In this post, I suggest some ways of making health insurance more affordable and accessible with less, rather than more, government interference in the market.
It has become commonplace to use the case of the United States as evidence that leaving health care to the workings of the free market results in worse outcomes than if it provided by governments, as is usually the case in Europe.
Unfortunately, the health insurance market in the US can hardly be described as free, even before Obamacare. It has long become little more than a playground for politicians to push their pet social goals.
One of the reasons why health insurance tends to be so expensive is that government regulation forces insurers to include some benefits in their plans that buyers don’t want, don’t need, and are not even insurance against any discernible risk in the first place. A case in point is that, under Obamacare, everyone must buy health insurance that includes maternity care benefits. Even men.
These mandated benefits are not new to Obamacare, but they differ widely among states. Instead of mandating additional benefits, the federal government should allow people to buy insurance from outside their state. This would those living in states where politicians see themselves as social engineers to “escape the asylum” and get affordable health insurance that only covers actual risks to themselves, and not socialized care to others.
Another way of making insurance more accessible would be to shift away from employer-provided health plans to individually purchased insurance. Why exactly anyone thought that employer-provided insurance was a good idea in the first place beats me, but the problems are obvious: when you lose your job, you lose your health insurance. Even if you don’t lose your job, you will not want to change jobs if you already have a serious health condition, because it may not be covered by the new health plan.
Unsurprisingly, this problem was also created by the government. Employer-provided health benefits are excluded from taxation, which means that if you want health insurance, it is cheaper to ask your company to provide it (in exchange for a lower salary) than it is to buy it yourself. In fact, this is the biggest tax deduction in the US. Not only does it present an enormous cost to the treasury, it also creates huge distortions in the health insurance and labor market.
Since it is such a bad policy, it should come as no surprise that not only will it be maintained by Obamacare, it is being expanded! From 2015, companies with more than 50 employees will be forced to buy insurance for them.
Instead of fixing what was broken with health insurance in the US, Obamacare has managed to take every bad policy in the book and make it worse.Diogo Pereira