Health Care - Macro View

There has been a lot of talk lately about health care. Obviously. Opponents of the current House Bill, HR 3200, cite various parts of it as atrocities on liberty and the economy, while proponents dismiss the claims as out of context or fabricated. But I'd like to look at the whole thing from a different angle through a macro-lens.

Suppose the many claims of those opposed to HR 3200 are indeed false and that this is indeed only another option for citizens and is, as President Obama states, a way “to keep insurance companies honest.” Let us hypothetically trace the ramifications of such a bill, were it to pass.

Suppose the government payer option is in place for all citizens; what do the demographics look like? As far as I can tell there will be, basically, two options: a government payer option of some sort and private insurance. Not much difference there. I can also see there being three groups of people: those already on some form of government based system (e.g. Medicare, Medicaid, the VA etc.), those using private insurance and those using neither option. Let's see if we can trace this further, seeing what would happen to each group of people.

The first group mentioned, those already on some form of government payer system, would likely change very little, as their circumstance would have changed very little – they would not have any motivation to switch to private insurance as this would be an unnecessary cost to their budget. They might switch from Medicare to the general government based system, but this would not change their finances significantly.

Now let's shift our focus to the group that was on neither government funded health care nor private insurance. They are the people who either could not or would not afford private insurance – they are not likely to suddenly afford that option. However, notice that a free form of health care has presented itself as an option to them. Given the choice between not paying for insurance and paying all of one's medical bills and not paying for insurance yet being able to be covered by a government plan, which will they choose? The latter.

The last group is those on some form of private insurance, either a family plan or in a group policy (e.g. through their business). Most likely they will continue as they are for a time, after all they were getting along fine before the government option presented itself, they would get along fine afterward as well.

However, those people will start to notice they can take a slightly more extravagant vacation or pay off their car a little more quickly if they divert their funds from their private insurance to other areas. Businesses will notice that if they cancel their group insurance policy, they can similarly divert their funds into developing better products or could cut costs in other areas to undersell their competitors. Suddenly, the private option is dwindling.

It is in this manner that our system would inevitably become entirely government run and the concept of private insurance would become obsolete.

Ultimately, one must realize that when an individual is presented with a free alternative to services or goods for which he is already paying, that individual will invariably choose the free alternative.