Tomorrow's WSJ runs an opinion piece by Laffer offering as clear a critique and as clear an alternative to Obama's healthcare initiative as one could imagine. Laffer calls attention to the healthcare "wedge," i.e. the difference between what healthcare costs and what the patient pays. When people pay less than something actually costs, they inevitably demand more of it, driving the cost still higher, even if someone else pays the difference. That, Laffer argues, is what drives healthcare inflation: government subsidies insulate patients from real costs and so drive up demand. Thus, Laffer concludes, Obama's plan will simply drive costs still higher.
His alternative? Patient-centered healthcare, which . . .
begins with individual ownership of insurance policies and leverages Health Savings Accounts, a low-premium, high-deductible alternative to traditional insurance that includes a tax-advantaged savings account. It allows people to purchase insurance policies across state lines and reduces the number of mandated benefits insurers are required to cover. It reallocates the majority of Medicaid spending into a simple voucher for low-income individuals to purchase their own insurance. And it reduces the cost of medical procedures by reforming tort liability laws
By empowering patients and doctors to manage health-care decisions, a patient-centered health-care reform will control costs, improve health outcomes, and improve the overall efficiency of the health-care system.
What's wrong with that suggestion? Well, much was proposed by George W. Bush, so it's self-evidently not just wrong but evil. All it has in its favor is everything that we know about human behavior.