Not surprisingly, the American Health Care Act, or Trumpcare for short, has gotten bad reviews from the media, reflecting its left-wing bias. But for fans of free-market capitalism like myself, a different appraisal is warranted. Trumpcare would make the U.S. health-care system a little bit more free market and capitalist.
What’s Wrong with Health Care Today
First, let me provide some context. U.S. health care is not a free-market system. It is a botched attempt at a free-market system, which leaves out consumer sovereignty and price competition. It delivers a good product, and powers the lion’s share of the world’s medical innovation, while western Europe free-rides. But it is locked in a permanent crisis of high costs.
This has less to do with the nature of health care than with the industry’s unfortunate organization. Without consumer sovereignty and price competition, any industry—housing, food, transport—would get stuck in a high cost trap. On the other hand, if health care became a normal American industry with normal consumer choice and payment practices, it could be expected to transition, perhaps over the course of a generation, to the good service and reasonable prices that normal American industries deliver.
Consumer sovereignty and price competition are excluded by the institution we misleadingly call health “insurance.” True insurance covers large, rare, unforeseeable costs. Health “insurance,” as we know it, pays most of the cost of just about every transaction you have with a medical provider. That’s not insurance. It is best described by a term the media use to lump together private insurance with government programs like Medicare and Medicaid: “coverage.” Coverage implies comprehensiveness, complete insulation from costs. What we call health “insurance” is really health coverage.
Coverage is the big problem with U.S. health care. People with coverage have little or no incentive to economize, so costs balloon out of control. Obamacare’s mandate for people to buy health coverage had the merit of high deductibles, which has given people some reason not to overconsume, but it ultimately reinforced the unfortunate coverage model.
How People Should Pay for Health Care --->Read the rest from The Federalist HERE and follow links to related stories below:
CBO Will Likely Nullify House TrumpCare Vote This Week
House May Have to Vote on Health Care Bill Again
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