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Wishing You Health, Prosperity, and Happiness In The New Year and Beyond (Part 1 – Health)

By Theresa Fritz Camoriano

A few years ago, when we were looking for an office manager, we interviewed several applicants.  One applicant asked us early in the interview what kind of medical insurance we offered.  We told her we had a good policy that even permitted us to go to doctors who were not members of the group.  She asked how much the co-pay was, and, if I remember correctly, it was about $10-$15 at that time.  She said that was too much, so she would not be interested in working for us! 

I found that incident to be very amusing.  Apparently, that job applicant did not realize that employment is a package deal, including both salary and benefits, and that a sensible evaluation would require looking at the entire package.  For example, if her salary were $100 per month more than she expected, then paying an additional $5-$10 when she went to the doctor should not be a problem.  She also apparently did not realize that, in any case, she would have to be earning that package – i.e., there is no free lunch (or free health care).  As I see repeated discussions of the “health insurance crisis” in this country, I am regularly reminded of that job applicant and now realize that many people share her misunderstanding.

The reality is that there is no natural right to free health care.  Health care is not free, and somebody has to pay for it.  The only real questions are who will pay and how will the resources be allocated. 

Over the past several years, we have seen health insurance policies that cover just about everything, with very little out-of-pocket payment required from the person using the policy.  This means that medical care appears to be “free”, so there is little incentive to be cautious about using it. It is as if we had a “hotel insurance”, which required us to pay $10-$15 each time we went to a hotel and which then covered all our other expenses.  You can well imagine that the Motel 6 chain soon would go out of business, because everyone would go to five star hotels and order expensive room service, pay-per-view television, and the deluxe treatment, since, after paying the initial small fee, the services appear to be free.   However, in reality, neither health care services nor hotel services are free.  But, when they appear to be free, or when the person using the services has no incentive to economize, the use of the services will expand, and the cost will go up to cover the expanding services. 

Whether your health insurance is provided by your employer or whether you write the insurance premium checks yourself, you can be sure that you are paying for that health insurance, which, due to our crazy system, is becoming extremely expensive.  The Kentucky state legislature has further compounded the problem by requiring that anyone who buys medical insurance must buy a long laundry list of coverage, again preventing us from limiting our costs by limiting the types of medical problems being insured.

Since health insurance costs have become so expensive, many people say it is time for the government to take over our health care.  This would mean that we would pay for health care by paying taxes, and the government then would determine what type of health care we would be able to obtain.  While it may sound good to think that we are pushing our medical problems onto someone else’s shoulders, the fact is that this kind of socialized medicine would be even worse than what we have now.  With that type of program, there would be no cost incentive for us to limit our use of medical services, so costs would skyrocket even further. 

The government then would have to do something to contain costs.  For example, there probably would be long waiting lines for expensive medical services, and certain people would be denied services due to age or other criteria, as is currently being done in Canada.  Or, as we are beginning to see in our Medicare system, the government may simply restrict the amount it will pay for services, so that fewer doctors would be willing to provide services for the fees the system would pay.  Again, this would make it more difficult for people to obtain treatment. 

The real answer to our health insurance problems is not to ask the government to meddle more into our health care.  Quite the contrary.  Instead, the answer is to ask the government to back off and to allow the market to work as it does so well in so many other areas of our lives.  The best way to allocate resources is for the people using the system to have an incentive to keep costs down.  So, instead of pretending that medical care is free, we need the consumers of the services to see the real costs and to have some control over which services they use and how much they pay for those services. 

For example, if we had major medical insurance for the big, expensive medical problems and then medical savings accounts which we used to pay the other costs, we would have much more control and more incentive to keep costs down.  When the patients are put in charge of their own health care costs, they will be much more careful about the way their money is spent, and the costs will be reduced.  Most importantly, the costs will be contained based on sensible decisions made by the patients, not based on red tape and waiting lists created by some government bureaucrat. 

This year, medical insurance costs become deductible to individuals, which may help move medical insurance away from being a benefit controlled by our employers to being something we buy for ourselves like car insurance, life insurance, or homeowners’ insurance.  Perhaps our increased freedom and the competition it will engender will lead us toward a system that will make much more sense.

In this new year, here’s hoping you will be very healthy, so you will not need to use any kind of medical insurance.  At the same time, here’s hoping our elected officials will realize that we need more freedom and more control over our own health care  -- not less -- so that, if we do need health care, it will be both affordable and available.

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