Health Care Letter to My Congressmen

Thank you for hearing me out on a issue that I am very passionate about. I have not been able to find any townhalls that you will be at, so I am writing this letter.

The primary problem with our current health care system is cost increase. The other major issue, insurance coverage, is in large part a result of the high cost as well. We need to attack high cost first.

Unfortunately, all of the Democrats' plans that I have seen would exacerbate the problem instead of fix it!

The high costs are a direct result of a mostly 3rd party payer system. The more government has gotten involved with Medicare, Medicaid, SCHIP, coverage mandates, and allowing frivolous lawsuits, the higher costs have gone.

This is what happens whenever government subsidizes something or mandates loans or coverage. It always artificially increases demand and thus costs.

We've seen it happen in higher education. Government increasingly subsidizes tuition and provides subsidized or low cost loans which increases higher education demand, and the prices (including tuition) have skyrocketed.

We've seen it happen in the housing market, where an asset bubble was pushed up by government strongly encouraging and even arm-twisting banks into offering subprime, interest only, and low/no down-payment loans in the name of "affordable housing". It resulted in the housing crash which, combined with opaque use of derivatives and severe misjudging of risk on Wall Street, has directly led to our current economic recession.

One can argue whether the benefits obtained by the government-caused higher costs are worth it, but it is indisputable that the government is fueling a good portion of the higher costs. If cost is the big issue and we want to bring down the costs while improving efficiency and leaving the utmost freedom of consumer choice, then we need to take steps to stop government from distorting the markets and allow a free health care market to work.

Imagine for a moment if we had grocery insurance. Food is just as important as health care, right? What if your employer took some of what he could have paid you in wages and, just like health insurance, bought you grocery insurance. Everyone has the right to eat! Universal grocery insurance is a human right! You could use your insurance to go to the store and pick up whatever food you needed or wanted. No prices were posted in the store, and clerks would look at you like something was wrong with you if you asked how much something cost. You just payed a fixed copay per grocery store visit (or no copay at all!). What do you think would happen to cost?

Grocery shoppers would pay no attention to prices and would pick up far more than they needed. The increased demand, and the increased demand for more expensive items, would make total food costs EXPLODE! Pretty soon, the big bad grocery insurers would have to start limiting what food items they would cover, and denying coverage to the heaviest eaters. And Congressmen like yourself would be oblivious to how you caused the problem and would throw a fit about the evil insurance companies.

That is where we are in the health insurance system right now. Remember that the big issue is high costs, and the Democrats' non-solutions are to mandate that insurance companies cover everyone, mandate that they cover more procedures, mandate that small businesses pay more into the system (which will lower wages or hours or cost jobs), and set up a subsidized public plan that will drive private insurers out of the market and into government-controlled insurance.

And for those who say some compromise like goverment-sponsored co-ops could compete on a level playing field with private insurers, I would point them back to Fannie Mae and Freddie Mac. Those GSE's sure turned out well. Would the co-ops really get no unfair help from the government at taxpayer expense? Would they be considered "too important to fail"?

Democratic proposals would INCREASE costs, not help bring them down!

Democrats are veering us down a dangerous road where the government, instead of the market, will be responsible for holding costs down. Government cost controls are ineffienct and totally inconsistent with freedom. Do we really want to head down a road where a panel of government bureaucrats will end up deciding what procedures are covered. Governement rationing in order to keep costs down is inevitable if we go the Democrats route. They may not be proposing a NICE board like they have in the UK right now, but once costs keep going up, they will be forced to propose it then. It is a slippery slope.

The market efficiently rations care based on the price system. As with programs like food stamps, the poor could receive health care stamps (perhaps deposited into their own HSA?) to purchase health care.

Remember, the problem is costs. The solution to bringing down costs is to shift more of the cost visibility and responsibility to consumers. We could pay less in insurance rates if we bore a higher percentage of the cost for each procedure, just like in my grocery insurance example. Catastrophic health insurance would of course need to cover a high percentage of costs, but if there were better price visibility and consumers paid 30-50% of the non-catastropic costs at time of service, they would have a much stronger incentive to limit unnecessary or borderline necessary care, and to search out the most cost effective care.

And of course, no plan to reduce cost should exclude health care litigation reform.

Please consider pushing for health care reform in a much more market-centered approach.