Month: June 2005

Detailing the woes GM is facing in providing health care to only 160,000 current workers, but 1 million others, Jeff Jacoby provides a microcosm of the problems the citizenry would face should health-care fall under the purview of the government.

GM’s hourly workers undoubtedly have a sweet deal — who wouldn’t love health insurance that comes with a $0 deductible and no premiums? But such sweet deals drive up the cost of health care for everyone. When somebody else is picking up the tab, there is little incentive to economize — that is as true of medical care as of anything else. The price of prescription drugs, hospital stays, and medical procedures has skyrocketed in part because tens of millions of Americans are insured through their employers with low-deductible medical plans. Why not run to the doctor for every minor ailment when the out-of-pocket cost to do so is minimal? Why inquire whether a procedure can be performed less expensively when it’ll be covered by insurance either way?

In no other area do we rely on insurance for routine expenses or repairs. Auto insurance doesn’t cover oil changes; no one uses homeowner’s insurance to repoint the chimney. That’s because most of us pay for those policies ourselves, and therefore get only the insurance we really need — generally against catastrophic events, like a car being stolen or a house burning down.

Only when it comes to health care do we expect insurance to cover nearly everything.

John Stossel:

But today, people expect insurance to cover everything, even routine things like eyeglasses and dental treatment. This is a terrible idea. Insurance is a lousy way to pay for anything.

Once some faceless stranger is paying for what you do, you don’t have an incentive to control costs. On the contrary, you have an incentive to get as much as you can and leave the other person with the bill. Doctors also have an incentive to run up the bills. Patients rarely complain, but they might complain if the doctor skips a test. Insurance companies know this, of course; hence the torturous bureaucracy: the paperwork, the phone calls where you beg them to pay, the times they refuse to pay for what you thought was covered.

I can’t blame them. They’re just trying to protect themselves from fraud and hoping to have enough money left over to stay in business.

Government insurance is worse than private insurance. A private insurer has an incentive to cut costs; every dollar wasted comes out of profit or must be recovered by raising prices, which drives customers away. Government just raises taxes or increases debt.

So when our bloated government picks up the tab for poor people’s health costs, guess what it buys: Viagra! In 2004, Medicaid spent $38 million on drugs for erectile dysfunction.
Funny. I always thought one of the Left’s battle cries was for the government to stay out of the private citizen’s bedroom. Here’s a great place to start.

Senator Tom Coburn (OK-R):

One of the greatest impediments to the president’s vision of an ownership society is an inside-the-Beltway entitlement society, in which federal agencies expect ever-increasing budgets, regardless of their performance.
The Washington Times article linked above notes the creation of the “Sunset” and “Results” Commissions, which will look in to eliminating waste within, and possibly closing down, federal agencies or departments. It’s about time.