With the health care debate on everyone’s mind, this quote has been floating around some of my friends on the social networks:
“No one should die because they cannot afford health care, and no one should go broke because they get sick. If you agree, please post this as your status for the rest of the day.”
To that I say “of course”.
The question is, by what means do you want to establish affordable healthcare? Do you want to use the magical fairy dust method, which somehow brings about great service and better care, covers more people, and doesn’t cost a dime? Or, do you want to endorse the only method of reducing costs that has ever worked in the real world, the free market?
Some will say, “wait a minute, isn’t it the free market and the greed of corporations that caused ridiculously high prices in the first place?” No, it is not. There is no free market in health care right now, so the free market cannot be the cause of the high prices. Here’s an example to illustrate the point.
Let’s talk about a simple commodity: food, specifically fast food. Right now as consumers we have nearly limitless choices of places to go, and a broad variety of menu options at each restaurant. If prices at one place get too high, we go across the street. If the deluxe meal is too pricy, we forego the fries and drink, or choose from the dollar menu instead. Fast food is therefore inexpensive because of a relatively free market.
But if government regulated fast food like it does health care, it would be a very different story. We would first be forbidden from crossing the street to buy our lunch. We would be forced to take the one on our side of the street. Next we would be unable to choose among the various menu items and would be compelled to take the standard meal. Government mandates would require us to purchase the fries and drinks even if we didn’t intend to eat them. Prices would skyrocket due to few alternatives and coerced food purchases. This is the way health care is handled now, and this is why there is no free market in health care.
This situation came about due to building government intervention over many decades. During World War II the government engaged in wage and price fixing. This forced businesses to offer health benefits to attract employees, since they could not offer higher salaries. Prices rose as a result of ever increasing demand as more and more employers provided coverage. Higher prices led to a problem where retired people who didn’t work could no longer afford health care costs. The government’s solution was to institute Medicare, another program where artificial demand grew exponentially because there were no market controls. Then came Medicaid. Due to lobbies from various groups like big pharma and the AMA, government regulations restricted supply just as demand was ballooning, and this soon created a very un-free market that only helped to super inflate prices.
This was great for insurance companies, because if health care prices become unreasonable then it means you will have to purchase insurance. So the two industries have driven prices almost off a cliff. But instead of understanding that the solution would be to remove government involvement in health care, there are people who want to just build a higher cliff.
The $20 Snickers Bar
Okay, so here is the situation we’re in right now. There is a Snickers bar in front of you. You go to grab it, and I say, “hold on there big fella, that will be $20″. You say, “$20 for Snickers bar!? That is way, way too expensive!” That’s when I get a big grin and say, “that’s right, and I am with the government and I am here to help”. When you hear these words, it’s always a good idea to run.
Now, here come the solutions.
The Bigger Government Solution: Regulations and barriers to entry removed the supply of many colorful choices that used to be available. They then realize it’s now too expensive for you (notice the addition of “for you”) so they now propose to charge each of your friends $1, and then you can get that $20 snicker bar for only $1. Your friends are a little upset, and you have not actually changed the ridiculous price, but in some strange logic it has now been made “affordable”. In fact the $20 Snickers bar will become even more expensive as the government collective increases demand while even tighter regulations strangle supply.
The Free Market Solution:We realize it’s too expensive, so we remove the barriers to healthy competition and consumer choice. By keeping the government out of it and opening the free market, the next thing you know people are offering you Snickers bars for $10, then $5, then a Three Musketeers for $2, then a Milky Way for $1 and some guy shows up offering you a Snugget bar for $.50 (I have no idea what a Snugget is…but it sounds delicious).
The people in need, the ones who absolutely cannot afford it, are few enough, that just the donations of doctors and charity would cover them.
This isn’t about saving lives. It’s about the fact that people were about to revolt against high prices, and the government has been lobbied to get involved and force everyone to pay, which will allow the prices to stay artificially high.
Our hospitals are flooded with people that are receiving free health care right now. They are not dying. But the thing is, they are not happy and neither are the hospitals that have to provide it, nor are the taxpayers that get billed the cost of “free” emergency room visits at five times the rate of a normal doctor visit.
Whereas little clinics like the one by my house are popping up and people are flocking to them. The care is not free. It costs $80, but these folks are willing to pay $80 to avoid paying $1600 and waiting 8 hours in a congested emergency room.
Some say we have to do something, else insurance premiums are going to jump up to 3 times their current level in the next few years. No they wont. Do you know why? Because no one is going to pay it. That is unless we get locked into some sort of universal government plan, then I guess we will be forced to pay it.
The only reason the government wants to be involved in health care is because they want to maintain high drug prices, high insurance prices, and high care prices for their lobbyist friends. It also gives them a reason to justify their existence. Most problems the government tries to solve, are problems it created.
The more government gets involved in health care, the more we head towards potentially limitless price increases. Do we currently have unlimited pricing for fast food or candy bars? No, because the free market offers a multitude of choices. But since government is involved in health care, it now uses the problems it created as justification for even more intervention.
– Allow people to purchase insurance anywhere giving consumers many more health care options. This measure alone will make health insurance available to so many more people.
– Allow Doctors a dollar for dollar tax rebate for serving patients unable to pay for services, during a transitional period.
– Allow competition from clinics staffed by nurses to handle small medical needs.
– Encourage individual insurance plans by giving them the same tax advantages of employer insurance. We should initially discourage government and employer based health care plans, since this is the source of outrageous costs.
– All people are then free to purchase their own insurance, but, since it is their own money they will be much more thrifty and competition will be increased.
– Phase out Medicare and Medicaid over 20 years. They are bankrupt institutions that have bankrupted this country. Encourage buyouts, right now.
– Encourage personal medical savings accounts that are tax free, and unused portions are passed on to families.
– Any type of government health care is done using “health stamps”. Like food stamps these would allow people to understand exactly what they are spending. When you have transparency of costs, you have desire to control them. This would also encourage people to shop around to get the most bang for their buck.
– Tort reform to make payments more realistic will further bring down health care costs.Make health care bills easy to understand so customers have a better idea of what they pay. – Allow a place on tax forms so quick donations to the needy can be made voluntarily.
– Finally, any other health care measures should be left to the states according to the 10th amendment of the constitution.
If we enacted some of these changes to actually create, rather than further prevent, a free market in health care, then we would greatly reduce costs. Additional regulation and artificial demand leads to waste and fraud, and gives consumers the false impression that their health care is “affordable”. Health care is a commodity like any other because of its scarcity. Now, let’s treat it like one and give people the freedom to make their dollars work in the most efficient and effective way possible.
By John Jay Myers, edits and assistance from Jordan Wagnon.Credit to the Cato Institute, Advocates for Self Government, John Mackey, the Mises Institute, and common sense.
John Jay Myers