Rossputin.com: Rational Thinking About Our World

A reader sent me a question, in response to my article about Rudy Giuliani, about health insurance. Following is his question and then my response:

Hello,
Thank you for making your well articulated analysis and commentary available to the general public. I am hoping you might be able to elaborate on this statement:

Giuliani is correctly on board with President Bush’s proposal to modify the tax code as a first step away from forcing health insurance coverage to go through employers and to begin returning to a system of personal responsibility.

Do you feel that the majority of Americans would some how be able to afford healthcare coverage without the aid of their employers?

Yes, I do believe that is the case.

First of all, the proposal is not to eliminate the deductibility of health insurance payments that employers make but simply to add a parallel tax benefit for individuals. Note that if an employer is not paying for someone's insurance, he can pay a higher salary. The employer cares about total compensation costs, not just how much salary he's paying to the employee.

Second, the insurance market must be reformed so that insurance companies can compete across state lines. This would make a huge difference in quality and price.

Third, regulations on insurance must be changed so that policies are not forced to include coverages (such as mental health) that the insurance purchasers don't want and which just serve to increase the cost.

Fourth, groups of people must be allowed to get together and buy with the power that groups bring, even if they're not all employees of the same company or otherwise professionally associated.

Fifth, and maybe most importantly, we must push the use of Health Savings Accounts so that consumers of health care have a somewhat higher cost to use medical care and the incentive that if they don't go to the doctor for something they really don't need to go for, they get to save/keep that money.

All of these things will bring competition and discipline to the insurance market. It will cause the creation of better and cheaper insurance policies, more self-reliance, and generally a system that is less socialist and self-destructive than our current health care funding system.

Thanks for reading and writing,
Ross