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    Thursday, February 08, 2007

    How We Got Here: From an interview with Canadian Dr. David Gratzer, author of The Cure: How Capitalism Can Save American Health Care:

    ...American health care has been shaped by two days: October 26, 1943 and December 1, 1942.

    On October 26, 1943, the IRS ruled that employers could continue to pay health-insurance premiums in pre-tax dollars. As a response to wage and price controls, employers had begun to offer health benefits to attract better employees. The IRS ruling legitimized and encouraged the practice, giving rise to the dominance of employer-sponsored health insurance.

    On December 1, 1942, Lord Beveridge issued his report on health care and pensions to the British parliament, envisioning zero-dollar public health insurance. Lord Beveridge had enormous influence here, particular among Democrats; his thinking (and persuasiveness) helped lay the intellectual foundation for Medicare and Medicaid.

    Fast forward 60 years, and the end result of these two days is that Americans — whether privately insured or publicly covered — tend to be over-insured, and thus less sensitive to prices. And so we come to a paradox: American health care is so expensive because it's so cheap. That is, with Americans paying just 14 cents out-of-pocket for every health dollar, they have little incentive to economize on health expenses. Americans have access to the most technologically sophisticated system in human history — yet pay pennies on the dollar out of their own pockets. The upshot? A health-care system that is heavy in cost but not necessarily strong in satisfaction and uneven in quality.


    So true.
     

    posted by Sydney on 2/08/2007 01:30:00 PM 0 comments

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