GOP Debate: Giuliani's Libertarian Health Reform

Are Americans ready for "real" health insurance? If Giuliani grabs the GOP nomination, we may find out.

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Evolution, gays in the military, and Scooter Libby all got plenty of time in last night's GOP debate in Manchester, N.H. (What, no questions from CNN moderator Wolf Blitzer about protecting Earth from an asteroid strike, "big love" marriage, or the upcoming Sopranos finale? America needs to know!) But Social Security reform was never mentioned, and there was virtually no talk about what the next president could do to juice the long-run growth potential and competitiveness of the U.S. economy—you know, the things that will help us raise our standard of living, deal with the tidal wave of entitlement debt, generate the technological innovation necessary to deal with climate change, and give us the resources to crush the jihadists.

About the only guy who really touched on any of this was Rudy Giuliani. In his closing answer, Giuliani said the candidate who can unite the Republican Party is a person who will fight the war on terrorism and "second, someone who will be on offense for a growth economy. Fight this impulse to raise taxes, do socialized medicine...." Then Blitzer cut him off. Giuliani also gave the most informative—or at least the most interesting—all-around answer about healthcare. The former mayor of New York City out "libertarianed" Don Knotts look-alike (more Hurley from Three's Company than Barney from The Andy Griffith Show) Ron Paul when he suggested that Big Business and Big Government get out of the healthcare business:

"Health insurance should become like homeowners insurance or like car insurance: You don't cover everything in your homeowners policy. If you have a slight accident in your house, if you need to refill your oil in your car, you don't cover that with insurance. But that is covered in many of the insurance policies because they're government dominated and they're employer dominated."

It will be fascinating if Giuliani pursues these ideas since they provide a clear choice vs. the Democratic health plans, which all call for increased government intervention one way or another. But what Giuliani is doing is far more radical than his folksy debate answer suggests. Essentially, he is calling for the complete abolition of the current way healthcare insurance operates in the United States. It echoes the analysis of libertarian economist Arnold Kling, who argues that what Americans have right now is health insulation, not health insurance.

"The health coverage most Americans have is what I call "insulation," not insurance. Rather than insuring them against risk, most families' health plans insulate them from paying for most healthcare bills, large and small. Real insurance, such as fire insurance, provides protection against rare, severe risk. Real insurance is characterized by low premiums, infrequent claims, and large claims. American health insurance—including employer-provided insurance and Medicare—is the opposite. Families typically are paid claims several times per year, often for small amounts. Premiums are high—the cost of providing insulation often exceeds $10,000 per year per family. However, most families pay these premiums only indirectly, through taxes and reduced take-home pay from employers....Insulation relieves the patient of the stress of making decisions about treatment. The patient also does not have to worry about shopping around for the best price. The problem with insulation is that it is not a sustainable form of healthcare finance."

Are Americans ready for "real" health insurance? If Giuliani grabs the GOP nomination, we may find out.


TAGS:
2008 presidential election
Republican Party
Giuliani, Rudolph
health insurance

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