@ FutureChallenges: The American Way and Healthcare

My newest article at Future Challenges, "The American Way and Healthcare," explores political economy in light of the health insurance debate in the United States. Arguing that an improper understanding of the proper role of government is at the root of the health insurance debate, the article briefly outlines the current, generally false, understanding of a government's role and what it should be instead. It then explores a number of pernicious effects that such misapplication of government has. While not offering a third solution (which I have done elsewhere), the article argues that by failing to explore the proper role of government, American society has been left with two poor choices: the status quo or a "big government" solution. A reevaluation of the true purpose of government will go a long way toward not only allowing government to flourish in its proper place but also freeing-up creative impulses to solve many real problems (such as the dismal American health system) in more appropriate forums.

The article states:

Healthcare, or more aptly the provision of health insurance, has been an increasingly contentious issue in American politics, particularly over the past three years. Since the passage of Obamacare in 2010 to its potential repudiation by the Supreme Court following the forthcoming judgment this summer, American politics have become infused with this intractable problem.

There is little doubt that the current American system—a bastardized semi-competitive private monstrosity that is enfeebled by regulations, restrictions, and complications—is a disaster. It is expensive, inefficient, and unable to provide reasonable access to many Americans.[1] This has lead many on the American left, and observers from across the Atlantic, to advocate for a government solution.

However, while some champion Obamacare—the current administration’s healthcare reform bill—as a step in the right direction, many across the political spectrum find it has failed to provide an ideal solution, albeit for different reasons. Many on the left feel it does not go far enough, pining for the type of public system that exists in numerous European countries. In contrast, the right has castigated it as a tremendous overreach of government authority and responsibility, but has, as a whole, offered few alternate solutions.

That a revamping of the system is needed seems to be beyond question; however, very little thought has been given to what is the proper forum for such change. The knee-jerk reaction, as is unfortunately all too common in American society, is to turn to the biggest and most powerful institution—the federal government—to solve such intricate problems. This has left Americans, at least in the popular media, with two choices: massive government involvement or the status quo.

The remainder of the article can be accessed at Future Challenges.

Mandate This Too!

The Wall Street Journal offers a brilliant, satirical letter to the Obama administration on other healthcare essentials that the government ought to mandate coverage for. Here's a sampling of the letter:

Dear President Obama,

Can you believe the nerve of employers? Many of them still seem to think that they should be allowed to determine the benefits they offer. I guess they haven't read your 2,000-page health law. It's the government's job now. 

That's a good thing, too. Employers for too long have been able to restrict our access to essential health services like contraception by making us pay some of the bill. Really, it's amazing that we aren't all dead. Now, thanks to you, we'll enjoy free and universal access to preventative care just like workers do in Cuba. Even so, there are still many essential benefits that the government must mandate to make the U.S. the freest country in the world. 

• Fitness club memberships. Most doctors agree that exercising is one of the best ways to prevent disease. However, gym memberships can run between $240 and $1,800 per year. Such high prices force us to choose between exercising and buying groceries. While we could walk or jog outside, many of us prefer not to. Therefore, employers should be required to pay for workers' gym memberships. Doing so might even reduce employers' health costs, which is why many companies already subsidize memberships. Those that don't are limiting our freedom to exercise. 

...

If only people would understand how un-hyperbolic and similarly defended these proposals really are to the underpinning logic of the current contraception issue. For the remainder of the letter, see the Wall Street Journal.

A Dark Day in America

With an astonishing display of fortitude and obstinacy the Obama administration and the Congressional leadership have managed to pass the healthcare reform bill.  The passage of this monumental legislation represents the first time such massive legislation has been passed without bipartisan support (both Social Security and Medicare were passed with Republican support).   It is yet another chip in the very foundation of the American system and a continued erosion of what once made America great.

The legislation was passed on the back of a deal between Obama and the pro-life Congressional Democrats, led by Bart Stupak (D-MI). Stupak’s gang of ten, who voted for the original House bill, were philosophically opposed to the Senate bill which, in their opinion, provided means for federal funding of abortions. Unfortunately for America, they were bought off by a promise from the President to sign an executive order the status quo, namely disallowing federally funding for abortions.

