Health Care Improvement Without Federal Government Control

Posted: Dec 06, 2007 4:57 PM
Health Care Improvement Without Federal Government Control

Much of the media coverage of the Presidential campaign has focused upon two issues — the war in Iraq and health care. The latter has been particularly prominent in Democratic Presidential debates and upon the campaign trail. The three leading Democratic Presidential candidates – Senator Hillary Rodham Clinton (D-NY), Senator Barack Obama (D-IL) and former Senator John Edwards (D-NC) – have stated they would urge Congress to implement mandatory universal health care run by the Federal Government. The Republicans have been underwhelming on the issue, failing to advocate aggressively and articulately free-market reforms.

Universal health care is synonymous with government-run health care. While candidates praise the virtues of such coverage, the reality is far different. In a government-run system, costs can be controlled but this is done through rationing. For examples of how this works in practice, one need look no further than Canada or Great Britain, where patients must wait months or years to see a physician and receive treatment for basic, non-emergency ailments. Such a system of rationing inevitably takes a toll upon people’s health and life-expectancy.

If universal health care is undesirable from a practical and ideological standpoint, what reforms should be made to improve health care in America?

First, people should be able to choose what services they want covered. Instead of having prepackaged, one-size-fits-all plans, consumers could choose what they can afford and need. The cost of health insurance is exceedingly high in some states because podiatrists, acupuncturists, massage therapists and others must be covered by law, according to Larry Elder in INVESTOR’S BUSINESS DAILY. The average healthy person has no need of such services and potentially would be more willing to purchase a cheaper insurance plan that did not include non-essential benefits.

Second, insurance should be portable. In other words, consumers should be able to purchase insurance wherever they want, from an insurance company incorporated in any state in the Union. Heavy regulations in states like New Jersey and New York have driven the price of health care beyond the reach of many, while states such as Kentucky and Oklahoma have kept costs low. According to Senator Tom Coburn, M.D. (R-OK) in “Competition: A Prescription for Health Care Transformation,” published by the Heritage Foundation, the price of a health insurance policy in New Jersey is seven times that of one in Kentucky.

Third, reduce the administrative overhead with which employers and insurance companies are burdened. Coburn notes that administration and processing currently account for 6% of health care costs, which may seem small until one realizes that 6% is in the range of $125 billion.

Fourth, reform Medicare and Medicaid. Much like the antiquated systems of Canada and Britain, Medicare and Medicaid are directed by government bureaucrats who decide what services and drugs patients can have, when they can have them and how much the government will pay for them. Consequently, access and care are not the same for those dependent upon Medicare and Medicaid as they are for those on private or employer-sponsored health insurance. It is difficult immediately to eradicate entitlements, like Medicare and Medicaid, once a large number of people are dependent upon them. Perhaps the place to begin is to eliminate overlap between the two programs and to streamline those who are on both into one or the other. In spite of the difficulty, these two must be reformed soon. If left unchanged Medicare and Medicaid are projected to consume 16.2% of the Gross Domestic Product (GDP) in the coming years.

The major problem with health care is that Americans have ceded to the Federal Government a role it should not have, particularly because the United States Constitution does not enumerate health care as a power of the Federal Government. True, government has a responsibility to ensure that there are medical standards in place to prevent abuse, malpractice and corruption but this is better left to state governments.

Health care and education are the two most regulated industries in America, and, consequently, two of the most expensive and staid. If the Federal Government would move out of the health industry and deregulate the market prices would fall, insurance companies would become competitive, taxpayers would save money and the industry would be much more consumer-friendly and responsive. As Scott Harrington and Tom Miller note in “Competitive Markets for Individual Health Insurance,” competition creates relentless pressure for accurate pricing. Ideally, Americans will move away from the false promises of universal health care and toward a free-market system in which competition lowers prices, creates more accountability and stimulates innovation.