While the government doesn’t control the health care industry to the same degree as public schools, government is currently the single largest purchaser of medical care. The federal government buys nearly 46 percent of all health care and controls nearly 60 percent of health spending. Government regulations further distort the health care market, encouraging individuals to obtain health insurance through their employers and divorcing them from the cost of the care they consume. In this type of government-dominated system, the relationship between medical care and pricing is terribly distorted.
President Obama and his allies want to solve this problem through more government involvement. Yet greater government interference in the health care sector will only make this problem worse – and create new ones. And what’s more concerning than what this intrusion will do to the cost is what it will mean for the quality of service. Undoubtedly, a public health care system would seek to control costs – and restore the balance of supply and demand – by rationing services. Is that really what we want?
The government has a role to play in reforming our health care system, but it is not in replacing our current structure with a government-run program. Instead government ought to empower consumers in order to make price relevant again. This is the best way to spur competition, reduce costs and ultimately improve care.
And policymakers have plenty of reforms to consider. For starters, Washington can move the current tax deduction for health insurance from employers to individuals, in order to encourage greater – rather than less – patient involvement in their choice of care. They can promote the expansion of health savings accounts, and allow the sale of health insurance across state lines.
Consumer-driven markets have brought us the wonders of massively increasing computer power and declining prices. It has brought us cheaper, more reliable, and safer cars. Consumer-driven health care is the route to an efficient and effective medical system.