Paying for Health Care

Is how we pay for health care important? A few weeks ago I skewered the Albuquerque Journal’s health care columnist for arguing that how we pay for health care is irrelevant.
Needless to say, as an advocate of free markets and someone who is versed in economics, I had to respond to such a statement. This is my response (subscription required) which appeared in Thursday’s paper. Basically, my argument is this:

Even avowed socialists like Michael Moore understand (to a point) that how we pay doctors is important. Insurance companies are taken to task in Moore’s movie “Sicko” for denying patients necessary care. What Moore and other advocates for government-run health care fail to see is that replacing insurance companies with government bureaucrats will only make the current situation worse.
After all, someone has to control costs and that means making decisions about who receives treatment and who doesn’t. Even in countries where the tolerance for high taxes is much higher than it is here, governments have imposed waiting periods and other mechanisms to deny care, thus keeping a lid on costs to taxpayers. (Of course, Michael Moore conveniently left these stories out of his movie.)
There are really only three cost-control options: individuals, insurance companies or the government. It only makes sense that individuals, particularly if they are armed with adequate information by their doctors, can obtain the best care for themselves for the lowest cost. After all, in a world of scarce resources where trade-offs are inevitable, wouldn’t you rather decide how those trade-offs are made instead of having someone else decide for you?
That is the thinking behind Health Savings Accounts (HSAs). Rather than giving insurance companies or the government the final call over my health care needs, as the proud owner of an HSA, I am building money in a savings account and can use that money on the care I need. This includes “alternative” forms of medicine that are not always covered by traditional insurance policies.
HSAs or, better still, simply giving individuals the tax advantages that are now given to employers to pay for health care, will improve the quality of our health care while saving money at the same time. Any scheme that purports to “reform” health care without empowering patients must rely on someone else to contain costs and will only worsen the problems we now face.
How we pay doctors drives the incentives in the health care system. Restoring the relationship between doctors and their patients can only be done by returning patients to the rightful role of owning their own health care.