By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.
The first question that must be answered about health care is about what it is: a commodity, an entitlement, or something else.
If health care is a commodity, then it must be treated as such. The price of health care should be what the market will bear, which, for someone in a life-or-death situation, is a lot. If someone is a poor negotiator, or if circumstances such as a ruptured artery make them unable to negotiate, then they might pay more. If they can’t afford it, then they can’t buy it, and the rest of us should feel no more remorse than if they can’t afford a pickup truck. They should have made better economic choices before they went shopping at the hospital.
Very few of us see health care this way. So if it’s not a commodity, then what is it? The opposite would be an entitlement – a service the government bestows. That’s how it works in a lot of European social democracies and in Canada.
Americans don’t like that either. The idea of the government having the power to give and take away free stuff, particularly something as important as health care, typically makes us uneasy (unless we can figure out some way of justifying it when we personally benefit, of course).
If health care isn’t a commodity, and it’s not an entitlement, then it’s something in between – a partial responsibility for middle- and upper-class individuals under age 65. That’s the messy middle ground Americans have selected, and the way it’s implemented is through insurance.
All of this is relevant because it’s time for Americans to once again sign up for health insurance. It’s now mandatory, of course, and this time, the fine for not paying is $695, which is enough to sting a little.
You can bet that Republicans will use this fact to score political points, even though this part of Obamacare was a conservative idea not long ago.
Insurance’s purpose is to insure us against unforeseeable costs we cannot pay. We pay thousands to the insurance companies today so we’ll be assured of receiving much more expensive care if we need it tomorrow.
For that system to function properly, most of us must lose money on this deal. And it only works fairly if all of us who can afford it pay in. The 23-year-old with money who doesn’t buy insurance will still be allowed to access the system if he crashes his motorcycle, because in that moment his life is so precious that it cannot be commodified. But somebody has to pay for saving that life, and because he didn’t, his health care will be subsidized by the rest of us. That makes it an entitlement.
One of the problems with this middle ground is that it doesn’t contain enough cost controls. If health care were a commodity, care would be rationed by the market. If it were an entitlement, care would be rationed by the government. As insurance exists now, buyers pay most of their health care costs upfront and have few incentives to shop around. Sellers therefore have few incentives to provide the cheapest deal possible.
The United States spends about 18 percent of its gross domestic product on health care, far more than the rest of the world, and the costs still are rising at unsustainable rates. If you’re wondering why you haven’t received a raise in a while, the truth is that you have: Your employer is paying more for your insurance every year rather than increasing your salary.
This can’t continue. In any economy, costs must be controlled by something, and if nothing else will do it, eventually the government will. So the buzzword these days is “consumer-driven health care” – making health care a little more of a commodity, but within the current system. Policymakers who are interested in solving problems are considering how to incentivize consumers to make more informed economic choices. Making them spend more of their own money, but not a crippling amount, through higher deductibles is one imperfect way of doing this.
This will be messy, it will be hard to figure out, and there will be a lot of yelling. So far, the United States has foregone the more cut-and-dried choices – making health care either a commodity or an entitlement – because of those choices’ problems. In other words, we still have a majority consensus about what health care is not. Now we just have to figure out what it is.