Search This Blog

Wednesday, December 07, 2005

Nationalized Health Care

Matt over at Purple America wrote that socialized medicine might make it possible for "employers who presently offer generous insurance benefits in this country" to not have to take a number of less than optimal actions including cutting "wages in order to maintain the same insurance benefits".

However, it doesn't necessarily matter all that much if you raise taxes for socialized medicine or employers cut wages. Even if you tax other "rich" people, the economic opportunity lost by redirecting those funds from investment to healthcare services will depress wages over the long haul. I recently described one of many mechanisms for how taxation reduces the economic well being of the less well off here. Also, it's no coincidence that most countries with lavish healthcare supplied by the state are not doing so hot economically.

That being said, I actually favor a variant on a nationwide health insurance approach. I think that everybody should be covered by the federal government for catastrophic and some preventative care. The preventative care portion is admittedly extremely difficult to define and I don't have the time to elaborate those details now. However, the catastrophic portion is more straightforward. The government insures everyone beyond some individual out of pocket expense for a given year. That limit would need to be set moderately high, perhaps something like $2,500, maybe lower, maybe higher, maybe means tested, I'm not sure. Perhaps the schedule of services covered would exclude certain procedures (the old liver transplants for alcoholics dilemma). Everything else is simply out of pocket expense.

In addition, I'd eliminate the tax deduction for employer funded health insurance. Why? Because the poor pay very little in taxes so it wouldn't affect them much while the better off pay more in taxes - but they can afford to do so.

These sets of actions would push the health care sector to be more market driven. High tech market driven areas tend to reduce cost and price very quickly. Consider cell phones, Internet, digital cameras, television, etc. Health care may respond similarly. If so, then we'll all get better healthcare at lower cost.

No comments: