Good Thoughts on Health Care

July 21, 2009

Thomas Sowell wrote an excellent column on medical care, Medical Care Confusion.   I encourage you to read the entire column.  Here are some good paragraphs:

None of the people who are trying to rush government-run medical care through Congress before we have time to think about it are pointing to Medicare, Medicaid or veterans’ hospitals as shining examples of how wonderful we can expect government medical care to be when it becomes “universal.”

Nothing is easier than for governments to impose price controls. They have been doing this, off an on, for thousands of years– repeatedly resulting in (1) shortages, (2) quality deterioration and (3) black markets. Why would anyone want any of those things when it comes to medical care?

Refusing to pay the costs is not the same as bringing down the cost. That is why price controls create these problems. When developing a new pharmaceutical drug costs roughly a billion dollars, you are either going to pay the billion dollars or cause people to stop spending a billion dollars to develop new drugs.

The confusion of “health care” with medical care is the crucial confusion. Years ago, a study showed that Mormons live a decade longer than other Americans. Are doctors who treat Mormons so much better than the doctors who treat the rest of us? Or do Mormons avoid doing a lot of things that shorten people’s lives?

Steve Forbes also writes on health care in the latest issue of Forbes.  The timing was excellent.  He echoed some thoughts I shared in my previous posts.

Today there is a disconnect between providers and consumers. Almost all health insurance is covered by third parties–either insurance companies or governments–so patients rarely know what most health care services cost. If you go to a hospital and ask about prices, the staff’s immediate reaction is that you must be uninsured. Why else would you want to know what something costs? Yet in just about every other aspect of our commercial lives the price of things is known.

Now that I’m writing the checks for my health care, I do want to know the price of the options I have and what I get for that price – difference in effectiveness, recovery time, side effects, risks and so forth.  Having the conversation with price is something my medical care providers aren’t prepared to do.

More good stuff from Forbes:

We could attain similar and ongoing miracles in health care. We are already seeing some in a few areas. Conventional Lasik eye surgery costs a third of what it did ten years ago. And there has been virtually no inflation in the prices of cosmetic surgery, even though there have been enormous technological advances, and the demand for these procedures has increased sixfold since the early 1990s.

He offers some great recommendations (for all the critics who say conservatives offer no solutions):

–Equalize the tax treatment of individuals and businesses. If the company you work for doesn’t provide insurance or you don’t like the plan offered, you are forced to try to buy a policy with aftertax dollars. If an individual wishes or needs to buy health insurance on his own, why shouldn’t he get a refund tax credit of, say, $4,000–and a family, $8,000?

–Allow consumers to shop for health insurance across state lines. Today it’s illegal for someone in Chicago to buy a health insurance policy that someone living in New York City can buy.

–Encourage the use of Health Savings Accounts. That way consumers–not government bureaucrats or employers–would control the purse strings, or at least a portion of them.

–Permit small businesses to form pools so they can increase their pricing leverage with insurers.

–Remove state-imposed obstacles to allowing routine medical care to be offered in, say, Wal-Mart ( WMT news people ) stores.

–Remove the obstacles that prevent entrepreneurs from setting up new clinics or hospitals. A number of states make this extremely difficult by demanding that such entrepreneurs obtain a certificate of need. In fact, in some jurisdictions hospitals must get permission to make major capital purchases.

Genuine free-market reforms in health care will slash the number of the uninsured and lead to the same kinds of innovations and efficiencies that are experienced in most of the rest of the economy.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: