The problem with our health care debate

Submitted by the Ayn Rand Center for Individual Rights

By Alex Epstein

Everyone seems to have a different take on how to solve America’s health-care problem. But notice that every solution offered involves some elaborate new system of government controls. Different proposals include a “public option,” mandatory insurance for individuals, government-supported health-care exchanges, government-sponsored “efficacy research,” government-supported co-ops, and as many other ways of dictating consumer and producer behavior as can fit in a 1,000-page bill.

More government controls, we are told, are necessary to solve problems such as skyrocketing health-insurance prices, lack of competition among insurance companies, the inability of workers to keep their insurance policy when switching jobs, etc.

Really?

Then why do giants of the computer industry like Google, Microsoft and Apple compete vigorously without a “public option”? Why do we have such plentiful, affordable food without a government “food insurance mandate”? Why does laser eye-surgery, which is not covered by Medicare or government insurance laws, get better and cheaper all the time, while the price of health services the government is most involved in, skyrockets?

The answer is that these other markets are (comparatively) left free--while health care has been manipulated by government “solutions” for decades. Thus, our health--care discussion should focus, not on how government controls can solve our problems, but on how government controls have caused our problems.

Take for instance the common complaint that individuals can’t keep their health insurance when switching from one job to another. The only reason so many individuals can’t keep their insurance in the first place is that they get it through their employer--a phenomenon that was institutionalized by the government post-WWII through tax laws that make individually purchased insurance far more expensive. We don’t face the same problem with car or home insurance when we change jobs because we don’t buy it through our employer.

Or consider the general phenomenon of skyrocketing prices for health insurance. The ways in which the government drives up prices are many and gory, but here are a few.

State insurance-mandates force companies and individuals to buy policies covering all sorts of expensive treatments they wouldn’t otherwise buy coverage for: chiropractic care, psychiatric care, prenatal care. Every such “benefit” means higher costs. Those who would prefer just to purchase insurance against medical catastrophe and pay for everything else out of pocket are prohibited from doing so.

More broadly, since the 1940s, on the idea that health care is a “right” that others must provide, the government has made Americans collectively responsible for each other’s health care, whether through collectivized employer plans or through Medicare; thus, on average, “every time an American spends a dollar on physicians' services,” explains health economist John Goodman, “only 10 cents is paid out of pocket; the remainder is paid by a third party.”

People consuming medical services on other people’s dime consume a lot more. Prices are further driven up by numerous restrictions on the supply of medical professionals, such as protectionist licensing laws that prevent doctor’s assistants, nurse practitioners, nurses, and paramedics from competing with doctors on services they are well qualified to perform (fixing minor bone breaks, diagnosing the flu, etc.).

When supply is artificially limited, and demand artificially increases, prices explode. (Any system promising “universal care” experiences this--the much-vaunted “affordable” European system just deals with it by severe rationing.)

This is just a fraction of the story of how government has mangled the market for health care--a story any honest discussion of health care needs to study and learn from.

Then we will start to hear proposals for a truly progressive idea: a market in health care where the individual is responsible for his own health, the medical profession is truly free to compete for his dollars, and the government has been removed from the equation--the private option.

Alex Epstein is a fellow at the Ayn Rand Center for Individual Rights, focusing on business issues.