Eighteen years ago when my son was born I came to the conclusion that health care was a very strange animal that appeared to be immune to the common sense practices used by businesses. Sadly the situation has gotten worse over the years and the present forms of “health care reform” look like they will aggravate the health care cost situation. I find both David Goldhill’s arguments in the video interview and the Cato Policy Analysis paper well thought out and more likely to improve the health care crisis than any other plan I have read.

One argument in favor of a government overhaul of the health care system is that the free market had its chance, and failed when it comes to providing the best possible care.  But as David Goldhill discovered while researching for the September cover article in The Atlantic, the United States has anything but a free-market health care system.

He explains his findings below:

For real market-based reform, see Cato’s new Policy Analysis, “Yes, Mr. President: A Free Market Can Fix Health Care.“

The Myth of ”˜Market Failure’ in Health Care
Chris Moody
Fri, 30 Oct 2009 18:55:05 GMT

Like most people I thought the Democrats would pass a health care reform bill even if it was universally disliked. I assumed that health care bill had about 99% chance of passing. Recently I lowered the odds to 50%. I have two major reasons to lower the odds.

1. The primary reason I am lowering the odds is that both the Senate and House versions of the health care bills continue to include the public option. The public option issue polls very badly among prospective voters and is very divisive for the Democratic party. This issue by itself poses a very difficult decision for at-risk Democratic House members. Although this is a small part of the bill, it is shaping up to be the straw that breaks the camels back. The argument that the public option is a de facto government take over of the health care system appears to be resonating among both the media and the public.
2. The huge unresolved issue is how to pay for the health care bill. One of the tax revenue options is the tax on the luxury health care plans. Despite the “luxury” name it looks increasingly like it would be a tax on union health care plans. I cannot see the unions standing by idly while this happens. The idea that the Democratic party is proposing to raise taxes on significant part of its base is both amazing and risky. The proposed changes to the Medicare Advantage and Drug Benefits are equally difficult to explain. Instead of improving Medicare the savings from Medicare is being used to expand health care to other groups. It is not surprising that polls of the elderly show that they are against the health care reform bill. To a lesser extent the cost shifting malaise affecting the elderly extends to the average voter. Increased payroll taxes are being used to subsidize insurance premiums. The polls suggest the voters are likely take it out on their elected officials next fall. One option not openly discussed is that the health care reform bill will become an unfunded mandate. Although an unfunded Health Care Reform bill would be distasteful to most voters, the politics of the Democratic party may force the party to not specify the funding specifics so that the Democratic party can get enough votes to pass something that looks like a Health Care Reform bill.

One of the things not being discussed is the fact that there is overwhelming skepticism that  any of the current legislation will slow down future health care cost increases. The political tactic is to expand health care coverage and leave the responsibility for “bending the health care cost curve” to a future group of legislators. Here are some sage comments by two organizations on the front line of health care.

The chief executives of the Cleveland Clinic and Mayo clinic, both held up as models for health reform, voiced concerns about the health care proposals moving forward in Congress.

Cleveland And Mayo Clinic CEOs Raise Concerns About Congressional Reform Proposals
(author unknown)
Fri, 02 Oct 2009 13:22:00 GMT

Last week my boss and I were talking about health care insurance. He said the reason our company offers a Health Reimbursement Account is because the the price offered to corporations for health insurance is so much higher than the price offered to individuals. Although I did not have specific knowledge on corporate rates, I am familiar with individual rates. I am amazed that the individual rates for a high deductable plan, $4,000/year, are so low compared to the rates reported in news stories for Verizon($20,000/year) and an Ohio lobbyist($30,000/year). The high rates paid at Verizon and others makes me wonder why such “smart” people can be so dumb.

Today an editorial in the Wall Street Journal, Another Health-Care Invention, reaffirms that point.

The Congressional Budget Office expects premiums for employer-sponsored coverage to cost about $5,000 for singles and $13,000 for families this year on average. "Premiums for policies purchased in the individual market," adds CBO, "are much lower””about one-third lower for single coverage and half that level for family policies."

The best health care deal for a frugal, healthy family is to combine a high deductable plan with a savings account for medical expenses.