What's your mechanism here? Anything that's covered by "insurance" is disconnected from consumer choice and thus normal competitive pressures don't work to constrain prices?
Would you outlaw insurance, then? I guess that could be a good approach if all of us were rich enough to self-insure!
> Anything that's covered by "insurance" is disconnected from consumer choice and thus normal competitive pressures don't work to constrain prices?
Not "anything." Obviously there are other types of insurance whose rates aren't skyrocketing higher than inflation, like car, auto, or life insurance.
> Would you outlaw insurance, then? I guess that could be a good approach if all of us were rich enough to self-insure!
I would make employer-provided coverage no longer tax deductible, and possibly even reverse that initially so that consumer-purchased coverage is tax deductible. This would cause a shift over the next few years away from employer-provided coverage.
This would be a net zero change in spending on day one, but now consumers will care about what they're paying for insurance and can switch on their own. This isn't a problem that will fix itself overnight, but when consumers actually see $1k+/mo leaving their checking accounts every month, they will actually shop around and make choices based on pricing. They don't do that now because they don't see the cost or pay for it directly.
With consumers making choices based on pricing, insurance providers will care much more about prices and push back, just like they do in other markets.
> I would make employer-provided coverage no longer tax deductible, and possibly even reverse that initially so that consumer-purchased coverage is tax deductible. This would cause a shift over the next few years away from employer-provided coverage.
This is something that I have argued for as well; the disconnect right now between what insurance costs, what it pays, and what the customer pays is too confusing and provides a very strange incentive structure. I would even go further and argue that all medical expenses should be tax deductible, with insurance premiums just being a special case of the general deduction. Get rid of all this FSA and HSA nonsense.
That said, I think part of the problem is that medical insurance is increasingly being used for routine medical care. Auto insurance, for example, does not cover preventative maintenance or oil changes, so consumers need to price those themselves. Similarly for other major kinds of insurance, like life or homeowners.
Vision insurance plans are increasingly common now, like VSP, and as a result, I've anecdotally noticed strange distortions of the market for eye checkups; we're still at the point where you can get a quote for one, but increasingly it's buried behind talk of co-pays and co-insurance that serves to hide the fact that the costs are going up for no reason, and the quality of service is being put at the exact minimum level that the insurance generally will cover.
I'd much prefer a high deductible plan (in fact I'm on one now) but I'm hampered by the fact that it is almost impossible to actually manage -- the billing comes from three different places and I can never figure out whether I've already paid a bill because they keep billing for different amounts for the same visit. And sometimes they bill my insurer, and other times they bill me directly, or sometimes they just go ahead and do both, and also send me threatening letters about paying bills that I've already paid.
I would love to see increased competition in this space, but until we get rid of employer plans, I don't see that happening.
Would you outlaw insurance, then? I guess that could be a good approach if all of us were rich enough to self-insure!