First off, I’m sorry that in my last health column, I seemed to support a single-payer… First off, I’m sorry that in my last health column, I seemed to support a single-payer system. I made the case as an explanation. Today, I’ll make the case for market-oriented reforms, espoused best by economist Arnold Kling in a book called “Crisis of Abundance.” It’s a great, short book. You should read it.

As a sober answer to our problems, we need to discard some deeply entrenched biases. Here are some realities:

First, we don’t have anything close to a free market in health care. The government pays for half of our health spending directly. It spends as much of our GDP directly on health care as Canada’s government does. Counting tax subsidies, the figure might be 70 to 80 percent.

Second, what we call “insurance” really isn’t. You can divide our mistaken concept three ways:

1. “True insurance” pays for conditions so expensive and unlikely that it makes more sense to pay a premium, and pool your risk with others, than it does to try to save for the required treatments. Insurance makes health care genuinely affordable when it’s needed.

2. “Insulation” is what we call “insurance.” It’s when you pay an insurer, either through forgone wages, taxes or a premium, to pay nearly all your health costs, even those you can reasonably save for and those you know you will have to buy. Insulation creates the illusion that health care is free.

3. “Welfare” is for those who can’t afford insurance. Many people without insurance today could afford it, but choose not to buy it. In contrast, the very poor cannot pay because they have no money. Likewise, the chronically ill cannot buy insurance because their costs are reliably higher. Welfare realizes our obligation to others as equal human beings, whose place we could occupy were it not for fortune.

Third, medicine often isn’t strictly unnecessary or necessary, black or white. Instead, there’s a large gray area. A treatment or test might be expensive but reduce a risk only slightly, such as when you get an MRI for lower-back pain, which could mean cancer, but almost surely doesn’t. It’s ridiculous to say, “Do everything conceivably beneficial,” given that we quite rationally ignore this principle elsewhere in life. Do you wear a bullet-proof vest when you drive through a bad neighborhood? There are treatments that, probabilistically, constitute just that.

Given these truths, Kling proposes three major reforms:

First, taxes should finance health care for all of the very poor and chronically ill. This satisfies our sense of social justice that no one should be left out in the cold. To me, it makes more sense than a single-payer, which would pay Warren Buffet’s health costs.

Second, there should be institutions that evaluate and publish health outcomes of treatments. Other nations use such figures to decide when government pays for a treatment, but Kling hopes this information could help insurers, consumers and charities make choices on their own.

Third, end subsidies for insulation. True insurance has large deductibles and operates in the long term. You might buy a plan that covers expenses above $30,000 over five years, for example. Up to $30,000, we would shop around for health care. Then, providers would compete, like car companies do, to offer a range of products, varying in price and quality, instead of trying to invent high cost premium medicine. New and unfamiliar ideas would become commonplace, like telemedicine.

We can imagine a renaissance of health consumerism. To an extent, this demands faith in possibility, faith that there are ways of doing things, totally unimagined now, that work better than what we have; ways of thinking, doing business and learning, that we will one day wonder that we did without. Ask yourself, if government considered transportation a right in 1850, and equipped all with horses, what would transportation look like today?

Given that Kling addresses equity, the main reason to oppose such ideas is that patients simply might not be able to make informed choices – that they will be exploited, inevitably. Even a market-supportive publication like The Economist doubts we can be savvy health care consumers.

I disagree. It’s true we’re uninformed in the status quo, but that’s fitting given that we seldom choose. If people could save by getting informed, a knowledge infrastructure would arise, from academia, think tanks, and private booksellers and websites. In fact, it’s happening now. WebMD isn’t a French company – no accident.

This concludes my series. I don’t hope to have convinced you of anything unless you’re very shallow and impulsive, only to have sparked interest. On a final note, I’d just like to remind you that news is full of lies, statistics are empty out of context and that it’s difficult to think about unrealized possibilities.

Please e-mail Lewis at [email protected] with any arguments or questions and he’ll do his best to answer.