John H. Cochrane neatly summarizes the root causes for many of the healthcare system’s woes. For one:
The main argument for a mandate before the Supreme Court was that people of modest means can fail to buy insurance, and then rely on charity care in emergency rooms, shifting the cost to the rest of us. But the expenses of emergency room treatment for indigent uninsured people are not health-care’s central cost problem. Costs are rising because people who do have insurance, and their doctors, overuse health services and don’t shop on price, and because regulations have salted insurance with ever more coverage for them to overuse.
If we had a deregulated, competitive market in individual catastrophic insurance, that market would be so much cheaper than what’s offered today that we would likely not even need the mandate.
This paragraph, meanwhile, sounds straight out of… well, you know. “Certificates of need”?
In my home state of Illinois, every new hospital, expansion of an existing facility or major equipment purchase must obtain a “certificate of need” from the Illinois Health Facilities Planning Board. The board does a great job of insulating existing hospitals from competition if they are well connected politically. Imagine the joy United Airlines would feel if Southwest had to get a “certificate of need” before moving in to a new city – or the pleasure Sears would have if Wal-Mart had to do so – and all it took was a small contribution to a well-connected official.
Despite the fact that it was published last night, I actually hadn’t read it before posting this.