Not really, but that’s what I’m writing about right now.

So why doesn’t private health care work?

A little econ 101- people make rational choices based on the information they have. The more perfect the information, the better the choices. With perfect information, supply and demand work to keep prices competitive.

Unlike shopping for apples or cars, we do not generally know how much health care we are going to need or what we are going to need it to cover. We also don’t get much of a choice in what our plans will be because they are decided on by human resource managers long before we ever sign up for it. Human resource managers also don’t know how much coverage we are going to need, all they know is that they need to find the lowest priced plan for the business.

Comparing plans is more like comparing all fruit for price, quality, size , nutritional value, and calories instead of comparing the quality of one apple to another. It’s not even apples and oranges, it’s every damn fruit there is.

Just a few things you would be looking for as a private individual shopping for health insurance:

• Price
• Type (PPO, HMO, Fee for Service)
• OOP (or out of pocket costs) like copays, coinsurance, deductibles
• Prescription coverage (do they cover the drugs you currently take- will the new formulary that comes out every year cover it next year, will they cover drugs that you might take in the future, do they have a maximum benefit amount, is there a maximum out of pocket cost for you)
• Do you get to keep your current doctor, will you need to find a new one. How far away are the doctors. Can you get in to see them quickly or is there a wait. How about specialists- do you have to be referred or can you self refer?
• Does it cover the things you need now (birth control and family planning, pregnancy, chiropractics, physical therapy, mental health) Are there waiting periods for pre-existing conditions?
• Will it cover things you need in the future? Will you reach your lifetime limit of care?

Since we don’t have crystal balls, it’s that last one that screws us up sometimes. With life insurance, you know that someday you will die and you know exactly what the insurance company will pay out. With car insurance, you may never be in an accident but you know if you can afford the risk of not carrying full coverage to pay off your car if it’s totaled in a wreck. You also know what the legal limits of insurance you must carry are.

With health insurance, you never know when you are going to need it and how much you are going to need, but in everyone’s life there is some point when they will need to see a doctor.

Health insurance plans don’t all cover the same things at the same levels. If they did, there would be real competition in the market because people would have perfect information regardless of what their future needs might be. But instead we play the health care shell game. Coverage changes from year to year and plan to plan and prices rise because there isn’t enough information for consumers to effectively shop for coverage.

Universal coverage changes that system. A government may not know exactly who is going to get cancer or have a massive car accident, but they do know about how many people will. And from that they can effectively keep prices for services competitive and can change what is covered based on trends in what services are needed. This is the exact reverse of what normally happens in the free market because normally it is individuals who know what they are going to need well before government does. I can tell you how many new pairs of jeans or shoes my Kid may go through this year, how much I need to budget for coffee and milk to keep myself charming and erudite, but I have no idea if we are going to have a major medical issue this year.

In universal health care, the government creates one giant pool of of consumers (everyone) and one giant pool of providers (every doctor, nurse, hospital and clinic). Competition then comes in by making sure that providers are supplying the best care in order to keep consumers coming to them instead of providers providing the cheapest care so that the insurance companies will keep them in their network.