No cheap health insurance after the Presidential election

The Presidential campaign is entering the final stages but there are still no proposals from either Democrat or Republican candidate on how to control health-care costs. This is fundamental to producing a fair and accessible health service but the issue is not being addressed. What we do have is a proposal from Romney and Ryan to redesign Medicare as a voucher service. It’s faintly possible this might cover all costs for the first six months, but it’s certain a gap would rapidly open between the actual prices for treatment and the value of the vouchers. The only way of bridging this gap would be for seniors to pay out of their own savings or buy private insurance. As it stands, Medicare does a good job of holding down costs. As a monopoly buyer for services, the prices have only been rising at half the pace in the private sector. Private insurers have no incentive to control costs. If they are not making enough profit, they simply increase the premium rates.

Similarly, although there’s a move to more preventive medicine, there’s no sign of any enthusiasm for the Democrats to take on the pharmaceutical industry or the medical lobby. Drug prices are shooting up and doctors refuse to accept an evidence-based approach to determine what treatments offer the best value-for-money to their patients. In a capitalist system, doctors and hospitals are for profit and not altruistic. So although the Affordable Care Act will have insurance exchanges in place for 2014, the competition will not of itself control medical costs. Premiums will be pitched at rates to pay the current costs and make a profit for the insurers. In other words, the policies of both parties are fundamentally flawed.

Sadly, this means no cheap health insurance is likely to be available for the middle-class policyholders. There will, of course be subsidies for those on or below the poverty line, but the health insurance quotes for everyone else will continue to rise faster than the rate of inflation. In due course, this will make insurance increasingly unaffordable.