Obviously Obama’s pitch was convincing enough to persuade Stupak; however, it is unclear how permanent or effective the executive order will be. An executive order, which is lesser in force than legislation, can readily be revoked by any President, current or future, on a whim. While in his press conference, Stupak indicated that Obama promised not to alter the order; it is questionable whether such a commitment will remain once the pro-choice Obama is pressured by his constituents. Why Stupak was convinced that these prohibitions for federal funding of abortion-related procedures will remain unadulterated is mystifying.

But regardless of Stupak’s reasoning, the bill will now be signed into law. The so called reform unfortunately will do little to fix the problems in America’s healthcare system. The Democrats undoubtedly have had the best of intentions in trying to fix a broken system, but their turn to socialist policies undermines the very foundations of the American system. Not only does this gross expansion of government power undercut the individual liberties of every American, but it burdens an already suffering economy.

There is no doubt that the industry needed reform. Neither Republicans nor Democrats denied this. But, as has consistently been shown, in both theory and practice, the paternalistic strategy of controlling the production and distribution of economic activity creates more harm than good. Unfortunately, this healthcare package represents the naïve utopianism that sounds pleasant to the uninformed ear, but in reality is mere sophistry. The health insurance industry will remain a mess with the additional encumbrance of excessive government involvement and added burdens on the American people.

Regrettably for America, the passage of this bill will not signify the end of the healthcare debate. Republicans are already gearing up to revoke the bill either through future legislation or the court system. For instance, the constitutionality of the individual mandate to purchase insurance is questionable. The next few years will be littered with an abundance of lawsuits aimed at repealing all or part of the legislation.

Likewise, Republicans will seize on the argument of government excess in the upcoming November elections. The midterm elections will revolve around the issue of healthcare (and the economy) and will define the direction of America for years to come. Hopefully, the GOP will successfully be able to convey the message that short-run, government-led ‘fixes’, while throwing the average American small and temporary handouts, will ultimately do more harm than good. If they fail, America will continue its anesthetized erosion into a second rate nation.

The Right Medicine for Healthcare - Part IV: Get 'Em the Money

A final necessary step in healthcare reform is to devise and enable new forms of healthcare financing. Health insurance is not a health-related but a financial issue. Generally speaking, the quality of healthcare in America is quite good. Although there are certainly instances where it could be more efficiently provided, few Americans question the available technological level of American health services or the requisite knowledge and skill of American doctors.

Under the American model, personal financial decisions are left to the individual (or family) to manage. While some base level social-safety nets are provided by the government, the majority of an individual’s financial decisions are left to one’s own planning. Individuals are responsible for saving and spending within their means, as well as preparing for their futures.

Insurance is one model that allows people to remove the financial risk of large, unforeseen circumstances. This is why millions of Americans purchase a wide range of insurance products – from auto, to natural disaster, to life. All of these are financial decisions based on an individual’s relative probability of some event happening, the perceived cost, and ability to pay. In any rational model, insurance should only be purchased if the math indicates that it is financially cheaper.

Health insurance should be no different. It should be one tool, out of many, that Americans can choose to rely upon if financially sensible. A number of new, financial tools should be developed to facilitate an individual’s access to affordable healthcare. All of these can and should be established in the private markets.

One of the current problems with health care provision is nonpaying emergency room patrons. This has sparked calls for a legislative individual mandate, where all Americans are required to purchase healthcare. The mandate, while undoubtedly unconstitutional, is a gross misappropriation of government power. Not only does it invade on the fundamental liberties of American citizens, but it drastically distorts the market. It forces individuals to make unwise financial decisions.

Without a mandate, proponents argue that hospitals have to unjustly bear the cost of these freeloading individuals. Ultimately, these costs get passed on to consumers via higher hospital bills and insurance premiums. This is undeniably a correct assessment of the current system; however, the mandate does little to allocate the costs of health to the appropriate recipient.

This is precisely where new financial instruments can alleviate some healthcare cost issues. Arguably, every individual (except for maybe the most indigent) should be responsible for paying for their own healthcare. This is particularly true for those who, under the current system, can afford health insurance but for personal reasons decide not to purchase any. If some do not buy private health insurance, due to poverty or personal decision, the burden of their health care should not fall on those who made the financially astute decision to invest in insurance.

However, under the current system there are few, if any, methods for those who gambled and lost to pay for expensive procedures. Providing new methods would not only benefit willing financiers (and the economy) but those who decide to opt out of the health insurance path.

