Wednesday, February 13, 2008

Arnold Kling likes Kevin Drum's health care plan

But if it's price signals and competition you're after, why not cut out the middleman and have consumers pay doctors directly? For example, imagine a national healthcare plan that paid 75% of all medical expenses but required you to pay the other 25%. Your maximum out-of-pocket expense each year would be capped at, say, 5% of income at low income levels, 15% in the middle, 30% at the next level, and 50% for the rich.

...why not a simple single-payer system with copays instead of a massive new regulatory structure designed solely to keep health insurance companies in business? What's the point?

To me, this idea sounds much better than what we have now. It's simpler. It has most consumers paying more out of pocket at the margin than today. My guess is that when all is said and done, government spending on health care (if you include the tax subsidy for employer-provided health insurance as "spending") would be less than what it is today. I'm thinking that although the share of spending paid for by government would rise, total spending would decline, because consumers would be more careful in choosing procedures and shopping for better prices.

From my point of view, we could do better in terms of health care reform. However, we are much more likely to do worse.

I really want to see health care providers paying attention to consumers rather than third parties. Drum's off-the-cuff proposal seems like a step in that direction.

Arnold's dad has been wrestling with the current system, and it's not easy.

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