Stephen Moore On Health Insurance Mike Rappaport

Moore writes:

About 10 years ago, I broke myleg playing basketball. After I came out of surgery, with a caststretching from my ankle to the top of my leg, an orderly asked mewhether I had ever used crutches before. I hadn’t, so he showed me whatto do, swinging through them from one end of the room to the other. Thewhole lesson lasted about 90 seconds. When I got my hospital bill, Isaw that I had been charged $150 for “gait training on crutches.” I didwhat all insured Americans do: I forwarded the bill to my insurancecompany. Why should I care? I wasn’t paying for it.

One of the problems with Americanhealth care, as David Gratzer notes in “The Cure,” is precisely apayment system that takes the patient out of the equation. In the early1960s, the average American paid out of pocket one of every two dollarsthat he spent on health care; today the figure is one dollar in seven.The inevitable effect is hugely wasteful spending (and inflatedhospital bills like mine). In fact, per-patient costs have gone upalmost exactly in inverse proportion to the share of spending borne bythe consumer.

Dr. Gratzer cites a remarkableRand Corp. study that tracked health-care spending by 2,000 familiesover eight years. The families who got free health care spent 40% morethan the families with cost-sharing arrangements. And yet the healthoutcomes for the two groups were the same. The lesson: Market-basedhealth insurance systems, such as health savings accounts, cut outinefficiencies and lower costs without compromising quality.