Presidential Town Hall: Here’s why our healthcare is so expensive
In the town hall debate this past Sunday, we were reminded of the issues surrounding rising healthcare costs in the United States. Americans spend more on healthcare as a percentage of income than people almost anywhere else in the world, and it’s certainly not the result of a lack of technology. We have some of the best medical technology in the world as evidenced by the number of countries and organizations that utilize our American medical technology.
However, the average American is not experiencing these advantages. We cannot afford the steep price of this world-class healthcare — Gallup polling data illustrates this in a simple fashion. While the ACA has contributed to these problems, it is only one piece of the puzzle.
Over the past year, there has been a witch hunt to crucify pharmaceutical CEOs for the absurd prices their companies charge for life-saving drugs, such as Mylan’s EpiPen. Politicians want to pin the blame on people they consider evil CEOs, but these CEOs aren’t evil… they’re just doing their jobs. While most would agree that this price-gouging is unacceptable, the origin is much deeper than a few bad apples. Our economic landscape, including healthcare, is the direct result of government policies, so we must stop stifling the market to allow free market economics to blossom again.
Some believe that more regulation is the answer, but if we explore the history of healthcare regulation, we can see how excessive regulation may have been the cause of some of our country’s problems:
- Healthcare costs have quadrupled in real terms from 1958 to 2012.
- Prior to 1940, health insurance was rare, yet health spending was modest.
- Decades ago, Congress passed a law that provided tax benefits for employer-sponsored health insurance plans. With the law came a boom in the health insurance industry.
- Since then, the largest insurance companies have pushed for more regulations, such as the ACA, to protect their industry.
There are several key approaches to allow the free market to work effectively again:
- Support the model of member-owned credit unions as a basis for the health insurance industry.
- Repeal health insurance mandates; repeal subsidies for insurance companies; repeal tax benefits for coverage. This will enable true competition and reduce the massive bureaucratic burden that contributes to substantially higher costs.
- Require transparent pricing for health services, drugs, and other health-related goods. Just like restaurants must do, health providers must charge one price for all customers and share this price up-front.
- Reduce regulatory hurdles for firms seeking to produce generic drugs pre-approved by the FDA.
- Allow natural supplement producers to advertise FDA-approved health claims for natural pharmaceuticals.
Ultimately, increased competition will allow healthcare costs to fall; health savings accounts will become more common, and insurance will only be necessary for emergencies, just as it is with auto insurance.
