Government health care in America – part 3
A big source of the problems currently plaguing our health care system is the fact that most of us—as consumers of medical services—are completely cut off from any concern with (and often from knowledge of) their prices. All we ask, typically, is: “Is it covered?” As I discussed in part 1 and part 2, government intervention has led to a system where 95 percent of the insured population in America—some 240 million people—have comprehensive health insurance provided by a third party (either their employer or the government).
With insurance covering all kinds of medical services and the premiums paid by someone else, Americans have little financial incentive to curtail doctors’ visits for minor ailments, to question whether a test is worth its cost, or to seek out cost-effective care. Before we buy virtually anything else, we ask ourselves whether it is worth its price and whether there might be a better deal elsewhere. When we go to the doctor, we don’t even see the price until it shows up on the invoice—with all but a small co-pay or deductible (relative to the total bill) paid by the insurer. History has shown that this system increases demand for health care, encourages wasteful consumption and ultimately increases costs for third-party insurers.
The results of this model are plainly evident today. Medicare and Medicaid cost hundreds of billions of dollars each year and are projected to consume ever-greater swaths of the federal budget in the decades to come. In the private sector, where businesses provide health insurance to 158 million Americans, premium increases force employers to cut staff, reduce wages or drop health benefits altogether. Businesses locked into labor contracts risk bankruptcy. Laid-off workers struggle to purchase health insurance on their own, as they must now replace the untaxed health benefits they received through their job by purchasing individual insurance on their own that is not tax-deductible and—thanks to 70 years of the government’s favoring third-party insurance at the expense of individual insurance—more expensive and more limited in coverage than employer plans.
Supporters of the proposed reforms believe these problems can only be solved by expanding government’s role in health care. But this argument ignores the role that government already plays in ensuring the dominance of third-party, comprehensive insurance in United States. Moreover, as we’ll see in part 4, it ignores that government expansion has been tried time and again as a solution to perceived problems in the health care system—and time and again those efforts have only made things worse.
Photo attribution: Scott_James on Flickr