Actually, I believe our monthly contribution for health care coverage for a family of 4 when I worked at a law firm was only $155.

It's true that if everyone had high deductible or high copay insurance, prices would come down. I don't see any way to mandate that, though.

The idea isn't to "mandate" high deductible/co-pay insurance, but to dismantle the perverse subsidies that encourage the opposite behavior. The idea is for employers to stop subsidizing health plans that discourage the beneficiaries from controlling expenditures. The first step would be for changes to the tax code through which the uninsured subsidize the overinsured. Specifically, end the tax break that corporations get for offering employee health coverage, but individuals do not get for purchasing their own health insurance.

There is another factor that drives American healthcare costs up: Americans are almost alone in paying the true costs of medication. The rest of the world only pays the "marginal" cost (i. e. what it costs to make that one more bottle of pills) while Americans pay prices that also include the costs of developing that medication.
And that's also the reason why American pharmaceutical firms fight the (re-) importation of cheap drugs from Canada, if that catches on there'll be nobody left to cover the cost of developing new medications.

P.S: My regards to Mrs Shark :)

Shark comments "Specifically, end the tax break that corporations get for offering employee health coverage, but individuals do not get for purchasing their own health insurance." Wouldn't it be better to a) encourage everyone to have insurance by making individual health coverage tax deductable and b) generally reform insurance plans to encourage the kind of consumer sensitivity to economics you now have with your catastrophic health plan?

Fundamentally, health care costs are unlike other kinds of spending because, 1) as a wealthy society, many people feel we should not allow people to suffer and/or die simply because they themselves do not have enough money to pay for health care, and 2) in most cases (the medications issue Shark cites being a notable exception), people want the best health care regardless of cost. If you have a potentially fatal disease, you are not going to go for the 50% effective treatment over the 75% effective treatment even if the 50% treatment is 1/100th the cost.

Making it worse, attempts to control costs end up potentially costing more than the costs they reduce. ABC had an interesting report on recently that said the US had (I'm quoting from memory, I might be a bit off) something like 300,000 doctors, 900,000 nurses, and 3.6 million health care administrators (defined as people who work on payments and the like without delivering any medical care of any kind).

Ralf Goergens cites the high cost of prescription drugs and claims that the US alone covers the development cost of such medicines. I've been interested in this issue for a long time and I have to say that Ralf's claim seems like a big overstatement, but not without a grain of truth. Getting a drug approved by the FDA (required to sell it in the US) is extremely expensive, as is marketing a drug in the US. Many companies therefore choose to sell their drugs first in Europe, where it is easier and cheaper to get them on the market and only later try for US approval, after which they saddle the US consumers with the extra cost. In any case, just like any other product, manufacturers charge what the market will bear, and that market changes from country to country. I'd bet Coca-Cola is cheaper in most of Africa than in the US.

Still, government funding of drug development, the only other alternative to the capitalist system anyone seems to think is viable, is not likely to be more efficient or cheaper in the long run. In fact, it would probably suffer the same kinds of costs (marketing expenses would be reduced, but you still have to spend money to educate doctors and insurance companies about the new drugs) and be further saddled with spending huge sums of money on drugs to treat relatively rare diseases (which I personally favor, but would undoubtedly raise overal costs).

The only major cost benefit to come from government involvment in the drug creation industry is a greater focus on cures. The economics of drugs encourage companies to focus on drugs that you have to take for a long time (e.g. every day forever) such as Mr. Sharkansky's acid reflux medicine, ensuring a long revenue stream for the manufacturer. A better drug that permanently cured acid reflux would be less attractive to private industry, but more attractive to the government, and might therefore be a win.

Yes, health care reform is much needed, but it is a very complex topic. I encourage everyone to get more informed and to make thoughtful suggestions for how to improve the system. Thanks for getting us started.

