Choice, Costs, And Healthcare, Ctd.

A reader writes:

Your reader's comments here are excellent, but I think he leaves out an important point.  He correctly points out that the costs of government health-care is being borne by the privately insured.  What he fails to mention is that the privately insured don't have real choice when it comes to the product they can buy. The current system of employer-provided health care has created a market for policies that would not exist in a real free market. 

Instead, these policies come from union-negotiated contracts with large employers.  Once these large companies establish what policies they must provide to these large groups, the rest of us are forced to buy that kind of a policy.

This is not a knock on the unions, but rather a knock on the whole notion of employer-provided health care.  When large groups of people can negotiate for what they want (while someone else is paying) they will always negotiate for the Cadillac rather than the Kia.  What that has bought us is a system that is supposed to be providing insurance, but in fact is providing routine care where the costs are shared by everyone.

Kling gets it right here:

" Our system tends to subsidize "first-dollar" coverage rather than catastrophic coverage. Catastrophic coverage is like auto insurance that pays in the case of an accident. First-dollar coverage is like auto insurance that pays for gas and tolls. First-dollar coverage results in more paperwork and reduced incentives to control costs."

This "first dollar coverage" also happens to include the vast majority of customers that the insurance companies serve, so these are the policies they support.
 
So when I go to buy a policy for myself as a one-man company, I have to buy the same policy that the Boeing Employees Union negotiated for.

I don't know what you call it, but it sure isn't a free market.  I get almost no choice of policies, so it's not a market, and it sure isn't free