Some might start this discussion by asking whether it is broken.  I say that it is broken, inefficient, ineffective and if something isn’t done, will soon resemble that of a third world country.  I’m not sure that, in some places, it doesn’t already do so.

The direction we are headed now, with a government plan that is part private enterprise, part regulation, is most likely not going to resolve the problem.  Like most government programs related to economics, it will provide benefit for some people, while putting others at a disadvantage, and leaving others confused by all the change in procedure, without any clear beneficial results.

“Leave it alone, and let the free market handle it!” is the cry of some, mostly conservative, voices.  The problem is that what we now have in place is not consistent with the principles of free market economics.  Insurance companies have cornered markets and monopolies in most states, leading to higher than necessary premiums, and rationed benefits.  And health care itself, as administered by hospitals and medical providers, does not operate on free market principles.  There is no way for a consumer to shop for the highest quality service, or the best price.  Each insurance company has negotiated rates they will pay with the providers, usually much lower than the “list price,” but those negotiated rates are not published, are different for each insurer, and the consumer is locked into accepting whatever their insurance company will pay for.

If health care operated in a free market environment, insurance companies would be free to sell their product in any state, to anyone who wanted to buy it.  Companies who provide the benefit for their employees would have a much greater choice of insurance companies to choose from, and would be able to receive bids at competitive rates for their services.  Insurance companies would have to adjust their rates downward, and ramp up their benefits in order to get the bids because of the competition.  The increased opportunity for new business would make up the difference in their profit margin.

Likewise, health care providers would have to advertise their services and their prices.  Consumers would be able to determine where they would go for health care, knowing the rates that will be charged, and the care that will be provided in advance.  If a doctor recommends surgery, the patient could choose the hospital based on their evaluation of the quality of service provided and the advertised costs.  The balance between quality care and low cost would be the attraction, and those providers who succeeded in balancing those things would be the ones with the most patients.

There is a problem with supply and demand in the health care field.  Pain, suffering, and the threat of the loss of life create an unfair disadvantage for the consumer when it comes to demand.  On the one hand, health issues which many people have in common would be completely covered, and would be very inexpensive.  But those diseases and conditions which are rare, and for which treatment would not generate profit, would either be ignored, or the cost of accessing care would be too high for consumers to consider.  The same thing would happen in the prescription drug business.  Commonly used medication would be ridiculously cheap, while rarer medications, even though production costs aren’t all that high, would be astronomical.  That is the only place where government regulation is needed in this business.

The other option is a single payer, government controlled health care system.  And while there are those that are uncomfortable with what they call “socialized medicine,” simply because it is not consistent with the way we do everything else economically, there are plenty of examples of countries in the world that have achieved a high quality of medical care at a relatively low cost in terms of tax dollars to their citizens using such a system.  Several of those countries have achieved a higher quality of health care than we receive here, and they’ve avoided all of the problems critics of it say that we will have if that’s what we do, so we know it can be done, and at a cost that is considerably less per patient than is now the case in the US.

The key to success in those systems is a gateway that allocates services based on the seriousness of the need.  Critics say that if health care is accessible to everyone, at no up front cost, doctors would be overloaded, and the wait to receive services would be long and possibly have health-related consequences.  But in those countries where the health care system is government operated, none of the bugaboos seem to occur.  The wait time, even in those that are more frequently used as bad examples, such as Great Britain, to see a physician or specialist is less than it is in the US today.  In many cases, the problems were anticipated, the rules were made to cover them, along with whatever exceptions were deemed necessary, and it works.  Medical professionals receive more pay than those in equivalent positions in our country, and the cost to each consumer is much lower, by something like $4,000 a year because the profit margins are removed.

It is amazing to me, in seeing both of these alternatives, that American ingenuity and entrepreneurial spirit has not been applied to a solution.  The obstacle is that there are too many people who stand to lose what they are now capitalizing on for either of these systems to be put into place.  Medical providers and consumers, who would be the greatest beneficiaries of either system, are not politically powerful enough, in that they don’t have the kind of money to invest in lobbying, that the other interests do.  That’s the bottleneck.  We have the Supreme Court to thank for squelching the voice of the people, in favor of the voice of the corporation, when it comes to that.

The end result is that we now have “Obamacare,” a compromise plan that the Republicans once touted as the saving of health care as we know it when they pushed it, and which they now say will ruin health care as we know it, because the other side is proposing it.  Though it will benefit some consumers, and some medical providers, it doesn’t solve the problem that keeps the system from being efficient and effective.  Americans are ingenious, and they are entrepeneurs, if not for the Congress, elected to be “of, by and for the people,” we would have a working health care system in place now.


About LS

I'm 56, happily married for 25 years, B.A., M.A., career educator with experience in education as a teacher and administrator, native Arizonan living in Pennsylvania, working on a PhD and a big fan of the Arizona Wildcats, mainly in football and basketball.

6 responses

  1. Your conclusions are those of someone who knows little or nothing of the health care insurance industry. Insurers are already required to pay 85% of their premiums in health care benefits, for true groups (generally over 50 people) and 85% on small groups. If they don’t, they’re required to refund the difference to their clients. That started in 2012.

    Seen any rebates lately?

    At the heart of this is the health care industry … and the demand for everything possible by the patients, and the sensible tendency for doctors to do much more than necessary in this litigious climate.

    All this stems from, IMO, the national mood of anger, which gives us just in the past week, the destruction of a profitable business empire over something the head said 30 years ago, and upset among portions of the citizenry over correcting a wrong in the Voting Rights Act’s application in some areas that no longer have a problem the Act addressed.

  2. Correction .. it’s 80% on large groups and 85% on small.

  3. Lee says:

    I know the 80-85% rule has been in effect for a while. It would not be necessary if competition actually regulated the premiums, and patients could shop medical providers. Insurers who bid competitively would have an abundance of customers, and medical providers who did the same would have an abundance of patients. The current system, as I am sure you well know, is responsible for the skewed rates requiring rules like the 80-85%, and the system on the table doesn’t do much to help.

    We may well discover that free market economics doesn’t work in health care, like most other industrialized countries have already discovered. When you factor in the other profit margins in health care, almost half of every dollar we spend on health care in America goes to “costs” (including dividends paid on stock held in the business) rather than actual health care, compared to less than one twentieth in countries like Switzerland, Sweden, and Germany.

  4. Jack Matthews says:

    As an attorney who works with insurance companies frequently, I do have some insights into what is going on. Regardless of the 80% or 85% rules, the fact of the matter is that, next to oil companies, health insurance corporations are America’s most profitable businesses. That is why the difference between what Americans pay for “health care” is almost double what most Europeans or Canadians pay for it, and why they get more than we do for what they pay. I think your idea of real competition by opening the market, and allowing consumers to “shop” for health care services, and opening up competition in the insurance business would bring costs down while allowing a fair profit. I think that solution fits better with our economy than the kind of government control that is found in European countries. Our size would make a single payer system very cumbersome and hard to police.

  5. You’re free to shop for health insurance, and they’re free to compete for your business. Right now.

    • Jack Matthews says:

      Not quite. It’s different in each state, but they have quite a powerful lobby and the open, free market kind of competition that exists for most goods and services is not available to consumers in health insurance. That’s one of the reasons the Affordable Health Care Act requires states to set up exchanges, because what is available in one state may not be available in another, at the same rate, or at the same level of service. And there are surcharges and taxes added on to non-profit insurers in some locations to “equalize” the rates or limit the service they provide. So you are free to shop, but you don’t have a full choice.