The cost of health care in the United States is a perennial issue in presidential election campaigns. Little wonder since money spent on it continues to rise year after year. by Kenn Jacobine
(libertarian)
Friday, June 20, 2008
The cost of health care in the United States is a perennial issue in presidential election campaigns. Little wonder since money spent on it continues to rise year after year. In 1960 the United States spent just 5.2 percent of its gross domestic product (GDP) on health care. By 2007, total spending on health care was $2.3 trillion. This figure represented 16 percent of the GDP. While costs continue to rise, 47 million Americans are still left uninsured. This is quite a quandary – ever rising costs that still do not meet total needs.
What is at the heart of this problem? The answer is government central planning. As government has gotten more involved in health care since 1960 the cost of it has risen dramatically. Naturally, this presidential election year is no different than recent years with the two major candidates offering more government solutions to our health care crisis. Whether it is tax credits, coordinated care, guaranteed access plans or a National Health Insurance Exchange of public and private plans for the uninsured, McCain and Obama are doing what all politicians do: propose new government policies to fix the problems caused by the previous policies. Their proposals will not reduce costs, but merely exacerbate the problem further. To realistically address the health care crisis in the U.S. we need to eliminate the government's stranglehold over the industry by ensuring greater competition, eliminating regulation and allowing consumers to spend their own health care dollars.
In all industries, competition is the key to lower costs and consumer satisfaction. The healthcare industry is no exception. To ensure greater competition in health care, providers should be allowed to offer their services on the open market without government interference. Government licensure should be abolished so consumers could be free to pick and choose which provider best satisfies their need. With the limiting restraints of government gone, more providers would enter the market and competition between them would be keen. New providers could offer alternative healing programs. A multi-tier system could develop in which common maladies would be treated by less expensive, minimally trained providers. For serious cases, specialists would receive referrals from the lower tier. In Zambia, I have been treated by doctors who would not be eligible for licensure in the U.S. because their medical training, received in Zambia, does not meet U.S. standards. They have treated me for the flu, strep throat, and rashes with successful results. If my condition was more serious I would seek the help of a specialist. In this system, low cost providers would heal minor afflictions, thereby lowering costs, and all providers, doctors, physician's assistants, nurse practitioners and the like would  stay up to date with the latest medical techniques and provide the very best service to all of their patients in order to keep them as clients.Â
Now, under the above described system, many folks would ask, how can we be sure medical professionals would be qualified to treat patients? Certainly, medical schools would still provide top quality training for practitioners otherwise their enrollments would decline causing economic stress to the larger university. Consumer groups would develop rating systems for medical providers to inform the public. Lastly, medical associations would form to support health care providers with training and forums for collaboration between professionals. We live in an age where information is plentiful and reliable. If there is a need in society the internet and mass media will supply ample resources to make an informed decision on how to satisfy it. It is time we harness the enormous power of the free market to provide more competition in health care in order to lower costs and improve the quality of the care.
Along with ending state licensure, the Food and Drug Administration (FDA) should be abolished. In 1962, President Kennedy signed into law amendments to federal drug laws that required pharmaceutical companies to prove the effectiveness of their products to the FDA before they could be marketed in the U.S. Of course, the new requirements did not make our drugs risk free as was their intention. Instead, over the years, ever longer and more complicated approval processes were put into place. These longer approval processes have kept much needed drugs for cancer, high blood pressure, cholesterol, and heart attacks off the market causing patients to suffer and even die. Additionally, the more complicated and costly approval processes have eliminated small companies from entering the market, thereby decreasing competition and raising costs. By eliminating the FDA, large pharmaceutical firms would not be able to restrain competition against them by hiding behind a $2 billion regulatory bureaucracy. Consumers would be the biggest beneficiaries from the move.
Again, many would ask, how would we know if our drugs were safe or not? The answer is the same as the one for ending licensure. Private testing organizations like the Underwriters Laboratories would spring up to test drugs for safety and effectiveness. Also, pharmaceutical companies would have incentives to produce drugs and medical equipment that were safe lest they would face civil or criminal lawsuits.
Besides a lack of competition and heavy regulation a third cause of high costs in health care is the fact that third party payers (insurance companies and government) pay between 70 and 80 cents of every health care dollar. This condition makes price comparison shopping unnecessary. If some other institution is footing more than 70 percent of a bill, the consumer has little incentive to shop for the best deal.Â
Enacting Medical Savings Accounts (MSAs) is a proper response to the third party payer problem. MSAs would bring down costs by making consumers more cost conscious. Here is how they work: Employers deposit a portion of the money they currently spend on your health insurance into an MSA, up to $1,400 for an individual (or $3,375 for a family). The remainder of the money is used to buy a catastrophic policy that covers expenses after meeting a deductible. You use your $1400 to pay for medical expenses directly. The incentive is for you, the consumer, to lower your medical costs because the proceeds leftover from the $1400 at the end of each year is kept by you in a tax deferred account. By requiring all consumers to meet a budget the cost of aggregate health care would decrease.
At this very moment, proposals in Washington to solve our health care crisis only include more government intervention. The key to solving the problem is less government, not more. By ending state licensure, abolishing the FDA and enacting MSAs, health care cost will come down allowing many more Americans the ability to get coverage. Perhaps then, health care as a perennial presidential election campaign issue will be no more. Then we can focus on different issues to tackle.
Part IV will deal with energy.
Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia. Send him email at lovesliberty@gmail.com.
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Posted By: Peter Namtvedt
Date: 2008-06-22 18:58:55
I am totally with you on this. Every move that politicians make on the medical cost topic moves us steadily towards socialism -- the system that the world declared to be a complete failure in the 1980s, with the collapse of the Soviet Union. Do we also have to go the same course and end in collapse?
I have given up on politics. What would happend if they held an election and nobody showed up?
