Who Pays for Health Insurance?

Wall Street Journal column discusses how it isn't just the uninsured who don't benefit from the current health insurance model (and how a standard deduction for health care would help insured and uninsured alike).

Weak consumer cost-consciousness has left the U.S. with private insurance that functions as a reverse Robin Hood scheme, taking from middle-income Americans to support a health system that benefits many elite interests. A significant fraction of the cost individuals incur for health coverage goes not to pay for care they and their families receive, but to support a variety of industry activities and projects, including medical education and research and the building of costly facilities. Even assuming the industry pursues only socially worthwhile goals, its otherwise uncompensated efforts should be financed by a fair system of taxation. At present, many such costs fall on premium payers like a regressive "head tax" rather than in proportion to their income or ability to pay.

Evidence also suggests that many benefits of health insurance, though paid for equally by everyone, flow disproportionately to the affluent. For example, cost-sharing requirements deter lower-income individuals from using their coverage more than they deter wealthy ones. The latter also know how to manipulate the system to obtain more and better services at plan expense. Legal mandates requiring insurers to cover such services as mental-health care and fertility treatment make available, at collective expense, benefits that the affluent are much more likely to use.

Particularly in view of the widening income gap between middle- and high-income earners, serious attention should be given to how the health-care system takes lots of money from the working class without giving them commensurate value for much of it. One does not have to be a populist to see the unfairness (as well as the tendency to increase the uninsured population) of forcing workers to pay unjustifiably high prices as a condition of being insured at all.