Mar 16, 2008

The Road Less Traveled: H.R. 3343

Politicians and the media have molded the national conversation on health care into a discussion about a choice between our current free-market system and a government funded, universal health care system. As prices continue to spiral out of control, it seems everyone is calling for the government to 'do something'. The approach most favored by the media is to label out of control health care costs as a 'market failure'. They quote statistics indicating that health care costs are increasing year after year at rates far beyond the annual inflation rate, and call it proof of a classic failure of the free-market. The fundamental 'ruthlessness' of the free-market is likewise to blame for the millions of Americans without access to medical care. Only more government controls will get prices under control and provide coverage for all Americans.
We are never told that the government already controls health care spending in the US. In fact, government provided health care (Medicare, Medicaid, SCHIP. etc) and regulation determines approximately 80% of all health care prices in the US. In reality, then, the spiraling costs are not a free-market failure; they are a government failure. All truly unregulated, free-market health care cost trends are exactly opposite the current cost trends of government regulated medical services. According to a 2006 survey of studies by the National Center for Policy Analysis the costs of medical services not regulated or covered by government or insurance, have either fallen or not increased as much as either prices in general or covered medical services. Cosmetic surgery fared the worst of the services studied and LASIK surgery the best:
From 1992 to 2005, a price index of common cosmetic surgery procedures rose only 22 percent while the average increase for medical services was 77 percent; overall, prices for all goods increased 39 percent.
The cost per eye of conventional vision correction laser surgery (LASIK) averaged about $2,100 between 1999 and 2005. By 2005 the price had fallen to just over $1,600.
As these cases show, the plain fact is that the evidence we have for the operation of a free-market in medical services shows that it works. Our daily experience of sustained and substantial rising prices indicates that our current government-managed medical care does not work. Yet all the health care proposals of the major Presidential candidates ignore this fact, and at best they promise us more of the same. Only one candidate--Congressman Ron Paul--seems to have a solution; and it is already a bill in Congress. Dr. Paul's 'Comprehensive Health Care Reform Act' (H.R. 3343) according to DownsizeDC would:
  • Give you a 100% refund from your taxes of every dollar you spend on medical care, including insurance premiums.
  • Make it easier for your employer to deposit the money it now gives to the health insurance companies into a Health Saving Account that would belong to you
  • This money would come to you tax free--you could use it to fund your health care and your insurance premiums This means your health insurance would belong to you, not your employer
  • You would have the money to pay small medical expenses with your Health Savings Account, which would allow you to reduce your insurance premiums by buying a Major Medical Plan, instead of a Cadillac Plan
  • You would also earn interest on the money in your Health Savings Account, tax free--you would get this interest instead of the insurance companies getting it (collecting interest on premiums is how the insurance companies make their money--these profits could be yours instead)
  • Plus, you would become your doctor's customer, instead of the government or your insurance company being your doctor's customer
  • This would place the consumer in charge, creating competition that would lower prices and improve quality

Simple and straightforward, the bill applies proven, free-market principles. It would bring down prices using competition, applied technology and increases in efficiency. As prices come down, more and more Americans would have access to affordable health care. Free market competition forces increasing availability. The history of decreasing prices over time in long distance calls, the automobile, and HDTV should make this point crystal clear.
The real national conversation needs to be about how best to de-regulate medical care, and what can be done to speed the transition to a system that works, not who will march the fastest down the road toward government mismanaged Universal Health Care.
(This article was published by The Conservative Voice on March 16, 2008.)