Insurance companies are a big part of the problem. They totally distorted the market and they are able to do this because of government involvement. In the first place, we capped wages during the depression, so employers offered benefits in place of higher wages. That's how employer-provided health care was born. The insertion of a middle man that represented collectives diffused costs across the group and concentrated benefits (this is the root of most waste in our form of government, and now we've seen it applied to the health care market). Because of this, providers and insurance companies can get away with little transparency and competition. We've got a mountain of red tape to ensure better outcomes for recipients. Some of them work, but most of them make health care more expensive and insurance companies and hospitals basically always win. I'm not one for regulation, but if we're going to have it, why not have smart regulation that encourages competition?....like forcing providers to publicly publish the cost of services. Lobbyists are always very influential in policy-making, and that's why we end up with so many regulations that benefit corporations instead of consumers.
There are three huge problems with the solutions the left tends to provide (not that the right is offering much better):
- We can't afford them
- Giving the government more control over health care outcomes opens the door for more lobbying
- Even if they came up with a super smart plan, implementation of a plan where the government increases its role is probably the most tricky component of all of this
This is a good pod episode.
Policymaking Is Not a Science (Yet) (Ep. 405) - Freakonomics