I attended a health care debate last night between national radio talk show host Hugh Hewitt and CU Law Professor Paul Campos. As I listened to the debate, I could not believe the things coming out of the liberal Law Professor’s mouth, but even more so, I was awestruck and disappointed by the things that Hugh never said.
One argument Professor Campos made was that we spend more on health in America than other developed nations, due to high administrative costs, which he claimed were 30% of the overall cost. I have not researched this myself but I believe it to be true. The question I wanted Hugh to respond with (and answer) would have been, “Why are we spending so much on administrative costs?” Part of the reason for this is people treat insurance as something that is meant to cover every routine check-up and doctor visit, instead of simply covering catastrophic events, such as a major illness or accident. When a doctors office must file myriad amounts of paperwork for insurance companies simply to see a patient who has the sniffles, it is no doubt going to raise the costs due to the time it takes to do such things. Also, when the insurance industry is getting a cut every time someone sees the doctor, it raises costs as now there are more people who need to get paid. Ari Armstrong, of FreeColorado.com, points out that the reason insurance should be left to cover catastrophic events is that “…if you force insurers to cover routine, expected costs, the premiums will grow much more expensive. Because holders of this alleged “insurance” bear no direct costs for their health decisions, they are less thoughtful about how they use medical services.” The second point he makes here is that when people aren’t spending their own money (i.e. they are billing it to their insurance company) they have no reason to shop around for the best price, or to consider whether they really need to see the doctor. This makes it much more expensive than it should be to have high-risk health insurance in the case something goes terribly awry.
Another point iterated by Professor Campos was there wasn’t enough competition in the health industry, which made prices go up and service go down. It is therefore necessary, he asserted, that government step in to create competition. To my surprise, Hewitt did not make a meaningful argument against this ludicrous statement. The fact is there isn’t near as much competition in the marketplace for health insurance as there could be. But to assert that it is a market failure is more or less to utter that you have no idea what a free market is. A free marketplace allows anyone to enter into the game and compete with their products or service. Mr. Campos is therefore making the conjecture that there simply aren’t enough people out there who want to make money in health insurance. Do we really believe this is the case? The real reason there isn’t as much competition in the marketplace is because of government – not market failure. Due to the tax code which provides tax breaks for employers who offer health insurance, more people rely on employer-based insurance as opposed to buying their own plans. This limits their choice and makes it harder for them to determine the actual costs of the plan, in addition to making it non-portable. When people lose or change their job, they also lose their insurance. Why doesn’t the government just allow tax breaks to individuals when they buy insurance for themselves? A phenomenal article called Moral Health Care vs. “Universal Health Care” by Dr. Paul Hsieh and Lin Zinser touches on many of the government regulations that have restricted competition in health insurance, including the inability to buy across state lines. To say that the government must be brought in to introduce competition in the marketplace is more than a joke, it is entirely contrary to the truth. I only wish Hugh would have made mention of it.