Arnold Kling  

Wrong State for Market-Based Health Insurance

The Big Lie... Cowen's Law...

My latest essay is now out from behind the subscription wall in the Weekly Standard.

Massachusetts is considering health insurance reform to address the problems of the uninsured. The federal government is pressuring the state to do something or lose several hundred million dollars in Medicaid funding. Two competing ideas are single-payer health care, favored by some on the left, and a multilayered insurance reform proposed by Republican governor Mitt Romney.

I wind up coming out in favor of single-payer for Massachusetts. It's not that I don't prefer Romney's plan in principle. It's that Massachusetts is a state where health care spending per person is way above the national average, so that any health care finance reform is likely to look bad.

In my view, the real reason that health insurance is expensive is that medical care is expensive. The real reason that medical care is expensive is that we have so many specialists and a lot of expensive technology. Massachusetts has excessive amounts of both. You can't fix the problem of expensive health insurance there. Try Mississippi.

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COMMENTS (4 to date)
Bill Stepp writes:

Isn't healthcare expensive because of artificially increased demand (caused by third-party payment) and decreased supply (caused by regulation of healthcare professionals, hospitals, drug production, etc.)?
Why not try economic freedom?

spencer writes:

I keep trying to remember the quote, but it was to the effect, anything that ranks Mississippi first and New England last has to be an example of something you do not want to have.

Isn't the reason health care is more expensive in Massachusetts it that it has a lot more and a lot better health care then Mississippi? If and when I have a heart attack, I will prefer havings a lot of expensive technology and medical specialists on call.

Brad Hutchings writes:

I don't get it. Doesn't MA have its hands full this holiday season with Puritan-era blue laws? Wouldn't that be a great thing to focus on and repeal in the coming election year?

Chris Bolts writes:

[quote]If and when I have a heart attack, I will prefer havings a lot of expensive technology and medical specialists on call.[/quote]

True, but that is what catastrophic insurance would be for: to cover expensive technology and medical specialists when you need it. What we have now is insurance that gives people what they want whenever the hell they want it and not necessarily because they need it.

One thing that is not mentioned, but can help reduce transaction costs greatly is upgraded IT in the healthcare industry. It's silly that I have to establish a new file with every doctor I visit. Of course, people who are concerned with privacy stand in the way of an integrated information sharing network from popping up, but this can help out a lot by reducing redundancies in information and cut down on misdiagnoses and unnecessary procedures and prescriptions from being undertaken.

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