Without any question the healthcare system in our country is not working. The evidence of that failure is all around us. Healthcare costs are out of control, twenty percent of the people in California cannot afford, choose not to buy or cannot obtain healthcare coverage, hospital emergency rooms and entire hospitals are going out of business, competent doctors and other healthcare providers are getting out of the profession, and there are allegations that poor people who are sick are being “dumped” back onto the streets.
Why has this happened? The answer to that critical question can be traced directly back to the government taking control of the system. Before the 1960s, the United States of America had one of the best healthcare systems in the world, both with regard to quality services and relatively low cost. But slowly the government started taking control of the system, with demonstrably disastrous results.
And now there is serious talk about having “Universal Health Coverage” or a “One-Payer System,” etc. that would be controlled by the government! But that is exactly the wrong direction to be going! How in anyone’s mind can a government that has a record of uncontrolled spending, deficits and borrowing, as well as a mind-set that “one size fits all,” be in a position to take virtually complete control over the healthcare decisions of everyone in the country? Instead, think of the situation this way: “If you think healthcare is expensive now, wait until it is free!”
So what do we do instead? We should first recognize that there are three groups of people in our country whose needs must be addressed: those who are able to take care of themselves medically, those who cannot, and those who are in between. Then we need to address each of those groups separately.
Those in the first group that are able to take care of themselves should be allowed to negotiate with healthcare providers and insurance companies in the libertarian way, completely free of the influence and mandates of government. This will directly bring up the quality of healthcare services and lower the costs. If you need an example of how that is so, consider that today there are two areas of medical practice in which patients receive quality care and services at competitive prices. What are they? Lasik eye surgery and cosmetic surgery. Why? Because those procedures are subject to the free market, and are not restricted by governmental or even insurance control. As a result, most magazines, newspapers and other media are filled with advertisements from various doctors who have “done this procedure thousands of times,” and who will provide the same quality service to you at low cost and easy monthly payments, etc.
But we do not see similar ads today about other medical procedures. Why is that? Because if a patient’s health insurance is going to pay for them, everyone wants and feels entitled to the “Cadillac” of treatments, whether those services are actually needed or not. And certainly no one needs to discuss payment terms. In the meantime, the government is dictating ever more services that the insurance companies must include in their coverage. Insurance carriers respond by continually reducing the payments they make to the healthcare providers for the services they provide to the patients. This accounts for the spiral of increasing costs and decreasing care that we have experienced for the last four decades.
The best way to take advantage of market competition in the healthcare field would be to combine the use of “medical savings accounts” along with required catastrophic insurance coverage. Unfortunately, today the common wisdom is for programs of this kind be funded by employers. I think that is shortsighted. Why should it be the employers’ responsibility to provide for the medical care of anybody? In addition, as a practical matter, if the system drives up the cost of labor, many people not only will not have medical coverage, they also will not have a job!
This alternative program would have adults pay for health insurance with a $5,000 deductible for themselves, and a $2,000 deductible for their children. Then those deductible amounts of money would be placed by that person into a medical savings account, which would be used for medical expenses solely at that person’s discretion. Importantly, this will give patients an incentive to find the most appropriate and cost-effective services necessary for their particular medical situation. Payment for the services would be made directly to the healthcare provider by the patient by using a form of debit card to access the funds in that patient’s account.
Studies show that the average adult in our country spends about $3,000 per year for medical expenses, unless that person has some form of catastrophic medical problem, and it costs less for most children. Of course, if there were a serious medical problem the insurance coverage would be utilized.
The benefits under this new program would be huge. The costs of healthcare would be materially reduced by the re-injection of competition into the marketplace. Further savings would be realized by a giant reduction of administrative costs, since there would be many fewer billings to insurance companies, fewer delays, and much less fraud. In fact, 31 percent of today’s $776 billion in medical insurance coverage payments is used for administration and profits of the insurance companies. Think of the actual health services that money could pay for! In addition, doctors, nurses, hospitals and other medical healthcare professionals would be able to reclaim the practice of their profession from the insurance and governmental bureaucrats.
The public would benefit by receiving more competitive rates for their catastrophic insurance coverage. In addition, they would be able both to select the most cost-effective medical treatments that would address their needs, and be able to “roll over” the excess amounts each year that were not spent for their healthcare into an IRA account for their personal use or for their long-term care upon retirement.
The better-run insurance companies would also benefit under this plan by having greater freedom to experiment with the types of competitive plans they offer for catastrophic coverage, anything from “bare bones” to the full “Cadillac.” In addition, they would no longer be forced by government mandates to provide coverage for treatments that were not taken into account when the policy premiums were originally selected, such as alcohol and other drug-abuse treatments, chiropractic, medicines or programs for contraception, psychiatric counseling or therapy, and even in-vitro fertilization. Of course those services would still be available to customers that were willing to pay for the premiums.
So for the people who could take care of themselves, the price of healthcare would come down, and the quality would go up. I think everyone would agree that this would be good news. But without question there will always be some people who simply do not have the financial ability to take care of their own medical needs. So what about them?
Well, first I must state my libertarian opinion that healthcare should not be considered to be a “right” in our country or anywhere else. I do not believe that one person not in that person’s family “owes” another person the right to healthcare. But I do agree that it is voluntarily the right thing to do. So with that distinction made, we will all still be on the same page.
My suggestion for those who cannot afford their own medical protection is for the government to set up a system of medical clinics and hospitals to provide care for them, either directly or more likely by private contract. Patients would not be able to make prior appointments, and probably there would not be a fancy rug on the floor at the clinic. But otherwise people’s medical needs would be met. A small co-payment for each visit would be required from each patient to ensure that the visit is really necessary, but if some people literally could not afford that either, it could be waived.
For years this approach has been denigrated as “socialized medicine.” But this approach has worked well for decades in our military services, and maybe they, along with Veterans Administration hospitals, could be combined with these new proposed facilities. In addition, today some private groups provide similar medical coverage to patients who voluntarily enroll, and I understand that for the most part the patients are content with the services. And many fine doctors are happy to be employed there as well, since they are more able to practice medicine unencumbered by administrative limitations. In addition the doctors like the feature that when they are on duty they will be on duty, but when they are off duty, they are not usually on call, so they have much more of a private life.
Under this system most of the money would be spent for doctors, nurses, hospitals and medicines, and not for administration, bureaucracy and fraud. Would there still be some problems with those who cannot afford to take care of themselves? Of course. And will people who have money obtain better services than those who do not? Yes, but life has always been and will always be like that. But by and large this system should address everyone’s issues far more beneficially and economically than any other.
Finally, what about those people in between? Well, in the first place, if the costs to employers to hire their employees, and the costs of health insurance and medical services are reduced as set forth above, this middle group of people will shrink substantially. So more of the people who are now “in-between” will join the first group. But the ones remaining should be required to make an appreciably larger co-payment when they go to these facilities for services based upon their income.
This is certainly a complicated and important issue. But our healthcare system, which at one time was the envy of the world, will never regain its prominence until it is revitalized by the system of innovation and competition that made it great in the first place. I acknowledge that this proposal would be expensive, but far less and with a better return than anything else being discussed. In the meantime, considering that government meddling and mandates are directly responsible for the collapse of our healthcare system, even thinking about expanding the government’s bureaucratic role in it is virtual madness.
Judge Jim Gray (Ret.)