First of all, private hospitals need to have greater say in how their emergency rooms treat patients. Within limits, private hospitals should be able to refuse care to individuals who cannot pay. [For instance, I don’t necessarily think hospitals should be able to refuse care if such refusal would lead to imminent death.] Hospitals should have the ability to decide whether they will open their doors to everyone and eat the costs or refuse care to the non-paying. From the hospital’s perspective there would be a tradeoff between cost savings and image. Like many environmentalists who pay a premium to ‘save the environment’, some individuals may feel comfortable paying higher prices to use the services of hospitals that cater to the common good.

Much of this tradeoff, however, could be erased with new financial mechanisms. Hospitals, for instance, should be encouraged to accept credit cards in lieu of health insurance [imagine the frequent flier miles!]. Likewise, hospitals could establish on-site financing departments that provide emergency care funding. Such funding could come in the forms of loans – like mortgage loans – that allow individuals to pay their hospital bills with interest over time.

This would enable individuals to take personal responsibility for their health care and prevent freeloaders from weighing down the rest of the system. It would allow individuals to design financially responsible systems for providing for their own health care. People would be able to choose what the most sensible way of covering potential expenditures, given their health and ability to pay. For instance, young, healthy individuals who want to save or invest extra disposable income could purchase minimalist health insurance policies given the low probability of needing coverage. They would be able to supplement this risky decision with on-site funding in the rare case of disaster.

Naturally, such credit related solutions could have significant impacts on individual’s debt situations. Bankruptcy laws would need to be reworked in order to make financing opportunities appealable to lenders. Alternatively, payment systems can be designed that move away from the fee-for-service model. For instance, rather than purchasing health insurance individuals could buy access to unlimited care at specific full-service facilities. Monthly membership dues – like a gym membership – would give individuals access to healthcare whether they use every specialist or just an internist.

While such proposals will not be a complete panacea, they will help to alleviate some of the issues. More importantly they may encourage people to be more proactive in planning and managing their health and finances. Ultimately, the goal is for each American to be able to pay for and afford healthcare, not necessarily health insurance.

The Right Medicine For Healthcare - Part III: Lower the Costs

The second needed step to reform healthcare is to directly assault certain aspects of the current system that cause excessively high costs. In particular, tort reform, medical record digitization, and realigned incentives are stepping stones that will help alter the healthcare landscape.

Tort reform is one of the most widely discussed and easily implemented solutions. The current legal system leaves doctors overly exposed to frivolous lawsuits and often gargantuan penalties. Many of these litigations go after doctors who made innocent mistakes or procedures where bad results were simply the result of probability. After all, medicine is innately subject to human error. While doctors should certainly be held accountable for gross negligence or irresponsibility, America’s overly litigious society has gone too far with malpractice suits. Lawyers looking for a quick settlement and some spare pocket change are aided by a compliant system in squeezing money out of generally well-meaning doctors.

This has indubitably led to an increase in defensive medicine and higher malpractice insurance costs. Defensive medicine – when doctors perform or require unnecessary procedures in order to protect themselves from litigation – is both expensive and potentially harmful to patients. Likewise, malpractice insurance is extremely burdensome to doctors. Together, these cause patients, both directly and indirectly, to have increased medical expenditures.

Tort reform is a relatively easy fix. According to The Washington Post, such reform would save anywhere from $100 to $200 billion. Litigation can be made more difficult, laws can be more narrowly defined to prevent abuse, and losers could be forced to pay opposing attorney fees. Penalties can also be applied to litigants who bring frivolous lawsuits. By restricting litigation to the truly deserving instances, doctors would be freer to practice safe and cost effective medicine (and even try high-risk procedures that might help some patients).

The second aspect to tackle is the digitization of records. Currently, according to CNN, the lack of digitized records costs the industry some $200 to $300 billion a year. While converting to a completely digital system will have implementation costs, in the long-run it is a clear cut necessity. Currently, the time spent by doctors and support staff in reviewing and transmitting paper documents is completely inefficient.

Not only would digitization impact overhead costs but it would have at least two direct health related impacts. First, it would enable a patient’s doctor to more closely monitor the patient’s health. It would facilitate communication between different doctors and potentially prevent life-threatening mistakes, such as conflicting medications. With digitization a doctor would immediately have a patient’s full medical history, thereby allowing better and more accurate diagnoses. This would not only directly improve the quality of healthcare but would lessen the cost.

