March 25, 2009

Healthcare Controls Can Be Natural or Unnatural

Justin Katz

In the abstract, there's a dollar amount at which our healthcare system would hum along, factoring in how much employees would demand to do their jobs, how much supplies and operations cost, the expectations and requirements of consumers, their willingess to conserve, and so on. The more we drift from that ideal, the more we'll hear this sort of news:

The study for the Robert Wood Johnson Foundation found that nearly 1 in 5 workers is uninsured, a statistically significant increase from fewer than 1 in 7 during the mid-1990s. The problem is cost. Total premiums for employer plans have risen six to eight times faster than wages, depending on whether individual or family coverage is picked, the study found. ...

About 20.7 million workers were uninsured in the mid-1990s. A decade later, it was 26.9 million, an increase of about 6 million, the study found.

In the 1990s, there were eight states with 20 percent or more of the working age population uninsured. Now there are 14.

The article notes that workers ultimately fund the health insurance of the elderly, the young, and all of those who receive subsidized healthcare, and it doesn't take extensive consideration to understand that increasing costs make it less likely that employers will offer the benefit and increasing coshares lead fewer employees to accept it. The more the system removes natural incentives to conserve and price shop for select groups, the higher the price will go for the rest.

A fiat that mandates the removal of risks and benefit-cost-cutting will skew the system further. The excesses and waste will come out somewhere — probably in rationed services and reduced quality.