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Mandating Higher Health Costs

Imagine you are a Doctor.  You are fed up with the current situation in the health care market, so you decide to do something about it.  You see lots of people who lack health insurance.  Because of this they are forgoing needed trips to the doctor for regular check ups, ect.  You decide that you will set up a plan whereby uninsured patients pay you a monthly access fee and then a very low co-pay when they actually come in for a visit. [Astute observers will recognize that this is essentially concierge medicine.  This is likely to be one of the ways that a market based system will solve the problem of the uninsured.]  Your idea opened up a way for patients to get access to care that they did not have before.  This is an achievement to be celebrated.  Or not?

The state of New York has determined that this very practice runs afoul of their insurance regulation.   You see, in the state of New York only licensed insurance companies have the right to charge flat rates for unplanned medical expenses.  As a result, Dr John Muney has had to dramatically raise his rates that he charges for unplanned procedures and abandon the monthly access fee.

The result of these regulations is that hundreds (if not thousands) of people being served at Dr Muney’s clinics in New York now no longer have access to affordable health care.  Isn’t that what advocates of government control were fighting for?

This highlights something I have been saying for a while.  Our health care problem will not be solved by mandating health insurance (or replacing private insurance with government run insurance).  The same disincentives to create innovative ideas like Dr Muney’s will exist under either option.  That leaves us with the false choice of the current situation or the equally bad “universal” health care.  Dr Muney created an option that required no subsidization by government.  And he did it while still making money.  What was wrong with that?

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