Healthcare - Free from Third Parties

The healthcare system in the United States is too expensive and fails to provide as good of care to citizens as the systems of Europe and Canada. Under our current system, costs will continue to rise, making healthcare unaffordable for a growing number of Americans. The free market has again failed.

This is the sort of nonsense that you’ll be increasingly hearing from Democrats as Congress wrestles with reforming our healthcare system. However, the free market has little to do with our present healthcare system.

Before you buy in to the arguments that we need a government-run healthcare system, consider: The health sector is roughly 16 percent of the American economy, and rising. The Medicare and Medicaid programs alone represent 23 percent of the federal budget (far more than defense), are growing, and consistently outpace inflation. Medicare’s unfunded liabilities alone are a breathtaking $89 trillion (that’s not a typo, folks) and is expected to go broke within a decade (Social Security will go broke about five years after that). The current national debt is $546,668 per household.

We are not alone in this staggering amount of debt; most Western countries are in the same boat. Who will finance this debt?

Congress is presently working on healthcare reform legislation, so there is no specific bill to discuss. The politics change with every news cycle – and sometimes within a news cycle. Senator Edward Kennedy, chairman of the Health, Education, Labor and Pension (HELP) Committee, has circulated a draft of a draft bill. The Congressional Budget Office scores, or estimates the cost, at approximately $1.6 trillion over 10 years, and that’s for starters. You can add that to the numbers above. Oh, and this $1.6 trillion will only cover 16 million of the 46 million currently not covered by health insurance.

Most of us have insurance through our employers, which is a buyer-seller-receiver healthcare model that distrusts the free market and limits an individual’s choice. We have a third-party payment system that is inefficient, confusing and paper-based, which invites fraud (a bureaucratic, paper-based system cannot keep up with fraud perpetrated through computer systems). All of this will be magnified in a government-run system.

In a government-run buyer-seller-receiver model, the buyer (government) gets nothing of direct value, so seeks to pay as little as possible and micromanages and second-guesses the seller (healthcare provider). The seller is beset with the feeling that the buyer suspects him of incompetence, greed or fraud – or all of them. The receiver (patient) of the seemingly free good or service has made no investment in this process and has no gratitude because he isn’t “paying” for it. He is never satisfied because he believes the good or service is his “right” as a citizen. He always wants more of it, with more convenience and with less personal accountability and responsibility. The buyer, unable to keep up with the receiver’s demands, will seek to pay the seller less and less for his services and/or limit what he will buy on behalf of the receiver.

A free market buyer-seller model is superior. In such a model, the seller (healthcare provider) offers the good or service to the buyer. The buyer (patient) checks out the good or service and decides whether or not it is worth purchasing at the stated price. There is a direct relationship between the doctor and patient, minimal paperwork, transparency of process, and efficient pricing.

Still not convinced? Let’s look at Massachusetts, where liberals’ dream of “universal coverage” was mandated by the state legislature in 2006.

The journal “Health Affairs” recently published a study by Sharon Long and Paul Masi of the left-leaning think tank The Urban Institute, which found that less than three years into the program there is a growing shortage of physicians, residents are enduring longer wait times and other restrictions on care. Long and Masi write, “Paradoxically, the increases in health care use…were coupled with the indications that some adults were having more difficulty obtaining care.”

What the authors see as a paradox is simple market economics at work. People will increasingly take advantage of a “free” good provided by the taxpayers. The authors note, seemingly without irony, “Although major expansions in coverage can be achieved without addressing health care costs, cost pressures have the potential to undermine the gains.” Ya think? This is precisely why we cannot implement such a scheme at the national level. Cost-shifting billions and billions of health care dollars doesn’t add value to patient care and quite simply threatens the future solvency of the United States.

What health care plan should we devise? Here, from the Center for Health Transformation, are patient-centered principles that should be a part of any health reform legislation:

• Every American should be encouraged and incentivized to take personal responsibility for his or her health
• Every American should have genuine access to quality, cost-effective care that best meets his or her individual needs
• Every American should have health insurance coverage (private or public) that is affordable, accessible and portable – no matter where he or she chooses to live or work
• Health care providers should deliver the best possible care based upon best evidence or best practice
• Every provider of care, from doctors and nurses to pharmacists and hospitals, should be interconnected with an electronic health record for every American
• Payment to providers should be based on the quality of the care delivered, not the number of transactions or services provided
• Cost, quality and performance information should be available and accessible to all consumers
• Government should promote and encourage competitive, market-based solutions in the private sector
• Government should offer effective, efficient an sustainable public programs only for those who need them
• Government should aggressively invest in targeted clinical research, laying the foundations for future breakthroughs and cures

Finally, for those still dubious of my premise, let me give one small example of the power of a real marketplace in health care: cosmetic surgery, which, apart from cases of disease or accident, is paid for directly by the consumer/patient, not by an insurer. According to a study from the National Center for Policy Analysis, “The real price of cosmetic surgery has declined over the past 15 years, despite substantial technological progress and a six-fold increase in demand.”

What we need is more free markets and less government control over our lives. The problem with the current system is that patients don’t control the resources; third parties do.