A Public Option? No, Public Assistance? Absolutely!

A friend who is reading my blogs told me he appreciated my comments on defensive medicine but implied disagreement with me stating he believed there needed to be a public option for healthcare.

If I have not thus far made it clear, I want to do so now. I am for government assistance to needy persons for health care. If you read my blog on the SNAP program below you will see it is not government assistance I want to do away with, but government price setting. With Medicaid and Medicare, the government sets the price too low causing cost shifting to insurance companies, which then results in higher premiums and fewer people able to afford insurance. As the pool of people paying insurance decreases the premiums must go up further and the spiral continues.

We must help the poor fund their healthcare. But we must do it in a way that keeps the government from disrupting the market forces. Please see my blogs on comparing healthcare and rent control. The free market will set the price lower.

Look at LASIK eye surgery. Health insurance and government medical care do not cover the price of this procedure. Meaning true market forces are setting the price. What has happened? When LASIK was introduced it cost $5,000 to $6,000 dollars. I saw an ad yesterday for LASIK for $499 per eye. Granted the average LASIK procedure is roughly $1,800 dollars, but even this amount is significantly less than where it started. As ophthalmologists competed for the dollars people were willing to spend, the price fell. This year's average was less than last year's. This decrease in the average cost of a surgical procedure on the eye happened in the face of an increase in healthcare costs that was twice the rate of inflation.

I truly believe something similar to the Food Stamp program would be ideal for healthcare. The consumer would make the decisions and the price would be set where market forces would put the price. Every time government rent control (which forcibly set the price lower for housing leading to cost shifting) has been lifted, the supply of housing increased and the price fell to affordable levels. Government intrusion by setting a price for services lower does not work in housing or in medicine.

Some might point out that currently health insurance and managed care companies are prevented from really competing in the market. That is true, and is significantly contributing to both cost and thus the lack of affordability. The government prevents companies from competing across state borders. There are some 1300 insurance companies in the United States, but in one district in California only 6 are allowed by the government to offer services. The redundancy of Blue Cross Kentucky and Blue Cross Tennessee and Blue Cross Alabama, you get the point, is an astronomical overhead cost forced on the insurance companies by...you guessed it, the federal government.

Allowing the insurance companies to compete across state lines would significantly reduce the costs of health insurance and would lead to more people affording health insurance. This is just another example of how government inserts itself into the free market and makes the situation worse.

We need to help poor families afford healthcare by taking actions that reduce their costs by allowing the free market to set the price, and where necessary provide them a method to pay for services and chose the type of care they want. The SNAP food stamps debit card like healthcare system with a catastrophic back up plan is, I believe, a viable alternative. It allows consumers to make the choice and incentivizes people to not abuse the healthcare system, especially if there is a pay back of saved revenue. We must act soon.