National Health Insurance

Published November 26, 2005

Dear Editor:

Robert Kuttner’s call for national health insurance [“Toward true national insurance,” November 26] is full of surprising and counter-intuitive claims.

He laments how fewer employers are providing health insurance these days, but as an economist he surely understands it is the well-off, not middle- or low-income workers (and certainly not the unemployed or self-employed), who reap the lion’s share of tax benefits from employer-provided health insurance. We need more, not fewer, alternatives to employer-provided health insurance.

He says “individual insurance is the least efficient way to insure people,” but a visit to and other online insurance Web sites reveals individual insurance is often cheaper than group plans and has the added bonus of not being subject to the whims of employers. The marketplace has changed, but Kuttner’s opinions have not.

Kuttner says “the system is already shifting too many costs to sick people,” but the single biggest flaw in the current system is that consumers spend too little of their own money on health care. The high rate of price inflation for health services covered by insurance versus those (such as cosmetic surgery) that are not is testimony to the fact that people are less careful about how they spend other people’s money than their own. Thankfully, the spread of Health Savings Accounts is changing this situation.

He cites opinion polls saying majorities want “coverage for all” and are even willing to pay higher taxes to get it. Yes, and pollsters say most of us are willing to pay more for better schools, better roads, more open space, a cleaner environment, and finding a cure for AIDS. Yet every politician knows supporting higher taxes means fewer votes in the next election and slower economic growth to boot. Maybe the public knows more than they are willing to share with pollsters?

The most surprising line in Kuttner’s column is “national health insurance … would be a far more efficient and reliable system” than what we have today. This is what he was saying 20 years ago, except back then Kuttner and others called it, more accurately and honestly, “socialized health care.” (See The Economic Illusion, 1984, page 250.) We now know socialized anything is apt to be less efficient and reliable than privately provided goods and services.

Kuttner has been singing this tune for a long time, even as markets, public policy, and expert opinion have changed. It’s time he learned a new melody.

Joseph L. Bast ([email protected]) is coauthor of Why We Spend Too Much on Health Care (1993) and publisher of Health Care News.