Why Not Try Healthcare Vouchers?

The healthcare delivery and payment debacle of the previous decades, brought to a head with the passage and current dismantling of Obamacare, lead us to find an alternative that might actually work.

As neither a doctor nor a politician, but as a student of economics, let me take a stab.

Basic economic theory predicts that if a good or service is producible by the free market, it is better for everyone if the market actually produces it, and that the government then purchases it, rather than having the government, with its waste, inefficiency and cronyism, try to create the good or service itself.

Suppose that we decided that all Americans by right should be safeguarded from the unfair and random consequences for individuals, their families and their employers of having their automobiles damaged in a wreck, and also from the cost of replacing any expensive automobile system.  Then we could issue every American of driving age a certificate/voucher for an annual amount which would pay for the minimum coverage necessary for a reasonably priced car.

With that voucher, each person or family would investigate and evaluate competitive auto insurance policies (across state lines), comparing insurers which were regulated by state insurance agencies to guarantee solvency and competence, and we would select the best policy for our situation. 

Some policies might provide that we could add additional features, or change deductibles, by paying more. Some insurers might focus on lower cost cars, giving more benefits for the national voucher if your car costs less.  Others might only go high end, requiring additional amounts beyond the voucher, or otherwise including a larger deductible.

But everyone would be covered, provided that they availed themselves of the voucher given to them.  If they did not, which would be a seemingly irrational decision, then their out of pocket costs after a wreck could be huge, and we should let that happen.

We would accomplish this universal insurance coverage without the federal government making cars, subsidizing auto repair shops, dictating the amounts to be paid for repairs, hiring anyone, overseeing anyone, mandating what we can drive, or delving into anyone’s personal life.

And without buying gas or oil for anyone—this would be insurance for major systems replacements and catastrophic losses, not a subsidy for regular maintenance, although, depending on the other policy details, some parts of preventive maintenance might be covered by some insurers.  Insurance companies would be free to enter the market and to compete and figure out how to reward those who take extra care of their (car’s) bodies, just like they do today.

I cannot figure out why some version of the above would not work for healthcare as well. Or at least should be tried for a few years before leaping out of the current healthcare frying pan into the Obamacare fire.

The only reasons I can imagine that such a voucher has not been tried are that big insurance companies and hospital systems will get richer sucking the government’s teat directly under government protection with little real competition. And that Statists want to keep people down on the Entitlement Plantation, where elitist progressives can oversee their lives in ever more perfect detail, also insuring that the plantation’s inhabitants continue to keep them in office with their votes.

As with every problem or issue to solve, we should look first for the solution which includes the absolute least government involvement.  A voucher does that, guaranteeing the desired end without trying to invent and create the means.

The cost of the voucher program may at first appear to be high.  But employers would no longer have to provide coverage, so real wages should rise dramatically.  And the cost of providing the vouchers would be virtually the total expense to the government and to the economy.  There would be a minimal bureaucracy, and none of the costly waste of government intervention in the healthcare system itself.  Most importantly, competition would be encouraged among insurers, hospitals and healthcare providers of all types.

A voucher system with real competition would not further encourage the destructive triumvirate of big government, big business and big unions, which currently distort markets, award results by cronyism, waste resources, and influence elections.

And we should be particularly critical of governments which have to lie, bribe or conceal in order to pass legislation that otherwise would have no chance. 

As in many other areas of our economy, much change is needed in healthcare delivery. But we should only work for change that improves people while also lifting up the individual over the waste and special privileges of big government, big business, and big unions.

Why don’t we try?