Health Care Reform – A small example of free market solutions

Posted by Jason | Posted in Economics, Government, Health Care | Posted on 18-10-2009

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Over the past week, I’ve been writing about how the free market is the best solution to health care reform. I also argued that the best way to fix health care is to get rid of third party payer, typically employers, from the health insurance purchase. The second fix was to get rid of third party payer for day to day medical expenses. For some reason, despite the fact that the market delivers food to you to survive, Americans think the market without the government involvement would not provide the insurance and medical solutions needed.

Now I’ve already argued that they would. Examples like walk-in health clinics, $4 prescriptions, and HSAs abound. The biggest fear for most people though is the pre-existing conditions and finding health insurance. I’ve exclaimed and still do that the market will address this need, because that is what the market does. It addresses needs.

The change that would help propel the creation of new insurance products is the consumer of the insurance actually purchasing the insurance. When we purchase goods and services for ourselves, we seek out the goods and services that address our needs effectively at the best possible price. This shopping will create a educated consumers and will generate competition among the providers of insurance and medical services.

Today while doing my bills, my mortgage company sent me this offer: “You can now get $100,000 of accident hospitalization insurance coverage for one full year for free.” Wow, free. Let’s take a look at the fine print. First, let’s make it clear this coverage is for accidental hospitalization. It is not for going to get your flu shot, which as we said before should be paid our of pocket. If our real concern is making sure we do not go bankrupt in the event of an unplanned disaster, surely a plan that covers accidents would be on the top of our list. So, this plan covers hospital stays and emergeny treatments. It even has an option to add your family and include doctors visits. Doctors visits are limited to one per month with a lifetime limit of 60 visits. Wow, I can probably count on one hand how many times I’ve been to the doctors in the past 20 years.

This plan is not total coverage, but it does address a need, accidental coverage. There are exclusions to this plan. The accident cannot be the result of drinking, drugs, committing a felony, flying a plane, war, accidents outside the US, etc. By limiting their exposure, they are able to offer a reasonable amount of coverage for a very low price. How much is this plan? After the free period, it goes up to $9.95/month. To add doctors visits, its $13.95/month, and for a family it’s $19.95/month.

So what does it say about pre-existing conditions? “All eligible customers who complete and return the Activation Form will be accepted. There are no medical questions or physical examinations required for enrollment.” Sounds pretty good for pre-existing conditions to me.

Now, I am not saying this plan here is the answer. It does not cover all scenarios. It’s for accidents. It does not cover cancer, heart attacks, or diseases. I think we could all agree, how could it at $9.95/month? What this highlights though is companies including your home mortgage company will offer solutions. When you are shopping for your own insurance, you will make good decisions to address your own personal needs. You will not be pigeon holed into a plan that doesn’t apply to you because a co-worker has different needs. You also will not go without options. The market is where options are created, and the government is where options are few and usually all bad.

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