Socialized medicine, here we come?

David Dranove thinks so (h/t Avik Roy):

There isn’t a public or private health insurer anywhere in the world that doesn’t directly intervene in the delivery of medical care. Socialized insurance necessarily leads to socialized medicine, and if the government controls well over half of the insurance sector through Medicare and Medicaid, and tightly regulates the rest, it is only inevitable that it will also seek to control how health care is bought and sold. And I don’t think it will make much difference whether it is Democrats or Republicans in control. The temptation to set the rules for 17 percent of the GDP is too great.

Provided health care costs keep going up at high rates, I have little doubt Dranove is correct, in the long run. If private industry wants to maintain the the proportion of control it has over health insurance and health care it had better demonstrate it can do so without bankrupting families, businesses, and governments.

In some sense, this is a matter of consumer preference. Health insurers were able to hold the line on health care prices, volume, and premiums in the mid-1990s via managed care. In time the restrictions they imposed were judged too onerous by consumers, as well as physicians. With the backlash, high health care inflation returned. Will consumer’s embrace what the private sector dishes up next: high-deductible plans coupled with health savings accounts? Perhaps, at least in the short run. But long term, I’m not sure higher and higher deductibles are going to be quietly accepted. There may be another private-sector idea after that. Time will tell what it is and whether it succeeds.

Eventually, if private solutions seem to have failed, and failed again, the political pressure for an even fuller government solution may be great. If that’s what consumers want–if that’s what they essentially demonstrate by rejecting private-side alternatives–on what basis am I or is anyone to complain? I think private insurers and health care providers have at most two, maybe three, decades to be part of a solution. The clock is ticking.

Later: The comments to this post are, so far, very good. If this subject interests you, please read them.

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