I work in the healthcare industry in my day job. I help drug companies get their products to market. Some of you might read those words and think I work in some kind of advertising and you would be wrong. Most of my experience in this field has been helping doctors and patient get their drugs via their health insurance. Currently I help uninsured patients get access to certain medications. (I am not at liberty to say which drug companies I work for or which products I assist with, but I only bring it up as background on my experience with the subject.)

I know that we need healthcare reform. Luckily, I like my job, my co-workers, and my company because last year I developed Psoriatic Arthritis. Without a very expensive medication my fingers swell up like plump sausages, become wracked with pain and I am nearly disabled. I am not uninsurable if forced into the open market. As long as I keep this job and this health care package I will be okay.

Given all that I don’t support a single-payer option or even a public-plan option. I do think the single best solver of problems ever developed is the market; when the market works. That’s is not always the case and it really is not the case currently with health care.

Why isn’t the market working?

1) Too few insurance companies. There have been a lot of mergers and the market is dominated by a few giants and then lots of little local guys. The bane of capitalism is too few capitalists not too many. For there to be real market pressures there have to be lots of merchants in the market. We have states where 80 or 90 percent of the market is control by one insurer. That’s not a market.

2) Perverse incentives; insurance companies make more money by finding creative ways to deny coverage and restricting their customer base than by selling more policies. So the competition is for finding ways to eliminate the pay-off of claims and to deny or revoke coverage. This helps profits, but does not advance the goal of health care.

3) Not everyone is in the pool. Insurance works by spreading an unknowable risk around a large pool of payers. Only a few of those payers are going to make claims, most pay money for a service they never needs. Auto insurance is the perfect example. The majority that do not have accidents cover the cost of those that do get into collisions. Unfortunately  with health care we have a class of people that we know are going to get into accidents — those with pre-existing conditions. If auto insurers knew who was going to have an accident, the game would change their too.

4) Health care costs are not subject to consumer discretionary habits. I currently do not own a car. I am looking into it, but I can get everywhere I need to — not fast or efficiently — by mass transit.  For me to buy a car I have to balance with my other debts and obligations, look at if the value is enough for me to justify what I would have to give up to afford the car. These are all reasonable discretionary calls for buying something, Health care doesn’t work that way. When I am in pain, or very ill, I will get the service and worry about paying for it later. People will not juggle health care costs the way they will other costs.

What can we do to make the market work for health care?

1) Break up the big companies just as we did with AT&T. Competition is the answer to too few insurers. Also I would allow them to sell policies across state lines.

2) Require that insurance companies accept people with pre-existing conditions. No one can be denied coverage.

3) Require everyone to have health insurance just as we require everyone to have auto insurance. This plus solutions one and two should help keep policy cost down. If it does not, then the government should step in and limit the costs of policies, or less preferable, subsidize the purchase of policies. (Some level of subsidy will be required for the poor, but no more than required unless the market can not bring down the costs of the policies.)

4) Nothing will change condition four, but working on the other three should be a big help. If it doesn’t, if after those actions we are still in a mess, then it might be time for a government run policy/payer.