Thursday, January 15, 2009

Why Govt Run Healthcare is and will be a complete

disaster. And when I say "complete" I mean lacking none of the attributes of a major boondoggle.

For every (Govt Healthcare) proposal, you should make sure you understand 1) Who is choosing the amount and quality of the care and 2) who is paying the bills and is therefore trying to pay attention to the cost of care.

What the hell does that have to do with anything, Coyote? What are you getting at? Well, perhaps I can begin my explanation by talking about something, practically anything, other than health care.

Take purchasing a car. When I need a new car, who determines what car I end up with? Why, I do. And who pays for the car and shops around for a price that makes sense in the context of the perceived value of the car? Why, I do again. The person who uses the car, the person who chooses the type and quality of the car, and the person who pays for the car are all the same person.

This clever procurement model of integrating the payer, the shopper, and the user all into a single individual is one we use for, well, just about every product and service we buy. Milk, Internet service, DVD’s, house painting, airline tickets — all the same model.

OK, lets consider a model that does not work this way. Let’s say someone just rear-ended your car and, miracle of miracles, they actually have a good, solid insurance policy that owes you for your car repairs. In this case, you will be consuming the repair services, and have the incentive to find the absolute best, cost-no-object body shop you can find to do the best, most fabulous job fixing your car, because someone else (ie the insurance company) is paying. The insurance company has a different incentive. They want to get off with as small a loss as possible, to protect their profitability as well as keeping prices low for future policy-holders. They are going to want you car fixed cheap, particularly since you are probably not even their customer. They are going to try to deliver the minimum.