Monday, January 02, 2006

Always Low Prices - Even in Healthcare

Policy Guy writes that Wal-Mart (that evil, evil institution that employs millions of Americans) is planning on offering Health Insurance.

I think that it is generally good news, by adding another competitor in the marketplace perhaps more innovative solutions for the consumer (as opposed just for employers) will begin to enter the fray.  In fact if enough truly independent suppliers of insurance enter the marketplace it is possible to completely circumvent much of the draconian measures that state governments impose on business.

I’m skeptical that the effects will be very widespread though for several reasons.  First, most states force all providers of insurance to provide coverage that consumers don’t want, so consumers are forced to buy coverage for alcoholism even if they don’t drink.  They are forced to buy coverage for marriage counseling even if they are single or legally prohibited from getting married.  Etc, etc, etc.  Of course, not all states impose such limitation so it is possible that there will be some improvement in certain parts of the country.

The next issue, and perhaps the most important, is that current health care model is not insurance, but pre-paid healthcare.  As long as Americans want plans that allow them to go to the doctor anytime they want, for any reason that they want for a limited out-of-pocket expenses, the “health insurance” will be very pricey.

Unfortunately, as long as politicians refuse to understand basic economics, I don’t see a solution to the “health care crisis,” and the only ones that will suffer for it are taxpayer that gets stuck paying for increasingly expensive healthcare.

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