Repealing ObamaCare is Not Enough: Applying the Free Market to Health Care

BY Glen Tschirgi
9 years, 5 months ago

Hat Tip Instapundit

This opinion piece by Keith Hennessey in The Wall Street Journal is full of good sense and seemingly sound strategy:

Now that the Supreme Court has ruled ObamaCare’s individual mandate constitutional, the direction of American health policy is in the hands of voters. So how do we get from here to “repeal and replace”?

Step one is electing Mitt Romney as president, along with Republican House and Senate majorities. Without a Republican sweep, the law will remain in place.

But a President Romney does not need 60 Republican senators to repeal core elements of ObamaCare. Democrats lost their 60th senate vote in early 2010 after Scott Brown took Edward Kennedy’s seat. To bypass a Senate GOP filibuster and enact portions of ObamaCare, they used a special legislative procedure called reconciliation.

Hennessey goes on to outline how reconciliation can be used in the Senate to avoid the filibuster.   More importantly, he goes on to advocate for implementing changes to the way in which Americans purchase health care, moving from an employer-sponsored plan to a marketplace where consumers purchase and own their own policies like car insurance.

Reform should start by replacing the tax exclusion for employer-provided health insurance with a flat tax deduction or credit. This should be combined with insurance reforms that allow consumers to buy portable health insurance sold anywhere in the nation, through their employer or on their own. That means you’ll be able to take your health insurance with you from one job to the next. Tax policy will no longer push Americans toward lower wages in favor of more expensive health insurance.

Top it all off with expanded contribution limits for health savings accounts, aggressive national medical liability reform, and structural Medicare and Medicaid reforms that dramatically slow the growth of government and deficits.

In 2009 and 2010 the nation took huge steps down a path toward more government control of health care. A shift to the consumer-based reform path is still available—if voters want it.

The difficulty with this free market approach is that… well, the market must actually be “free.”   Hennessey’s piece leaves out at least two, crucial elements for a free market in health care to function properly:  readily flexible supply and freedom for innovation.

Health care costs will never decline, no matter how many tax deductions and national health care plans are implemented, so long as the supply of doctors and nurses is kept artificially low.   In the current system, there are a relatively small number of spots available for those wishing to enter the medical profession.   Becoming a doctor is more like joining a medieval guild than any, other occupation (with the exception, perhaps, of the Delaware bar).   With all guilds, there is an inherent financial interest in preventing too many people from entering the field.   The guild decides how many new members it wants, irrespective of the actual, public need.  A key part of any health reform, then, must be a reform to the various controls that the Medical Guild has imposed to keep out new doctors.   This would include, by the way, the active recruitment of the world’s most talented doctors by liberally handing out work visas.

Increasing the supply of doctors, however, will not work without reforms which allow for drastic innovations in the supply of medical services.   Laws need to be loosened which would encourage doctors and nurses to form profitable practices that provide quality care at affordable prices.   The provision of medical services has changed very little over the last 70 years due in large part to restrictive laws that impede competition among doctors.   Similar reforms need to be implemented in the fields of biotechnology, pharmaceuticals and medical devices.

As just one example, the Federal Drug Administration should be transformed from a licensing agency with police powers to an advisory role.   Rather than prohibiting new drugs, procedures and devices from reaching the market until the F.D.A. has given its final approval, these products and procedures should be allowed quick entry with appropriate F.D.A. evaluations.   So, in the case of a new treatment for diabetes, the F.D.A. provides merely an evaluative opinion on its safety and efficacy.   It is left to doctors and, more importantly, to patients to decide whether they want to risk a new treatment that has, for example, a “red flag” of sorts from the F.D.A.    As time goes by, the F.D.A. may change the flag to yellow or even green.

Public perceptions play into the debate as well.  For better or worse, public attitudes about health care have shifted dramatically over the last 70 years.   Prior to World War II, the average person viewed doctors as specialists who were consulted only when a medical issue was too severe for the family to care for itself.   Doctor visits were far less frequent than they are today and no one much thought of having access to the most sophisticated and cutting-edge technologies to extend life.  Professional medical care today is seen as a right and access to expensive, marginal treatments, even for cosmetic or non-life-threatening conditions (sex change operations?  Really?) is considered essential.

In short, the problem with health care in the U.S. is not one that the Federal government needs to solve.   It is a problem largely created by the Federal government as a result of incessant meddling, regulation, taxation, over-hyping expectations of care, and anti-competitive policies.   The single, best thing that can be done to improve the health of our nation is to make the provision of health care more like the provision of automotive care— giving consumers a wealth of choices.


Comments

  1. On July 5, 2012 at 5:29 pm, D. Lively said:

    Also, don’t forget to end the government-created state monopolies that prevent citizens of one state from shopping for insurance in another state.

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