Third Party Payment

It's become very fashionable to blame insurance companies for many of the problems in health care these days. But, here's another perspective to think about since we are now having a national conversation about health care reform. The premise of insurance is to have a third party (the insurance company) pay for things. But, there are always problems when you bring third parties into such economic transactions. Ask yourself: If you were the third party how many treatments would you be willing to pay for? How many treatments would you deny payment for? If it were your business to provide third party payment would you be as generous with your money as everyone is demanding that insurance companies be with theirs?

There's no question that the way our health insurance industry is structured and regulated distorts any free market principles at work in health care. But, to find a solution we must first understand the problem. Any attempt to separate the physician from the customer will distort the system in some way. This is the system we currently have and, unfortunately, it looks to be the system we will still have once reform legislation passes.

What nobody seems to be asking is what would happen if we allowed health insurance to work as car insurance works. We don't expect car insurance to cover every expense associated with our cars such as gas, oil changes, and other routine repairs. As a result, these services are affordable as is insurance. Part of the reason they both are affordable is because there is a free market at work. Unlike health insurance, car insurance can be sold across state lines and unlike health care services automobile services charge clear prices for their products that consumers pay.

One of the worries is that if we let the free market dictate prices most people won't be able to afford health care. Why would this be the case? What business would charge more than any of their customers (or the vast majority) could not pay. They would soon go out of business. But, you might say, health care is already expesive. Well, if we leave payment to third parties this is an inevitable result. If neither the doctor nor the patient can engage in a negotiation for their health care services and what they will pay for them costs will continue to rise.

But, what about medical procedures that are inherently expensive since they use expensive technology not yet widely available. The best analogy here is with consumer electronics. When flat screen and plasma televisions first came out they were expensive and only affordable for a few people. But soon after this prices fell and now these technologies are widely available and affordable. The same would likely apply if we allowed health care technologies to be available in a free market.

What about those who still cannot afford these services. We can address that problem as we do other affordability problems with much less disruption and much more beneficial results. There is no question that the current system is in need of reform, the real question is will we pursue a course of reform that might yield beneficial health results or just beneficial political results for our elected officials. These will not necessarily be the same benefits.

Health and the Constitution

Article I Section 8 of the U.S. Constitution specifically outlines the powers that Congress has. What I would like to know is where in that section of the Constitution does it allow Congress to legislate with regard to health care. Here is the relevant text, please help me out!

Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and current coin of the United States;

To establish post offices and post roads;

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

To constitute tribunals inferior to the Supreme Court;

To define and punish piracies and felonies committed on the high seas, and offenses against the law of nations;

To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water;

To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years;

To provide and maintain a navy;

To make rules for the government and regulation of the land and naval forces;

To provide for calling forth the militia to execute the laws of the union, suppress insurrections and repel invasions;

To provide for organizing, arming, and disciplining, the militia, and for governing such part of them as may be employed in the service of the United States, reserving to the states respectively, the appointment of the officers, and the authority of training the militia according to the discipline prescribed by Congress;

To exercise exclusive legislation in all cases whatsoever, over such District (not exceeding ten miles square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States, and to exercise like authority over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings;--And

To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.