Likewise, digitization would supply researchers with a vast wealth of information. With the proper privacy controls in place, such information could help researchers develop new procedures, medicines, and techniques. It would also allow potentially harmful cross reactions between medications and harmful procedures to be rapidly flagged and removed from the doctor’s toolbox. Ultimately, this would allow doctors the needed insight to refine their craft and focus on the most effective and helpful remedies.

The final, and by far the most challenging, aspect is to realign doctors’ incentives. Presently, the fee-for-payment system incentivizes doctors to perform repetitive and often useless procedures. With each test doctors receive more money in their pockets. A payment system needs to be developed that induces doctors to only run tests that are beneficial to a patient.

Harmonizing the incentives for a doctor to perform at his best with disincentives to go overboard is extremely difficult. However, some models already show promise. Institutions, such as the Mayo Clinic, are not only successfully but highly admired. Payment systems that are based on access to an institution’s resources, rather than per procedure can limit unnecessary expenditures. Alternatively, diagnoses can be detached from the testing and curing of illness. For instance, individuals could have one doctor, a so-called coordinator, who would evaluate a patient’s issues and then prescribe certain procedures or tests in which he has no financial interest. The tests and procedures would then be performed by other doctors on a fee-for-service basis. Naturally, legal regulations would have to be made to prevent procedure-doctors from unfairly influencing coordinator-doctors (as many pharmaceutical companies do today).

These three aspects are important steps that need to be addressed in any healthcare reform. While certainly only a start, they deserve far more focus than they currently receive. A solidly reformed system will only be successful by tackling the underlying costs of healthcare in America.

The discussion continues with Part IV: Get 'Em the Money.

The Right Medicine for Healthcare – Part II: A More Competitive Market

Any successful healthcare reform needs to formulate a more competitive health insurance market. A more competitive market will drastically alter the cost structure for health insurance. In order to remain in business, insurance companies in a competitive market will need to drive costs downward. A multitude of new insurance products will be offered which will provide consumers with an array of choices with varying levels of amenity and price. There are at least three ways in which the markets can be made more competitive.

The first, and easiest, step would be to allow insurance companies to compete across state lines. The current, useless restrictions only serve to drive costs upwards. By allowing cross-border competition, the number of insurance providers available to any one individual will immediately increase. Companies will then have to compete with more market participants in order to capture a sufficient segment of the now larger pool of potential clients. This will force insurance providers to develop new types of insurance products and cut their own costs to improve margins.

The second step would be to end the employer-based system of the provision of health insurance. Many Americans currently get their health insurance as a fringe benefit from their employer. However, there are a number of problems with this method of provision. First, those that cannot get insurance through their employer often have to pay exorbitant fees in the private market. Second, health insurance is contingent on employment. When an individual loses his or her job, it becomes a double hit with the elimination (or increased cost) of health insurance. Third, employer provision necessarily limits an individual’s options. Most companies only offer three or four options – all generally from the same insurance company. The individual has little say in terms of picking an option that suits his or her financial and medical needs. Insurance companies therefore only need to offer plans that appeal to a few Human Resource managers, and do not need to offer specialized coverage for unique requirements.

All of these issues can be resolved if individuals or families obtained health insurance on the free market. Like auto, homeowner, or other forms of insurance, health insurance should be an individual’s personal decision. If insurance companies competed for individual policyholders, rather than for corporate HR managers, they would be forced to diversify products to meet individual needs. Insurance policies that ran the gamut from expensive with maximum coverage to limited cost and coverage would be widely available for individual purchase. This would help lower costs as individuals would self-segregate into policies that better meet their needs and budgets [for instance why does a single man need health coverage for an OB/GYN?]. Likewise, entrepreneurial insurance providers will be able to successfully target niche markets that formerly went uncovered.

The end of the employer-based system can be easily achieved through simple legislation. A law that requires employers who provide health insurance to offer an employee opt-out clause would allow individual employees to select their form of compensation. If the individual chose not to receive his employer’s health insurance policy, he would receive the money which the employer would have spent on health insurance. The employee could then turn to the private market to purchase his own policy.

This coincides with the third step: ending tax exemptions for employers. This will further facilitate the transfer from an employer-based system to a free-market system. Not only will this end the incentives for employers to provide insurance, but it will also increase revenues (or allow tax cuts) for the government. Employees will naturally receive higher salaries as their compensation switches from a fringe benefit to direct pay.

