American Healthcare in Crisis: Problems and Solutions (Part 4)

This is the fourth post in a four-part series on the American healthcare system.


Pre-Existing Conditions

The Individual Mandate required all Americans not covered by a “qualifying plan” to purchase insurance or pay a penalty.  We require basic car insurance to legally drive, so why not health insurance?  However, this is an apples-to-oranges comparison.  Driving is a privilege and is voluntary (we can choose not to drive), while one’s health is impossible to separate from the individual.  Compelling citizens to buy something from the government, just because they are alive, borders on the tyrannical.  Besides, the government’s interests are often not aligned with our own.

Continuing with the car insurance analogy, you don’t call up the auto insurance company after you’ve been in an accident and expect to be able to buy coverage to fix your car.  Yet this is exactly what Obamacare’s Guaranteed Issue encourages.  It allows people to “game the system” and avoid paying for coverage until they are sick.  According to my insurance broker, this is the biggest reason the individual health insurance market is collapsing.  People sign up during the extended Open Enrollment, pay their premiums for a couple of months while consuming a lot of services, then drop their plans.

That said, there are good arguments for having some kind of “safety net” in place.  This was the original purpose of Medicaid.  However, as more and more Americans are being forced into this program, its long-term stability is being jeopardized.

Health Empowerment Accounts

One of the best proposals I’ve seen to address pre-existing conditions, gaps in coverage, and the long-term sustainability of our healthcare system was made by former presidential candidate and current HUD Secretary Ben Carson.  He suggested Health Empowerment Accounts be assigned to individuals, funded in part by tax dollars currently spent by the government on healthcare.  These accounts, very similar to Health Savings Accounts (HSAs), would allow patients to comparison shop, stimulating competition in the marketplace.

An added benefit of these Health Empowerment Accounts is that they would be portable, and patients would no longer be “tethered” to an employer plan.  In other words, everyone would have continuous coverage, essentially eliminating the issue of pre-existing conditions being an obstacle to receiving the care they need.  (As a side note, prior to Obamacare, the “pre-existing dilemma” wasn’t that much of a dilemma.)

That said, in order for this approach to be successful, a couple of things would have to happen at the same time:

First, as Congress crafts the legislation for these accounts, we would need to keep industry and other special interest groups away from the process.  If insurance companies, insurance brokers, big pharma, hospital and physician groups, medical device manufacturers, and other lobbyists and activists are allowed to be involved, it could cost us dearly (the carve-outs and special deals are usually good for them, but not so good for us).  We also would need to limit as much as possible the role of government in these accounts once they are established.

Second, in order for this program to be successful, we must promote transparency in pricing.  Without transparency, there will be no way for people to know how to best spend their healthcare dollars.  Once there is transparency, not only will prices go down, but there will be greater incentive to provide good customer service.  It will also encourage innovation and investment, with the focus once again being on patients, not the government.

Of course people should continue to have the option of purchasing individual insurance, remain insured through their employer or group plan, or remain on Medicare with or without a supplemental plan.  States can determine who is eligible for Medicaid.

More Free Market Solutions

Other steps that can and should be taken to roll back government and use the free markets to bring down costs and improve access include:

  1. Remove the Essential Health Benefits requirement, allowing patients to choose the kind of coverage they want.
  2. Permit the purchase of health insurance across state lines, encouraging competition nationwide.
  3. Allow patients with Medicare to pay cash for their care if they want (this is currently not allowed by Medicare).
  4. Let doctors who want to offer discounts to their Medicare patients do so (this is currently not allowed by Medicare).
  5.  Allow patients to use their Health Savings Accounts (HSAs) for memberships in Direct Primary Care (DPC) and concierge practices.
  6. Gradually phase out federal subsidies and return control of Medicaid to the states to be managed locally.
  7. Encourage tort reform, economic growth, employment, and self-sufficiency.

 

Conclusion

The Cato Institute’s P.J. O’Rourke famously said almost 25 years ago, “If you think healthcare is expensive now, wait until you see what it costs when it’s free.”  After witnessing the fallout of decades of ever-increasing government control, many Americans have a better understanding of the truth in those words.  What is urgently needed now are free market reforms that encourage transparency in pricing and empower patients by putting them in control of their own healthcare dollars.

What politicians have done to our healthcare system is immoral.  It would be a tragedy if we failed to learn from these valuable lessons, and instead took the other path, allowing government to force us into taking the final plunge into socialized medicine.


“Doc” is a primary care physician in private practice in Colorado.  Read his other posts in this four-part series:

Part 1: How Healthcare Became So Expensive in America

Part 2: Medicaid, and Why Single Payer Won’t Work

Part 3: Comparing the Costs of “Billed Through Insurance” to “Self Pay”

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