Health Care vs Health Insurance


This interesting Ed Kilgore post about the public option reminded me that I really wish people would be more careful about distinguishing between the terms “health care” and “health insurance.” It’s like the difference between the auto mechanic who fixes your car if it gets damaged, and the car insurance that gives you money to hire a mechanic if your car gets damaged.

Which is to say that when Kilgore says “[o]n much of the Left, as noted earlier, ‘market means’ are considered inherently illegitimate when it comes to health care” I don’t think he’s correct. I think the view that we should make the pharmacy business a government monopoly, like in Sweden, and get rid of CVS and Rite-Aid and such is extremely marginal. Nor do I think there’s much support for the view that we should go U.K.-style and turn the bulk of doctors into government employees. The subject under controversy is whether a private, for-profit health insurance industry has a valuable role to play in the design of a health care system.

I think it’s extremely difficult to make the case that it does. If you look around the world, you see a mix of direct government provision of health care services (Britain), direct government provision of health insurance (Canada), non-profit provision of health insurance (Switzerland), and mandatory private savings accounts (Singapore) playing the dominant role in financing health care. Private health insurance exists in many countries, but it’s generally pretty marginal. The reason is that the way insurance companies make money is to segment the population based on risk. And the way centrist, moderate, or otherwise incrementalist approaches to reforming U.S. health care work is they attempt to regulate away insurance companies’ ability to do risk-segmentation effectively. But once you accept the premise that you don’t want insurance companies doing all this risk analysis, there’s basically nothing else for them to do. That’s just what an insurance company is.