All of these steps will facilitate a more competitive environment. Insurance companies will need to compete with a larger number of competitors and for a larger number of potential customers. This will help force costs downward, as only the most efficient and cost-effective insurance companies will be able to survive. Consumers will be offered a wider array of choices, with varying degrees of price and services. Customers will therefore be better able to afford, at least, minimal coverage. A increase in competitiveness would drastically alter the health insurance landscape and promote free-market reform.

The discussion continues with Part III: Lower the Costs.

The Right Medicine for Healthcare – Part I

With the Senate now beginning debate on a healthcare bill, it is time to step back and really think about where America could end up. The bills – and ideas – that are prevalent in Congress are devoid of commonsense. Under the current system of thinking, any bill, such as the current one on the Senate floor will be disastrous.

No one disagrees with the fact that American healthcare is in desperate need of reform. However, the current proposals do not offer good solutions. They attempt to patch a broken system without understanding what is not working. Like a charlatan doctor peddling a homemade cough syrup, they offer the wrong medicine.

The essential problem with America’s healthcare system is cost. Some may frame it in terms of accessibility – too many people do not have health insurance. However, accessibility is, in essence, an issue of cost. People that want, but do not have, insurance are precluded due to prohibitive prices. However, the present top-down approaches advocated by Congress do not address the fundamental cost issues. Instead, they attempt to make healthcare “more-affordable” by redistributing costs between different parties - whether taxpayers, the young, insurance companies, the poor, etc.

Not only is this a divisive and politically-charged (as we all know) approach, but it ultimately will fail to make substantial, lasting change. For instance, if insurance companies are simply forced to ignore pre-existing conditions, they will need to find ways to pay for these more expensive patients. This means either increasing premiums for everyone or lowering services across the board. In essence the current Congressional proposals create a zero-sum game, with clearly defined winners and losers.

What needs to be done is to develop a solid system of proposals that counter the inanity in Congress. America needs a reform that fixes the system and benefits all. The fundamentals of any successful reform rely on the mechanisms of the free market to create a cost efficient system. As Soviet Russia has shown us, centrally planned economies end in dismal failures. Regulatory bodies that determine maximum prices, public-options, individual mandates, and outrageous restrictions on private enterprise will not solve the problem, but exacerbate it.

Over the next few articles I will try to outline a few points that may serve as a rough skeleton for some detailed reform. In particular, (1) greater competition needs to be created between insurance companies by ending the employer based system, (2) medical costs need to be driven downward through tort reform, digitization of records, and realigning incentives, and (3) new financial instruments should be established to cover emergency room visits of the uninsured.

Ultimately, healthcare is a financial not a health-related issue. Insurance is one tool to make healthcare affordable. However, it is not the only, nor always the best way, to pay for healthcare costs. The desirability of health insurance is, and should be, an individual’s decision, based on relative risk and one’s financial situation. By failing to acknowledge and address these issues, Congress is suppressing true reform that could have a lasting impact on America’s future. The government should serve as an impartial referee, not a troublesome participant, in the realm of healthcare.

The discussion continues with Part II: A More Competitive Market.

Back from the Dead - Harry Reid's Public Option

Just in time for Halloween, Harry Reid has raised the dead. Like a zombie from a cheesy horror flick, the public option is now once again roaming the halls of Congress. In a recent announcement, Senate Majority leader Reid stated the newest version of health care legislation would be heading to a vote in the Senate with a government-run public option included.

Setting aside for a moment the foolishness of a public option, Reid’s insistence on including this provision in a plan is utterly baffling. The public option was killed over the summer when Democrats realized the political infeasibility of the concept. The Democrats simply did not have the votes in the Senate to avoid a Republican-led filibuster. The Democrats need every single member of their caucus (58 Democrats and 2 Independents) to agree with the plan in order to push it through without Republican support. The political reality indicated that this just was not possible. If one Democrat wavered the entire plan would fail. And so, wisely the Democrats seemed to move on from the public option. After all, they profess that their real goal is to achieve much needed health-care reform.

Reid’s move to bring back the discussion on the public-option is a step backwards. Nothing has changed to indicate a different political environment. In fact, shortly after his announcement Olympia Snowe, the sole Republican to have voted with Democrats on some health-care related issues, backed off from her cross aisle move. She indicated she would work with Republicans to quash any health care reform that included a public option. Snowe’s rebuke was quickly followed by one from Joe Lieberman – one of the two Independents who caucuses with the Democrats. With Lieberman’s defection a public option is undoable.

