March 16, 2005

Libertarian Health Care

On Democratic Freedom a discussion of health care from a libertarian (Democratic) perspective opens with references to Howard Dean and Russel Feingold. It includes the false but popular idea that half of all bankruptcies are health-related.

Todd Zywicki of Volokh Conspiracy is a bankruptcy specialist. In one post on VC he brought up and then debunked this argument on health-related bankruptcies.

He points out that almost all the bankruptcy studies have found little relation ebtween health insurancer and bankruptcy. The basis for the finding is from a flawed method. An excerpt:

    They draw their data from two sources. First, self-identified bankruptcy filers who say that some medical event "caused" their bankruptcy. Second, analysis of "objective" facts on filers bankruptcy papers that find either (1) debtor or spouse lost at least 2 weeks of work-related income because of illness or injury or (2) uncovered medical bills exceeding $1,000 in 2 years before bankruptcy, or (3) debtors who say they had to mortgage their home to pay medical bills
If you want a libertarian- and budget-friendly solution to health care costs then I suggest unlimited medical savings accounts, which have existed for several years but are currently capped at a modest $5k per annum (last I heard). The money has to be spent on health costs and then it's tax-free, otherwise it's taxable at what would've been the rate had it not entered an MSA.

This money can be spent on health insurance. In surveys, a huge supermajority of uninsured people said they would get health insurance if an MSA would let them do so tax free.

Remember, almost all the people without health insurance have money; they're not poor or indigent. Everyone that's old or poor already gets government insurance (or is eligible for it), so it's the people that aren't poor who are more likely to lack health insurance. They have money, but giving them a tax break would make health care more affordable.

I really wouldn't trust Dean with health care after his Vermont record.


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