The other day, my friend Scott McMillan posted a comment about the opening sentence of my (now ancient) last post. He said, “I’d like you to comment on this statement: ‘It’s starting to look like we’re going to get some sort of healthcare reform.’”
Well, Scott, here you go. It’s often been said of the Palestinians that they never miss an opportunity to miss an opportunity. Turns out that the Democrats are Palestinians in sheep’s clothing. Who knew? This was a slow, hanging curveball that stopped over the plate, looked at the batter and said, “Hit me. Please. I beg you. Hit me. ” It’s not easy to strike out under those circumstances, but Pelosi, Reid & Co. still managed to do it.
Health insurance reform will show up again. It has to because the underlying problem won’t go away. I’m not going to predict when the comet will reappear, but I’m sure that it will. When it does, here’s something I’d like to see:
I’m a big believer in simple solutions to complex problems. That’s actually a misstatement. What I’ve found in my business life is that people make problems much more complicated than they need to be. They do this by defining problems incorrectly and also by subconsciously accepting artificial constraints that are based on history rather than current reality. Like algebra, the art really is in simplifying the problem first, then solving it.
In the healthcare debate, there is broad agreement that (unless the government steps in as the sole insurer) health insurance should be provided by employers. Many go so far as to say that employers should be required to provide it. This is silly, and is a classic case of an artificial constraint that should be done away with.
Employer-sponsored health insurance is an anachronism that is decades out of date. It emerged in the 1940s as a valuable benefit for unions to demand and an easy, inexpensive concession for employers to give. The government liked it because it broadened access to health insurance without the government having to do anything. And the insurance companies liked it because it gave them random pools of people to insure.
Of all those factors, only the last is still relevant today. The essence of insurance is that the lucky subsidize the unlucky. That is only possible when individual outcomes either cannot be known (will you get into a car accident) or are known but are not factored into the cost of the insurance for individual buyers. Factoring them in = “pre-existing condition.”
So let’s redefine the problem. If you start with the assumption that employment is the right basis for inclusion in a random insurance pool, then the question is “How do we convince/enable/force more employers provide health insurance?” However, if you do away with that assumption, the question becomes “How do we provide insurance companies with random pools of people to insure?” That’s a much easier problem to solve.
Here’s one idea. Create insurance pools that are based on last three digits of your Social Security number. You are automatically entitled to join the pool with your number, either as an individual or as a head of household. That would create 1000 pools for insurance companies to bid on. Each pool would have a board that would collect and evaluate bids, and select 3-4 plans that members of the pool could purchase. The government’s role would be limited to oversight of those boards.
Creation of these pools would allow us to eliminate employer-provided health insurance altogether. Health insurance can and should be an individually purchased product, just like car insurance. The cost could be made tax-deductible (although it’s not clear that it should be – but that’s a problem for another day). Combine this with a subsidy to help those who can’t afford to pay (otherwise known as “welfare”) and voila, we have universal coverage. There, now that wasn’t so bad, was it?
Running a business in America today is tough enough. I can’t see any reason to continue burdening business owners with the obligation to provide health insurance when the need for them to do so expired long ago, and when it would be so easy to solve the problem another way.