"Simon" says: Wouldn't it be better to a) encourage everyone to have insurance by making individual health coverage tax deductable and b) generally reform insurance plans to encourage the kind of consumer sensitivity to economics you now have with your catastrophic health plan?

a) Why should health insurance be tax-deductible, and not say, automobile insurance, food, or housing? I should also point out for the sake of my progressive friends that making anything tax-deductible is regressive.

b) Yes, and the most effective way to reform insurance plans is with market pressure. The current insane system of paying for health care buffers the industry from normal economic decision-making.

Stefan--

I'm surprised you didn't know the 'retail' price of the medication you had been taking. My husband takes six prescription meds/day, probably for life. We pay $15-$30 foe each, monthly. And each receipt has a line that reads, for example, "You have saved $186.43 by using your plan".

It has occurred to me that this kind of information--the difference between retail cost and out of pocket payment--could serve to insert buyer awareness, and help fund a prescription drug benefit. Caveats for extraordinary costs as a proportion of income, but suppose the difference were treated as income, and the taxpayer received a statement similar to a 1099. He would then pay income taxes on the government-supplied benefit received at his marginal rate--still a saving over the retail cost, but not more than the copay plus about one-third.

I don't know enough to guess at costs of implementation or by how much the additional revenue might offset the cost of a prescription drug benefit, but this is, I think, an interesting idea.

My plan for healthcare is simple: the consumer pays, not the employer or government. It works well for everything else.

What about the poor? Increase cash aid so that they interact with the healthcare system just like everybody else.

If you don't think it will help costs, look at laser eye surgery. What used to costs thousands of dollars per eye a few short years ago costs hundreds now (there are ads in the Sunday papers for $299 an eye). What different about laser eye surgery? No existing healthcare plans cover it - the cost comes completely out of the patient's pocket.

This isn't a perfect system, but it is better than what we have now, and instead of getting worse over time will get better.

Thanks, Sharkanskys and other commenters for a civil and educational discourse on the subject.

Occurs to me that the word "insurance" may have a different meaning when applied to domestic health-care issues than in other circumstances. E.g. those of us with term life insurance enter into a death-pool, allowing ourselves to be evaluated by a company and pooled with similarly situated individuals. Net premiums about equal net payouts, plus administrative costs and the insurer's profits (including money made from float and investment).

Heath insurance and especially universal health insurance seems to refer to a system where premiums for everyone are modest (not-more-than-now-preferably-less) and medical care is top notch, at least at the level that well-informed middle-class Americans have come to expect.

Without knowing anything about the numbers, I intuit that such a system will run very large perptetual deficits, given the need and appetite for costly medical interventions. A self-supporting "insurance" scheme, I suspect, would look much more like the catastrophic-coverage plan that Mr. Sharkansky describes.

If you've ever dealt with the bureaucracy of a medical provider combined with that of an insurance company you'll understand at least 50% of the problem.

The state's budgeted funding rate for calendar year 2004 is about $505 per employee per month. King County's reported rate is a staggering $951 -- almost 90% higher! Maybe there are good reasons why they're high (a more expensive retiree pool, maybe?), but it's hard to understand why they're THAT high. If anybody with the County reads this and can explain it, please do.

Shark says "I should also point out for the sake of my progressive friends that making anything tax-deductible is regressive."
I have to say "not so fast." It is regressive in the context of a purely progressive tax system, but that is not what we have. In the US, with payroll taxes such as social security and unemployment and medicare being taken from only the first $X leaving anything over $X free of tax, we have yet to establish a purely progressive tax. One can certainly engineer a progressive tax deduction in our current tax framework.

As to the greater question "Why should health insurance be tax deductable?" That's easy. We are currenly in a period of time where we believe government should not let people with life-threatening but curable diseases die because they cannot afford treatment. It's as simple as that. Our government has mandated that people should not die from lack of medical care where such care is feasible. So government money (your taxes) goes to treat those who can't treat themselves. By buying health insurance, you are reducing the potential burden on the government purse (saving tax dollars) in so far as you are elevating yourself out of the pool of people the government will have to pay to treat. For that, you deserve a reduction in your tax.

Although the cost of prescription drugs make up a very large portion of insurance company payouts, another statistic startles me. I heard something a while back that suggested the vast majority of payouts went toward the last six months of a person's life.

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