How to Pay for Health

Now here’s some interesting thinking on health care:

Imagine each person has a health plan responsible for paying all his medical expenses.  (Each person still pays his non-medical expenses, like for diet or exercise.)  Each year, the government pays his health plan a dollar amount based on his quality of life figure for that year.  This might be $100,000 if he is healthy, $50,000 if he is disabled, $30,000 if he is in great pain, and so on.  These health evaluations are based on random visits.

Since these payments usually far exceed medical expenses, an auction is used to assign health plans.  The plan willing to pay the government the most gets the (tradable) right to be that person’s health plan forever more.   A full record of his medical history is made available to auction bidders.

Cato Unbound Oct 2007

Of course as a workable, practical plan, it has no chance of succeeding in politics.  But it is ingeniously market based and provides for full coverage.  I like the way it so insightfully includes full disclosure of information, which is one of the reasons health insurance struggles now; imperfect information for a number of crucial players.

And we still need medical malpractice tort reform.  That alone might decrease medical costs 10%.  Proponents of government universal health care programs in other countries always seem to fail to mention that its a key tenet in all of them.