Right Angles column: Free-market economics should shape U.S. health care
July 17, 2017
Health care in the United States should be shaped by free-market economics. Socialized approaches, like Obamacare, focus on universal government-subsidized insurance while health care costs climb and quality and accessibility decline.
The problem with U.S. health care is the disconnect created by our reliance on third parties to pay most of our bills. We need competition and free choice to ensure quality care that is accessible and affordable and a system that puts Americans in charge of their health.
Liberals proclaim that health care is a right and that insurance provided by third parties is the key to exercising that right. FamiliesUSA, a "health care advocacy" group, has made the claim that an American dies every 20 minutes for lack of insurance. Such advocates cling to Obamacare because it expanded Medicaid to insure 17 million additional households. It also requires private insurers to extend coverage to all applicants, regardless of pre-existing conditions and risks.
Many Americans don't comprehend the escalating costs of this approach to health care. Our insurance is increasingly funded by corporations and government. On average, individuals pay less than 20 percent of their annual health care costs. When it appears someone else is paying the bills, demand increases for a fixed or decreasing supply of services, which leads to soaring prices. Government health care outlays are now more than $980 billion per year, which is 26 percent of the federal budget.
Ultimately, taxpayers are stuck with a huge bill because of government health-care entitlements. Government's annual Medicaid spending is more than $450 billion. Medicare costs $600 billion per year to cover nearly 55 million people. The number of Medicare beneficiaries is expected to surpass 80 million by 2030. Higher taxes can't cover the shortfall. Entitlement programs, including Obamacare, will consume every tax dollar collected before 2050.
Unfunded liabilities associated with Obamacare are estimated at more than $17 trillion over the next 70 years. Despite the incomprehensible expense, drastic limits are still required to ration the opportunity for care. Individuals are losing the choice of providers, treatment options and medical facilities. Government cost controls also strip financial incentives for providers, stifle technological advances, and overload hospitals and clinics.
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Americans should not accept the premise that insurance coverage is more important than quality, affordable health care. Under the present system, people have no incentive to be prudent and frugal consumers. Providers have no incentive to reduce costs. Insurance should be about unforeseen risks and catastrophic events, not routine care. If Americans are positioned to pay for typical health care in a free-market system, the costs would necessarily decrease to levels commensurate with incomes.
Health savings accounts (HSAs) are an important tool for individuals and families to pay for health care. HSA plans combine health insurance that provides catastrophic protection with a tax-free savings account. We should allow unlimited contributions to HSAs to foster personal savings and personal control of health-care decisions. Current laws should be changed so that money contributed to HSAs can also be used to pay health insurance premiums.
Competitive insurance prices will require markets that are not restricted and confined by state boundaries. We should have the freedom to choose the health plan that best meets our needs, regardless of location. Americans who lack health coverage through work should have access to a defined tax credit that provides tax relief comparable to employer-provided health benefits. Expanding consumer choice and implementing cost-control benefits will reduce health-care prices and spending.
Medicare and Medicaid were created as safety nets for the elderly and the disabled, as well as a temporary fix for the poor. Using these programs to provide universal insurance is not sustainable. Medicare must be changed to a "defined contribution" system, in which government makes direct contributions to competing free-market health care plans chosen by enrollees. Medicaid should be changed to a block grant program that allocates a fixed amount of federal money to each state.
Medical services are not free, and health insurance is not an unalienable right guaranteed by the Constitution. Government-controlled health care smothers market forces, consumes wealth, erodes liberty and ruins health care. It's easy to waste other people's money. The competition of free markets fosters superior care that is the best bang for the buck — and it puts American citizens in control. A free-market health care system is the only way to "insure" the health of our people and nation.
James D. Kellogg is an engineering consultant, a team-building advocate, and the author of "Radical Action: A Colt Kelley Thriller." Look for the novel on amazon.com and visit JamesDKellogg.com or email email@example.com.
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