So what are the left-wing Democrats trying to accomplish? The inclusion of a public option will sink any reform bill. If the Democrats truly want to reform healthcare, they need to face the reality that it cannot (nor should not – see a prior post on ANR) include a public option. Reid’s gambit seems to lead to nothing but a dead end – torpedoing the Democrats’ and Obama’s crown jewel.

Ironically, it appears that Reid is sabotaging any chance at Democrat-led healthcare reform. One possible explanation is that the Democrats are in such internal disagreement that they cannot design any plan that is amenable to all wings of the party. The tensions between the leftists and the centrists are running high. In order to avoid a failure based on the Democrats’ inability to compromise, Reid is setting up a surefire way to fail that can be pegged on supposed Republican obstructionism. At the end of the day, Democrats will point to the ‘anti-reform’ Republicans who successfully filibustered their plan, rather than their own ranks for the political failure to pass a reform bill. If one is going to fail, at least make it look like it is someone else’s fault.

The Wall Street Journal offers another relatively plausible explanation for Reid’s maneuver. Reid might be offering the plan knowing full well that he will have to drop the public option. The WSJ writes;

He could then tell the left that he did his best, only to have been beaten back to the unreliable likes of Mr. Lieberman….Meanwhile, such endangered swing-state Democrats as Blanche Lincoln of Arkansas could claim they won a great concession if the public option fails, making it easier for them to vote for a final bill that would still do enormous harm to private insurance and the federal fisc.

Reid and his cronies could be trying to push the negotiating grounds leftward in order to achieve a more Democrat-friendly outcome. This is a risky move, but opens an opportunity for Republicans. Senate Republicans should point out the foolishness of Reid’s insistence for a public option. They can easily turn the tables on the Democrats, by branding them obstructionist. How can the Democrats claim to be solving our health care problem if they are offering proposals that clearly are not passable? However, such a strategy necessitates a counter-proposal – something the Republicans have been lacking. A successful Republican-led reform will offer America the right kind of health care fix and deal the final deathblow to the leftist Democrats’ socialist ambitions. Let’s put a nail in this coffin for good.

Obama on the Attack and the Destruction of Healthcare

Obama’s artifice and politically motivated smears in his recent comments regarding healthcare are despicable. The President is not only putting undue pressure on an already delicate issue, but using scare tactics for political expediency. His attempts to cram through ‘reform’ and socialize America’s healthcare system are terrifying to say the least.

In remarks given Monday, he launched an all out partisan attack on Republicans. He preyed on emotional fears of a failing healthcare system and attempted to portray the respectably cautious Republicans as pawns of vested interest and the status quo. Obama continued his misguidance on Tuesday, again attempting to portray Republicans as the bad guys.

This is not only unfair, but patently disingenuous. As Obama points out, everyone acknowledges the system is in need of overhaul. However, the current Democrat-led plans are disastrous. Republicans, such as Bobby Jindal, are proposing alternative and better solutions which the Democrats wish to ignore.

The bottom line is that, as discussed here before, the public option is an utter sham. While Obama’s claim that “[i]f you like your current plan, you will be able to keep it. Let me repeat that: If you like your plan, you'll be able to keep it,” might be technically true, it glosses over the economics of the public option. Because a public option ultimately rests on the shoulders of the taxpayers, it can (and will) operate in a grossly inefficient fashion.

Any shortfall in profitability will be picked up by the taxpayer. This will allow the public option to avoid cost reduction. Managers of the public plan will be able to simultaneously undercut private insurers and avoid having to reduce costs. If America is concerned about inefficiencies in the private sector, just wait until the government gets into the business. Obama, with an unequivocal Freudian slip, admitted this: “The reforms we seek would bring greater competition, choice, savings, and inefficiencies [sic] to our health care system…”

It is unfortunate that the Democrats in Congress backed by the increasingly disingenuous Obama feel the need to cram a broken fix upon a broken system. It is even more frightening that they are attempting to cloud the scene with false economics and political sleights-of-hand. What we need is a well thought out, economically efficient plan, that corrects the flaws in the current system. Hopefully, America will wake up and halt the pending utter destruction of our healthcare system before it is too late.

Give Me Healthcare, Or Give Me Death?

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.