Americans are generally healthier and live longer than those in other countries. So why has financing our health care become such a monster that consumes such a big slice out of our family pizza?
Let’s look at the numbers. Accounting for inflation and population growth, medical costs have grown from 3.5% of GDP in the 1930s to 15% in 2015. But are we getting the best medical care for the money? No.
John Steel Gordon nails the situation in a recent speech at a Hillsdale College travel seminar. Health care insurance is not like regular insurance which provides indemnity coverage (the company pays for loss and the customer decides how to deal with it). Health care insurance pays for all listed services of the policy, no matter the cost. The customer has no incentive to shop around for the best price because someone else is paying the bill.
The hospitals realize that this type of insurance can be a steady source of income and so they support it. They are able to convince the government that the costs of this program should be classified as a charity and therefore are not taxable.
In 1965, President Lyndon Johnson signed Medicare and Medicaid into law, which picks up the major chunk of the insurance bill. The government is now the largest source of funds and their checks never bounce. Customers can now afford advanced medical care and doctors and employees can get raises.
What can we do? We might go with a national health service like the Brits did after World War II. The government already runs a couple of single payer systems (Medicare, Medicaid, the VA and Indian Health Service) but each of these is in shambles, famous for waste, fraud and abuse, the first two slated for bankruptcy in the near future.
As a solution, Gordon suggests reforming the economics of the system.
First, require all medical service providers to provide their prices for all procedures. Once customers can see and compare prices, capitalism’s greatest weapon comes into play — competition. Everybody must become more efficient just to stay competitive.
Any politician who gushes about improving our health care without talking about making prices public is simply carrying water for special interests.
We must be able to shop for our insurance based on our costs and our needs.
Gordon points out that most health insurance policies today cover everything from the sniffles to a heart transplant. That isn’t an insurance policy; it’s just a high cost prepayment ploy that jacks up the premium.
Oil changes aren’t covered by auto insurance, and annual flu shots and treatments for cuts and scrapes shouldn’t be covered by health insurance.
Major medical insurance should be available for employees and the self-employed, plus some sort of accruable health savings account for future health care.
A little poem about old age by Belloc:
Physicians of the utmost fame
Were called at once, but when they came
They answered as they took their fees
There is no cure for this disease.