Showing posts with label Guest Editorials. Show all posts
Showing posts with label Guest Editorials. Show all posts

Guest Editorial - Brad J. Cooper, M.D.

My father, Brad Cooper, has been a practicing physician for nearly thirty years and has observed firsthand the problems with the current healthcare system. He also has been the primary political influence in my life. He's a solid conservative, and i've asked him to explain the healthcare problems and offer a conservative solution, from as insider's perspective.

-Josh

Health Care - At What Price?

Another Presidential Election is nearly upon us, and we can expect, as usual, that “health care” will be high on the list of campaign issues which will be discussed ad nauseum. It is equally likely that the candidates of both major parties will be falling all over each other in an effort to convince the American public that they can provide nearly everyone with something which many listeners will interpret as “free” health care. Unfortunately, it’s not like that in America, or anywhere else, for that matter. Health care is far from free. There is always someone who pays, and in this country, it seems clear we are paying far too much.

Just how much we spend is truly staggering. In 2006, Americans spent $2.1 trillion on health care, an increase of 6.7% over 2005. This amounts to $7,026 for every man, woman, and child in the nation. Viewed another way, it represents 16% of Gross Domestic Product, or one-sixth of the United States economy. If allowed to grow at the current rate, health care will expand to consume one-fifth of GDP by 2017. Americans seem to have an insatiable appetite for health care goods and services, and the health care industry is more than willing to sell us those things, often at premium prices.

And just who pays for all this? Well, in 2006, businesses paid for 25 percent of the total, households accounted for 31 percent, “other private sponsors” covered 3 percent, and the biggest payer of all was government, at 40 percent of total health expenditures. Of course, the vast majority of all health care bills are paid through “third-party payers,” either insurance companies or various government bureaucracies. This fact often leads John Q. Public to think that he doesn’t really have to pay for health care, that it is simply “covered” by insurance or some other entity. And when he does have to pay for something that is not a “covered expense,” a bona fide tantrum often ensues.

Of course, given today’s astronomical prices on medical services and prescriptions, a tantrum seems like a rather reasonable response. Many Americans, if they would actually look at the dollar amounts on an itemized hospital bill, and then shake themselves out of their stunned incredulity, might easily be convinced to take up arms and re-enact the Bolshevik Revolution.

The problem, we are told, is lack of insurance. Some 40 million Americans are “uninsured”, and that very fact, to some, puts the United States on the same moral plane as the perpetrators of the Holocaust. “Universal health insurance” is touted as the ultimate solution to our health care woes. Conservatives admittedly have great difficulty in mustering up opposition to an idea like this, which sounds intuitively right and almost self-evident. The problem is that nobody is asking the right questions. No one (or at least, very few) will look at the origins of our current health care financing crisis and conclude that insurance is not the solution, insurance is the problem.

In general, what does the advent of an insurance plan bring to any marketplace? First and foremost, it brings a large pool of money, contributed by many individuals, including some who will never file a claim. The very existence of this reservoir of available funds has the effect of bidding up the price of goods and services. The insurance company wants providers to participate in the plan (in order to attract new members.) The company then agrees to pay providers a fee that is very near their usual “asking price” for the service, and delivers to the provider a number (sometimes a large number) of clients who need or want that same service. The provider thus has an incentive to perform that service even more often than he might normally, simply because there is someone (the insurance company) who is willing to pay him to do so, and because there are clients who want (or demand) what he sells or does. That demand is fueled by the knowledge that the service is “covered” by the insurance plan, rather than paid directly by the consumer. The “third party payer” thus inserts artificial demand into the market, and this will always tend to increase prices.

Although there were some primitive forms of health insurance in this country dating back to shortly before the Civil War (most of these were more like disability insurance), it was not until the post-Depression era of the 1930s and 1940s that Congress enacted large tax incentives for businesses to provide health insurance for their employees. Widespread enrollment in health insurance plans became the norm in the 1950s and 1960s, and the rest, as they say, is history. Fueled by a massive infusion of dollars from employer-funded insurance plans, health care fees began their dizzying climb into the stratosphere. Health care expenditures since 1960 have increased almost one hundred-fold, a massive increase, even correcting for inflation and for population, which has not even doubled since then. (It is difficult to think of anything else that costs one hundred times what it did in 1960.) Of course, the results were not all bad, for the demand for more and better health care stimulated unprecedented levels of research and innovation which made the United States the technological envy of the medical world. The down side, however, is that now our nation is hopelessly dependent on health insurance. It is, for all practical purposes, a necessity, and yet it promises to drown us in an ever-rising tide of health care costs.

Government, of course, has made matters worse (they always do) by pumping more money into the health care system through the Medicare and Medicaid programs. These obese twins, children of the Sixties, have already cost the taxpayers several orders of magnitude more than originally predicted, and threaten to literally crush the Federal budget in a couple of decades, as the post-war “Baby Boomers” graduate to become Medicare beneficiaries. Congress has shown no real desire to rein in these programs, and continues to pass small increases in Medicare benefits virtually every year. (Medicaid has not fared quite as well, because it must depend on cash-hungry state governments for much of its operating budget.)

The point is this: Doctor visits, blood tests, hospital rooms, surgeries, and x-rays all cost what they do because that’s what insurance companies are willing to pay. What would a $1300 MRI scan cost if the patient had to pay for it out of pocket? It would cost a lot less, or else none would ever be done. The same would apply to doctor visits and everything else. Do we have “food insurance”? “Clothing insurance”? Of course not, but if we did, those commodities would be skyrocketing in price as well. Whenever I am permitted or encouraged to use someone else’s money for something I want or need, the natural restraint imposed by the law of supply and demand is simply thrown out the window, and the sky becomes the limit.

It is insurance (and the U.S. Congress) that created this untenable situation in which nobody can actually afford American-style health care. A tipping point is near, because employers can no longer manage the burgeoning cost of premiums and have begun shifting more of the responsibility to individual employees through reduced coverage and higher deductibles. This just creates even more dissatisfaction with the whole system, and it opens a window of opportunity for humanistic social engineers to come charging in on their white horses, shouting, “We’ll take care of you!” to cheering throngs, and they will be met with open arms by a population weary of the whole health care mess. What they will do, if given the chance, is to create a “single payer” (government-run) system, nationalizing one-sixth of our economy, stifling innovation and eliminating freedom and incentive in the process. If we as a nation make the choice to turn down that road, then, depending on how fast we go, we just might pass the Canadians and the British on the way to old Soviet Russia. Single payer health care (i.e., socialized medicine) is a very different product from what most Americans know or even imagine. For many reasons, it would be a seriously destructive influence in this country, but the siren song of “free health care” may be irresistible to an entitlement-addicted nation at this point in our history.

What is truly needed is a health care system where everyday medical expenses are paid directly by consumers (sort of like food and clothing!), thus encouraging real competition in price and quality. The federal and state governments could allow tax-free “medical savings accounts”, so individuals would have an incentive to put away money for the express purpose of meeting these expenses. Relatively low cost “catastrophic health insurance” would prevent financial decimation by major illness or injury. Reforms like these would create a more “consumer-driven” health care market, returning a real measure of both power and responsibility to the patient, something that is sorely lacking in our dysfunctional system today. As long as someone else (either my insurance company or my government) pays for most or all of my health care, the services I get will be unsatisfying, poor quality, or drastically overpriced, …and they just might be all three. Common economic wisdom says, “You get what you pay for,” but that is certainly not true in the bloated, warped, artificial American health care market of 2008.
We can…and we must…do better.
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