Ron Wyden, who has something of a reputation as a serious policy analyst has a solution for all of our health problems and that solution would be more competition among private health insurers:

Empowering Americans to choose from a broad selection of health plans would turn the tables. Those insurers that charged affordable rates and provided good coverage would attract more customers, while those that treated customers badly would be forced to change their ways or go out of business. To stay competitive, insurers would need to follow the example of places like the Mayo Clinic and offer good, low-cost coverage.

Would that it were so. But alas, those of us who are not in the Senate know a little more about the world. It does not make us so optimistic.

Wonks Anonymous own dealings with traditional health insurance are thankfully limited. He sort of set up his life so that this would be true. He has had various occasions to file claims with a traditional insurer for non-traditional treatments. All of these experiences have been awful. Worse, in fact, than dealing with Yugoslav or Russian functionaries in the bad old days.

And there are strong economic reasons for this. Which reasons Senator Wyden would be familiar with if his economic education had not stopped with memorization of the phrase "market magic". These are:

• Poor service, denial and delay of claims and the creation of byzantine rules governing payment and coding, save money. The more difficult it is to get payment on a policy the more likely the customer is to give up and pay the costs himself saving you money.
• Most consumers do not file claims and therefore know nothing about the quality of health plan services. Poor service has little or no impact on the choice of the average consumer who will almost always go for price.
• Good service and a reputation for good service attracts people who think that they might have health problems. Good service attracts people who you would rather not have for customers.

Health plans control costs by avoiding sick people. They compete to make sure that other health plans are more attractive to geezers and the morally deficient whom god has punished with ill health. This gives them a younger, healthier risk pool which means that they pay out less in claims. If they pay out more in claims they can take more in profits and charge lower rates. Plans that hired ex members of the Serbian Police force as claims adjusters and customer services reps probably would win the competition.

This is a form of market failure, my people call it adverse selection.