Health Care

I was discussing the issues of national health care with a friend the other night. While I understood the basics of the issue, it wasn’t until I did some more pensative consideration that I started to grasp the entirety of the issue.

The current system we have has led the way in medical advances worldwide. The medical business is quite profitable, and new medicines are constantly being developed, new procedures are being implemented, and research is ongoing for cures for some of our biggest plagues.

Yet there’s a large cry for reform. And rightly so.

The current system consists of a largely flawed insurance system. The idea is that all members of an insurance program pool their funds together, and from that pool each uses an appropriated amount for their own medical expenses. Thus all have access to a large amount of money for their medical expenses if needed. This, of course, is banking on not many needing large medical expenses.

This concept is okay, although very collectivist in nature. It does not allow for an accounting of the differences in individual market values of health related costs. What I mean by that is that the actual value of any one medical procedure or medicine is however much a person would personally be willing to pay for that procedure or medicine. With insurance, that market value is thrown out, and people claim their rights to access the pool of funds for whatever procedure they feel they would like. While some might be willing to live with a little discomfort if they had to pay for the procedure themselves to fix the problem, now they don’t worry about it and go ahead with the procedure anyway. The value of health is artificially inflated by the system, since the demand is elevated due to universal accessibility to coverage.

Another large issue with the current insurance system is that the pool of funds is reduced in size by management fees of the insurance companies. The profits of insurance companies comes from the money that members of the group pooled together for their own health coverage. With profits in mind, insurance companies are often found to avoid allowing access to the pool of money they are given charge of. Requested medical procedures are declined by insurance companies, forcing the insurance member to pony up the funds himself or do without. This, of course defeats the purpose of having insurance in the first place.

This is what universal health care is intended to fix. By placing the management of the pool of funds in the hands of the government, we (supposedly) remove the profiteering incentives for denying coverage for needed medical procedures. The system remains the same, but all are part of the same insurance group, run by the government.
This new system, while providing a solution to the issues of providing care for the poor and potentially reducing the pool management costs, comes with it some very significant issue as well.

First, should one who is contributing less to the pool have access to a greater part of the funds for a large procedure? I’ve already pointed out the collapse of fair-market values when you can pay for something with someone else’s money. So if the poor have access to full health coverage, and the rich still have their full coverage, total cost of health care have immediately doubled (assuming # rich = # poor).

Taxes must necessarily increase significantly in order to provide such coverage. And as I’ve explained in previous posts, taxes remove capital from the wealth-creating private sector and give it to the wealth-consuming public sector in exchange for services forced on the private citizens, whether they want the service or not. The transfer of funds into public use would be detrimental to private sector business, as capital would become significantly less available for investment in production.

If we are to attempt to keep our taxes reasonable, the system must necessarily become as the insurance companies and deny coverage to those who need expensive procedures. This is precisely what current proponents of the universal system are promoting. Christopher Dodd proposed that elderly and those with issues needing expensive procedures be required to accept their fate rather than become a leach on the system. Also, new and experimental medical procedures would be stopped, as the risks and costs are too high. Thus medical progress is halted, and we are simply exchanging one life for another. It is left to the government to decide which life is more valuable to them.
Finally the drive for medical excellence is removed with the removal of free-market competition. Regulations, processes, and other requirements will dictate the procedures of obtaining medical attention. We will not have choices, and therefore medical staffs have no incentive to be better than another. Waiting lines in current universal health systems are astronomical. Costs for medicines are absurd (they’re absurd here too, due to the current system and government intervention, but it really can get worse, believe it or not).

If we want to fix the health care system, trading one set of issues for a larger set of issues is not the way to go. Let’s not socialize medicine.

The best way that I can see to improve national health care is to drive the medical industries to provide better care at more affordable costs. By drive I do not mean to regulate them, for we have learned from experience (well, some of us have learned) that market regulations cause market imbalance and a loss of fair trade, resulting in a loss of wealth. Instead, we should remove the regulations and programs currently in place, and let market competition drive down the costs of medical practices.

Insurance should be an available option, if people choose to pool their money together, but most people may instead consider creating their own medical saving accounts to be available for their possible needs. Accounts from deceased will be allocated to their children/friends as indicated by their will, after costs of death have been covered. Some may consider insurance plans that would provide catastrophic coverage. But these plans will be relatively expensive, and short in demand. This would result in a drop in prices as needed to raise the demand. The freedom to choose your own medicines and procedures as you see fit (per doctors approval and recommendation) will create a much stronger market competition in those fields than presently exists. People will choose options that are satisfactory, but affordable. More expensive procedures will fight for market share and drive their costs down. New ideas will produce more efficient practices. And those who once couldn’t afford care would soon find that sufficient care would now be possible.

This is the way the American markets have worked for centuries. It has proven to be the most effective system in the world throughout all history. Amazing inventions that in the past would be available to only the extremely rich, such as the automobile, are common staples for even the poorest class. Put the free-market system to work on a market that has been imbalanced and inflated due to regulations and unnecessary costs, and see how affordable health care can become.