Health Care Is a Mess… But Why? | Seamus Coughlin and Sean Malone
You probably know a couple who both work full time to support their children, but even with their dual incomes, they’re finding it more and more difficult to afford health insurance.
Everyday incidents like sports injuries, asthma, and blood pressure, combined with their anxiety over rising premiums, are turning their American dream into sleepless nights.
Why can’t people catch a break? It wasn’t always this way!
According to the Consumer Price Index and Medical-care price index from 1935 to 2009, the health care spending crisis didn’t start until the mid 1960s, around the same time when Medicare and Medicaid were signed into law, and at the same time that we began requiring doctors to go through all sorts of expensive licensing procedures beyond medical school.
Since then, health care spending has doubled, even adjusted for inflation. Why? Well, there are a few reasons.
Everyone wants health care, but there’s only so much to go around. And short supply leads to high prices. Normally what happens in a marketplace is that when prices are high, entrepreneurs try to profit by finding more affordable ways to provide goods and services.
The more people become involved in providing these services, the less scarce they become and the lower the prices drop, so that over time, more and more people can afford them.
This is what happened to televisions, microwaves, computers, cell phones, internet service, delivery services, food, shipping, transportation/air-travel, entertainment, home security, fitness, yoga, massages, and even all the medical technology, like LASIK, that isn’t as heavily regulated or controlled by government.
Can’t government drive down the price of goods and services like the free market?
Let’s look at what happened with Medicare and Medicaid as an example. In 1965, these two single payer health insurance programs were instituted in the US. These programs made the unfortunate less dependant on impartial private charities and more dependant on political institutions and pharmaceutical companies.
On top of that, these programs constantly require tax increases, and because they function more to satisfy the health care industry than the worker, they continually lead to more expensive and wasteful ways of treating patients.
As a result, prices shot up, making it even more difficult for people to afford health insurance. Not only that, but in 1965, government took over the training of new doctors, and in 1997 they limited the number of new doctors they would train at 110,000 per year — and the number hasn’t changed since!
Even worse, our government won’t let migrant doctors from developed western countries practice in the US without undergoing this training. So, not only do experienced doctors from other countries not want to practice medicine here, but the ones who do are taking up 15% of those few 110,000 slots, limiting the supply of doctors even more.
Won’t Obamacare solve these problems?
Unfortunately, Obamacare suffers from similar problems. It eliminated the pricing structure by seriously restricting competition because all providers have to offer the same kinds of plans at the same price. And because that price isn’t really determined by the market, providers can charge the taxpayer way more than they could otherwise. It’s basically just a handout to big insurance companies.
But it doesn’t have to be this way! If we get the government out of health care, more people like those you know will be able to get the care they need.
Originally published on fee.org on July 20, 2107.