The state of US healthcare system is atrocious. It is in need of desperate reform. Unfortunately, the Republican Party lacks any coherent proposals to fix the broken system. This leaves the American people with a choice between the current unwieldy system or the big government, nationalized, nearly Socialist plan of the Left.
For years, the Democrats have been proposing state control of the healthcare system. They want to offer universal healthcare to every American on the taxpayers’ dime. While seemingly noble in aim, this is absolutely foolish. Not only will a government system crowd out the private industry, but it will be vastly inferior. As most know, the government does a substandard job at providing services, particularly services that can be supplied by the private sector.
Unfortunately, this is where the discussion stops for most Republicans. The criticisms of the Democrats’ model of universal healthcare are solid and well thought out. However, the Republican’s offer little in terms of a solution to the obvious problems in the healthcare industry.
A relatively clear-cut answer is to fall back on the free-market principles that form the base of American conservatism. While unquestioning defense of the healthcare industry often comes hand-in-hand with criticism of universal healthcare, this need not be the case. One of the bases of free market capitalism is the notion of competition. However, the current structure of the health insurance industry limits competition.
Contrary to other, non-health, insurance industries, the health insurance system is an employer-based system. This severely reduces the number of buyers of health insurance. A health insurance company only needs to pitch its product to a few large companies in order to capture a substantial portion of the market. This forces the insurance company to structure products that will appeal to HR representatives, not the insurance consumer. This limits the diversity of the products offered and gives the insurance companies greater market control. Health insurance consumers can veto bad insurance plans only by leaving their jobs. Certainly, this puts some limits on the downward movement of insurance quality- as competition remains at the firm level. However, it drastically reduces the specialization that would occur if each consumer were responsible for his or her own insurance.
The easy solution is to end the employer based health insurance system. Individuals would be responsible for finding their own health insurance. Companies, since they no longer have to pay for insurance, would increase salaries accordingly. This would leave individuals with the same amount of money as they previously had to purchase health care on the free market. Naturally, many new, specialized products would develop. This would allow individuals to spend more or less based on the type of care and services they want. Insurance companies would have to compete rigorously with each other to capture new, separate segments of the market. All this would lead to greater competition, lower prices, and increased services. Insurance companies that fail to deliver would find a swift exit from the market, thereby creating a marketplace of higher quality companies.
Critics of such a proposal argue that health insurance is far too complicated for the average American to purchase on their own. This, however, unfairly diminishes Joe Six-Pack’s ability to obtain the appropriate information that he would need. The average American is capable of doing their own taxes and finding homeowner’s or car insurance. For those that cannot, or do not want to be bothered, there are a myriad of brokerage services available. It is quite likely that insurance brokers would expand in scope as they aided individuals in searching for the right health insurance plan.
The answer to the health insurance issue is not increased consolidation and government regulation, but a move towards greater free market competition. Government controlled, universal healthcare will only deepen the systemic problems that already exist. A greater number of differentiated healthcare providers will facilitate cheaper, more universal healthcare, without sacrificing the quality of healthcare in America.