.

"Universal coverage" is a popular solution in health care. Too bad it does not address the important problems. Even economists on the liberal side of the spectrum recognize that broader reforms are needed.

My thought is that calls for universal coverage are worse than a distraction. They are a seduction that if mommy or daddy government takes care of it we can rest easy. Looking around the globe, I don't find this to be an attractive idea.


Oroborous said...

I'd like to see an end to both tax deductions for health insurance premiums, and for mortgage interest.

If we want to foster health coverage and home ownership, tax credits to low-income wage-earners seems like a better policy.

Bret said...

I'll agree that given the approach that those calling for universal coverage want to take, that universal coverage will be much worse than a distraction.

I wouldn't have a problem with certain types of universal coverage if the definition of universal just means "everybody" as opposed to "complete coverage for everybody". In other words, I think that it wouldn't necessarily be a problem for the government to provide universal catastrophic coverage if that coverage was limited to various recoverable maladies (so as not to cover the very expensive and fruitless end-of-life heroic efforts).

I also tentatively agree with oroborous regarding eliminating tax breaks for health care insurance. Unfortunately, in the near term, it would essentially amount to a huge cut in compensation (or increase in taxes) for a substantial portion of the population, so it probably ought to be phased out slowly to avoid adversely affecting the economy.