Health Care: End Third-party Payer, or Stop Wasting My Time and Money

Lynne Kiesling

I continue to be thoroughly disgusted by the disingenuousness of the health care policy debate in Washington. From a public choice perspective I understand why the debate continues to focus on what I think are the tangential and ancillary questions, and the attempts to tweak and improvise around the edges … but my opinion long has been, and continues to be,

Unless and until we change the differential tax treatment of employer-funded health insurance and remove the third-party payer incentive problems embedded in it, we will have no meaningful change in health care costs or affordability.

Therefore, all of the time and resources that Congress and the administration are pouring into forcing a health care bill are just wasting my tax money and the time and effort of my elected representatives. What they are doing right now is expensive and wasteful wheel-spinning, well deserving of the name “political theater”.

Arnold Kling made a related point on Thursday:

There are two ways to approach reducing the use of high-cost, low-benefit procedures. You can have the government tell people what they can and cannot have. Or you can have individuals pay for a larger fraction of the medical procedures that they consume. It really comes down to those choices.

Advocating either one of those is political suicide, and talking about anything else is a waste of time. The Democrats will not advocate government rationing, and the Republicans will not advocate scrapping most of our current system of third-party payment in medicine. Instead, the summit, like the entire “health reform debate” this year, will be a waste of time.

I do, though, think that Arnold is being too generous when he gives the health care summit participants grades ranging from D+ to F-. They are wasting our time and money by refusing to confront and address the core incentive problem, which is the staggeringly distortionary and inefficient coupling of employment and health insurance.

3 thoughts on “Health Care: End Third-party Payer, or Stop Wasting My Time and Money

  1. Very true Lynne. Unfortunately, contrary to the blathering of mental lightweights like Ezra Klein et al., the plans coming out of DC cement the third-party payer system in place and make it worse by issuing even more layers of regulatory diktat. My fear is what we will get down the line when our fearless leaders in Washington see that the system they have created has not slowed cost growth at all.

  2. Don’t leave out Medicare and Medicaid, they are almost half of the country’s health care expenditures.

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