12 Nov 2009

Milton agrees with me on healthcare

Well, Friedman is dead, so I suppose that I am agreeing with him, but I didn't know he also said that employer-provided health insurance is dumb (and note that the current bill makes that worse, by making it mandatory).

Bottom Line: Give the premium money to employees as salary [the money that's already "theirs"] and then let them buy their own insurance. Better incentives for better insurance, care and cost controls.


  1. My only question about individual health care in the manner you describe is about cost containment. With so many individuals buying into an oligopoly, there are going to be a lot of market inefficiences.

    What of the buying power of the bulk?

  2. I hope there will be more options available for health care (and medical care - they not necessarily the same thing) in the future - rather than fewer - which seems to be the direction of the health care debate. I believe the asymmetric tax advantage enjoyed by businesses and their employees distorts the efficiency of the market, and the reliance on low deductable insurance plans provides a moral hazzard leading to higher consumption of medical care than might otherwise be expected. The government sponsored barriers to entry (the AMA was another Friedman target as was the FDA - see Capitalism and Freedom and Free to Choose) also contributes to increasing costs.

    I think employers have a productive role in containing costs and providing effective preventative health care. What other consumer benefits as directly if people stay healthy, do not miss work days, and do not have expensive and debilitating health problems.

    For example, I can get flu shots at the office; no work time lost, the employer pays less sick time and has more productive employees, public health is improved by making the spread of contagious conditions more difficult, and I bet the cost per dose is lower than most other ways vaccines can be administered. It's my choice to participate or not. It looks like a win-win-win, individual, employer and community.

    For those who like the idea of disruptive developments and the associated lower costs, Clayton Christensen has written, The Innovator's Prescription.

    Bottom Line: Competition, choices and distributed decision making benefit us.

  3. @Josh -- the oligopoly is ENFORCED by employee purchase. Bulk discounts are irrelevant in most cases (drugs? get' em at walgreens; knee surgery? go to a clinic that specializes, not an insurance company/govt that crams down fees...) What's needed is more competition (we agree) and the opacity of employer insurance increases that. If you want to pay attention to the "inefficiency" of individuals buying, look at the market for computer hardware -- competition is what matters!

    @Jay. Totally.


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