Topic: Health Care
A Better Way To Handle Rising Health Care Costs For Children Why is it that anytime a discussion comes up in Congress about having yet another way to fund Health Care at taxpayers' expense, neither major party actually talks about reducing the cost of health care?by Walt Thiessen
(Libertarian)
Thursday, September 27, 2007
Why is it that anytime Congress and the President argue over funding for some government health care program or other, no one wants to talk about what it will take to actually reduce the cost of health care? The two major parties don't seem to care about that. They're much more concerned with how much taxpayer money they can spend to "fix" the problem.
The latest example is the State Children's Health Insurance Program, for which the Senate just passed a bi-partisan $60 million funding bill over the next five years. President Bush doesn't want to get into the cause of rising health care costs either. He just wants to cut the funding in half.
I'm all in favor of saving taxpayer money, but wouldn't it be better if Congress and the President actually addressed the root causes of the spiraling rise in health care costs? If they did that effectively enough, programs like the State Children's Health Insurance Program wouldn't even be needed.
The #1 contributor to rising health care costs is the U.S. Government, closely followed by the 50 state governments. Consider the following:
Employer health insurance is a major contributor to rising health care costs. Because the employee (under traditional employer benefit plans) barely even sees the bill and doesn't have to pay for more than a small fraction of it, employees never shop around for better pricing or service. That's the main reason why health care providers: doctors, clinics, hospitals, etc. aren't set up to provide competitive pricing information except for the most basic services. This problem exists because the IRS gives 100% tax deductions to employers who offer health insurance, but denies 100% tax deductions to individuals who buy their own insurance. This one is easily solved: let everyone deduct 100% of their own medical expenses while taking away the employer deduction. This will virtually require individuals to buy their own health insurance for themselves and their families. Since individuals won't want to pay for the massively expensive health care policies that employers are now trying to abandon in droves, complete with all their "free" (i.e. massively hidden cost) health care, the entire health care industry, including the health insurance industry, will have no other choice but to start finding ways to reduce health care costs on a patient by patient basis.
The FDA has contributed massively to rising health care costs. FDA regulations on new drugs effectively drive the development cost of any single new drug upwards of $500M to $1B before the drug even gets approved (and even if it doesn't get approved). The only way to recoup this kind of cost is to ratchet up prescription drug prices dramatically. Lo and behold, that's exactly what has happened. It has gotten to the point where, if you're a pharmaceutical, unless you've got a product that has a patent on it guaranteeing that no one else can produce that product, you can't compete. I've got news for you, folks. That's not what a free market does. That's the product of heavy government regulation. There are two possible solutions. One is to abolish the FDA. For those who like the FDA, the second solution is one I proposed previously: let individuals and health care providers opt out of FDA protection to form a separate, private health care economy. Either approach would effectively and dramatically reduce the cost of health care.
Medicare regulations have driven costs up by building in all kinds of hidden regulatory costs that make it more and more difficult (and therefore more and more expensive) for health care providers to meet their patients' needs. The solution is to move Medicare (health insurance for seniors) into the private sector and stop letting government regulate it.
State health regulations in a wide variety of ways place a huge list of requirements on what health insurers can, must, and cannot offer, what doctors and hospitals can, must and cannot offer, and what pharmaceuticals can, must, and cannot offer. Every one of those regulations leads to higher prices for everyone. The solution here is obvious: cancel all the state regulation.
The American Medical Association, along with the other quasi-"private" medical associations, have such a strong headlock on who can practice medicine and what they can do and who can't practice medicine and what they can't do that it is virtually impossible for any competition to exist in the mainstream medical industry. There is nothing that is such a sure thing financially as being a doctor if you want to be guaranteed endless lines of patients streaming through your door, all because of government regulation and the AMA (and all the other 3-letter "self-regulating" groups). The solution? Take away from the medical associations the right to decide who can be a health care provider and who can't. Any time you restrict the supply of something, the price goes up. That includes the supply of doctors, hospitals, clinics, nurses, etc.
Patent law has made it impossible for anyone who doesn't have a corner on the market to compete. Patents were never intended to give manufacturers (including medical manufacturers) a monopoly on their corner of the market. They were merely intended to reward creativity and innovation. But the way Congress has implemented patent law has created a monster that threatens to bankrupt us all. Serious patent law reform is desperately needed.
How much would this reduce health care costs? It's impossible to say exactly, but if you want a guide, consider the following:
Before the IRS offered tax deductions to employers, health care was cheap and plentiful. Today, it's expensive and hard to shop for.
Before the FDA was created, drugs were largely affordable and were not considered the only solution to health care problems. Today, drugs almost totally dominate health care and have become largely unaffordable for most Americans without insurance. The FDA is a major contributor to this overwhelming trend.
Before Medicare was created in 1965, Medicare was sold to the American public as a supplement to senior citizen health insurance, not as a replacement. Today, because of it's overwhelming negative influence on competition, most senior citizens find themselves almost 100% dependent on it.
Before state regulations started to become onerous, even the poorest Americans could afford at least a little health care. Today, they can't begin to afford any of it, and there are more poor Americans than ever before.
Before the AMA took over, health care was absolutely cheap. It was cheap even by the standards of those times.
Before the overbearing patent laws poured untold riches into the pockets of patent owners, medical equipment and pharmaceuticals were all extremely affordable.
Need I say more? But instead of talking about all of these things, which are the root causes of spiraling health care costs, Congress and the President debate whether to give away $30B or $60B to fund children's medical care.
