Arnold Kling

Health Care Reform

Arnold Kling, Great Questions of Economics
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How should we deal with health care? Sydney Smith writes

An even bigger step in the right direction would be to offer insurance directly to the consumer, by-passing the employer altogether. Much of what's wrong with our current system is that health insurance is linked so strongly to employment. This may have worked fine in the stable corporate culture of the 1950's, but in today's fluid job market, it makes no sense to tie health care insurance inextricably to employment. We would all profit by divorcing the two. Insurance companies would improve their risk pools and their customer base by offering affordable, basic insurance plans to individuals rather than limiting themselves to comprehensive health benefits for corporations. The self-employed could find affordable insurance. The unemployed wouldn't risk losing theirs. And maybe, just maybe, our runaway costs would be contained by introducing financial responsibility to the doctor-patient relationship.

Discussion Question. Compare the economics of the government providing the poor with: (a) cash that they can use any way they want; (b) vouchers for health care; or (c) health insurance coverage.

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