Readers who want a better grasp of the major structural flaws in American health care should get to know David Goldhill. Goldhill first made waves with “How American Healthcare Killed My Father,” a 2009 article in The Atlantic that questioned the wisdom of funding health care through an insurance payment mechanism. He later published a book on the same topic, and now he’s back with an op-ed in the NYT.
His new op-ed lays out the same basic argument he advanced in 2009: our healthcare system hides the costs of treatment from those who use it, and as a result prices become distorted, warping the system out of shape. How did this happen? In America we pay for all our health care with insurance, which means that every time you go to the doctor, whether for a small checkup or a big treatment, you aren’t paying the full price of the visit. Other people who have payed into the insurance pool help to cover your costs, just as you help to cover theirs when they get treatment. Since you don’t pay for the care alone, most people wind up not knowing how much their treatment costs.
Our employer-based insurance system makes this problem worse. When your employeer pays your premiums, you become even more ignorant about just how much health care is costing you. Goldhill calculates that health care will cost an average 23 year old at least $1.8 million over the course of his or her lifetime. But we often don’t realize how high this number is, because employers pay it. Much of that $1.8 million could go back into our paychecks if health care were cheaper, but because the cost of care is hidden, most of us don’t know what we’re losing out on.
Goldhill argues that to fix our system, we need to start paying for it just like we pay for other areas of life that have both routine small costs and rare massive expenses. His proposal is to restrict the scope of insurance coverage to truly catastrophic costs—rare, unpredictable, serious illnesses—and to pay for all other care out of pocket. This would still give people the chance to pay for very expensive treatments through insurance, while giving them more information about the true costs of routine care. Putting consumers in the driver’s seat in this way would revolutionize health care just as it has revolutionized many other industries.
Read the whole thing. And better yet, read the longer, 2009 article. Not all of his arguments are persuasive, and there are important counter-arguments to his proposals. But unlike most health care wonks out there right now, Goldhill is able to step back from the policy weeds and look at the big-picture causes of our healthcare dysfunction. In picking a guide to understanding our system, one could do much worse.