One final thought. U. S. Comptroller David Walker predicts that by 2040 the interest on the national debt plus Social Security obligations will leave no money left over in the Federal budget for Medicare or Medicaid....or anything else!
Both major political parties and both the Congress and the President need to have their collective heads examined, preferably not at taxpayer expense. Meanwhile, can we as a nation please begin to consider and address the root causes of rising health care costs? Is that really too much to ask?
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The views expressed in this
article are those of Walt Thiessen only and do not represent
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You asked the easiest questions. Those corporations that you said you have nothing against all have a board of directors. They hire lobbyists like Fred Thompson who take big checks to those politicians you fault. And all this reasoning you published above leaves with the lobbyist. Within a week of announcing my candidacy for the U.S. Senate, I received a letter from the Sierra Club informing me that they gave generous campaign contributions. I wrote them back to say that proposals good for the country didn't require a contribution, and any person who showed up at my office offering me money would be thrown head first through the window. They wrote back, "Don't worry about it. You'll never be elected." They were right. I came in 3rd. You see, these people who sit on the Board of these HMOs do sincerely care about children, their children
Posted By: Walt Thiessen
Date: 2007-09-27 15:25:56
I don't understand what you mean when you say, "those corporations you said you have nothing against." I don't like the fact that they're creatures of government. I'm not against them trying to make money in private enterprise (or what's left of it). I am against corporations having influence in the electoral system. See my article on the subject at http://www.nolanchart.com/article145.html for more details.
On the other hand, I don't see any reason to hold corporations responsible for the crazy laws politicians pass that benefit corporations. That responsibility rests with the politicians and the voters who elect them. Last time I checked the Constitution, the Bill Gates of the world don't have a vote in Congress.
Don't make the mistake of blaming the ones who use money to wield influence. Too many commentators in the media make that mistake and successfully help the corruptible politicians (as well as the voters who elected them) deflect the negative attention they so richly deserve. Blame the ones who allow themselves to be corrupted by that influence then try to act like they're doing the rest of us a favor. That's what makes the worst kind of politicians. That's where the blame really lies. And blame the voters especially who help them get reelected. They're the ones who deserve the most blame, because they're supposed to be the guardians against excessive government, rather than its fountain of eternal corruptibility. Blaming the money men misdirects attention from the real perpetrators of corruption and injustice in America.
What restriction on physician supply?
The physician supply has risen 129 percent in the last 20 years. During that time, there's never been a single year when the physician per captia ratio hasn't improved.
Shortages of physicians are caused by physicians choosing to congregate in metropolitan areas and in certain specialties. This maldistribution in the available supply is a function of individual response to economic influences, not AMA control.
Posted By: Walt Thiessen
Date: 2007-09-27 16:53:39
So make up your mind. Are you claiming that there are enough physicians or not? You contradict yourself. Sure, more and more new doctors are choosing specialties. So what? The restrictive supply of physicians in specialities (combined with the other factors I described in my article) make those practices even more lucrative than primary care. All you've really managed to do is to prove my point. If there were enough doctors in specialities to make them competitive niches in medical practice, they wouldn't be so lucrative, and more and more doctors wouldn't want to enter those niches. The market (if unimpeded by regulatory influences) wouldn't let them. Unfortunately, the market for medical services is nothing but impeded by regulatory influences.
I'm not sure what your source for that figure is (since you didn't provide anything to substantiate your claim), but even if it's true it doesn't matter. The medical industry has been severely understaffed for far longer than 20 years, and the problem is getting worse. And if you think that the AMA doesn't do it's best (which is a lot) to restrict or doesn't want to restrict the number of doctors out there, you don't understand the real meaning of the term "oversight." Their whole purpose for existence is to restrict the supply of doctors, all for our own good of course (to protect us from those "bad" doctors out there). And if that happens to make them richer, that's just a little perk, right? Funny thing is, I haven't really noticed any decrease in medical malpractice, have you? Incredible, isn't it. Medical malpractice increases while we're being "protected" by state regulatory oversight (by state boards which are staffed by AMA doctors) .
You complain about lack of doctors in rural areas, but the only way that can be an issue is if doctors are chasing big buck opportunities created by a regulated market. The only way that can happen is if there aren't enough doctors. Back before the medical industry got invaded by government, there was no lack of doctors. In fact, some of them made house calls! They weren't trying to make a mint because they couldn't (and thus many of them didn't really want to).
Introduce government regulation (which always restricts supply) and you change the whole dynamic of the industry. That's what happened in America over the past 40-50 years in medicine. It's also one of the main reasons we're in the current mess that we're in.
The next time you want to argue that there are plenty of doctors, ask yourself this: When was the last time you heard of a doctor closing his office because he didn't have enough business to sustain his practice? If the answer is that you can't remember the last time, then you have just proven beyond doubt that there is a shortage of doctors, no matter what increase there might have been. I know I've never heard of a doctor going out of business for lack of patients, so it's pretty likely you haven't either.
"This is a government of the people, by the people and for the people no longer. It is a government of corporations, by corporations, and for corporations." -Rutherford B. Hayes
Don't worry too much about this stuff. Before too much longer there'll be much larger issues. Most Americas are not even aware that the dollars is on the express elevator down. Their $500,000 home will be worth $350,000 before their hero Mr. Bush leaves office. Frankly, I can't say I feel sorry for them. The day Bill Gates and Warren Buffett traded in their dollars for Euros, I traded mine in. As Bill Clinton said after the 2000 Election, "You wanted a change, and you're going to get."
AP - Another New Low for the Dollar - Dollar Hits Seventh Consecutive Low. Friday September 28, 10:18 am ET
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