Sick people and older people like comprehensive coverage but it is expensive. Young people think that they can get by with less and plans that cover little or nothing are cheap.

As young people go to the high out of pocket plans they improve the risk pool in these plans. Cheap plans get cheaper and the price of comprehensive insurance goes out of reach.

Insurance Exchanges and all the Baucus plan stuff only make this worse:

http://wonksanonymous.com/2009/08/17/health-insurance-exchanges-1-a-free-market-fable.aspx

We agree that many health care purchasing and treatment decisions are not governed by normal price discovery mechanisms. However, your examples (botox, fake tans, teeth whitening) obscure fundamental differences between elective and non-elective care. Demand for elective aesthetics is elastic. Demand for trauma plastic surgery is not. At the time of care, acute care patients (e.g. heart failure) are price takers and impervious to advertising and price comparisons. Non-elective procedures are primarily performed in hospitals that have enormous fixed costs. Elective botox injections are delivered in strip malls and office buildings that do not.

An employer based benefit system is a foolish administrative and cost albatross for American enterprise. WWII tax deductions and wage freezes did expand employer sponsored benefits. However, this is not the complete story. It was actually American businesses that introduced welfare capitalism in the late 1800s and early 1900’s in order to halt the threat of government expansion to the public safety net. Unfortunately, corporate America still clings reflexively to its role of providing pension and health care benefits at the expense of its own competitiveness and needed health care reform.

- SF

Insurers are highly constrained in what they can offer by zillions of state regulations. Also, the tax deductibility of employer health care expenses (a remnant of WWII era wage controls) means that almost no one pays with his own money for his own health care.

In the areas that are not reimbursed by insurance — teeth whitening, fake tans, botox, breast implants, etc. — you see a mostly normal market based system. Providers advertise, consumers shop for price and quality, prices go down, quality goes up, and no one complains.

It is only in the areas that are reimbursible where we have the current odd situation in which providers don’t advertise, consumers don’t shop for price or quality, prices go up, and quality doesn’t necessarily improve, and lots of people complain.

The main thing a public option will do is put even more decision making power in the hands of the government — the last thing you need in a complex, rapidly changing, highly personal system like health care.