Conservatives should care about health care

Philip Klein has a must read article about why conservatives should care about health in the The American Spectator. He makes the case that it is not enough to fight off the left's push for a single-payer play (i.e. socialized medicine) but real reform is needed in something that consumes one-seventh of our GDP. He even appeals to "foreign policy" conservatives, based on the idea that increasing government spending on health care (which is inevitable without Medicaid and Medicare reform), will interfere with national defense.

As for free market solutions, he discusses a few:

HEALTH-CARE ANALYSTS OFFER several ideas for reforms that would usher in a consumer-based market. Most pressing is the need to change the tax code that makes the country overly dependent on employer-based policies. The purist free market reaction would be to simply scrap the benefit altogether, which would lead to higher salaries with which individuals could purchase their own insurance and which would save the government $200 billion in tax subsidies. The more politically palatable option would be to extend the same tax status to individuals purchasing insurance on their own, which would lower the ranks of the uninsured and allow people to maintain their insurance when they leave their jobs.

Another reform would be to allow individuals to purchase insurance across state lines, which would create a national market that would help consumers get around onerous regulations.

A change that Herzlinger believes is crucial to an efficiently functioning market would be requiring hospitals and doctors to disclose data on patient outcomes and publish prices, so that consumers can make informed choices.

The biggest challenge of any health-care system is answering the question of how those with pre-existing conditions and chronic illnesses such as diabetes would get covered, because it often isn't profitable for insurers to take on the risk.

To some extent, opening up the market would help, because if it were easier for people to purchase cheaper, high-deductible insurance policies in the individual market, insurance companies could capture premiums from healthier people and bring them into the risk pool, thus offsetting potential losses from higher-risk patients.

John Goodman, the president of the National Center for Policy Analysis, says that "what we need is a market for sick people....In normal markets, entrepreneurs go after unmet needs. That's how entrepreneurs make money, but in health care we've made it very difficult for people to make a profit by meeting the needs of sick people."

Beyond that, there are several other solutions offered for how to cover the very sick. One option is to create risk pools, which have already been experimented with in some states. Under this system, all the riskiest patients would be taken out of the normal insurance market and given the option to choose among a number of plans. At the end of each year, an administrator would tally up the cost of the losses for treating those patients, and insurers would divide up the cost among themselves. The result is that the losses get spread out, so no single insurer has to worry about getting stuck with a high concentration of the difficult cases.