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Date: Sat, 24 May 2003 12:21:34 -0400
Subject: [libnetd] Liberty: -- Solutions -- There are free market answers to America's health care crisis
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Solutions: There are free market answers to America's health care crisis

by Jonathan Trager

America has a health care problem that has developed into a
full-fledged epidemic.  

Over 40 million Americans currently lack health insurance.
Skyrocketing health care costs eat up about 15% of the nation's total
productivity. Thousands of businesses have dropped their employee
health care benefits.   

How did the American health care system become so diseased?

Prior to the 1960s, America had a health care system that many
considered the best in the world. Most Americans could afford to pay
for health insurance; hospital procedures didn't cost a week's pay;
charity hospitals were available for the poor and indigent; and
doctors even made house calls.    

Then the federal government stepped in with programs and regulations
that would allegedly make health care more accessible. Since then,
prices have gone up at a feverish pace, and increasing numbers of
people are unable to afford coverage.

The ballooning cost of health care has been met by cries for even more
government intervention. In the past year, politicians have proposed a
Medicare prescription drug benefit, a "mental health parity" bill to
force insurers to cover mental illnesses, and a "Patients' Bill of
Rights" to give individuals more power to deal with health maintenance
organizations (HMOs).

But further government intrusion into the health care market would be
a cure worse than the disease. For a case in point, just look to
America's northern neighbor.

Under Canada's "free" health care system, tax revenues fund all health
care. There are no user fees. No insurance companies. No health care
management organizations. At first blush, it sounds like the perfect
patient paradise.

The reality is quite different. Canadian politicians may have been
able to dispense with the for-profit system, but they have been unable
to repeal the laws of supply and demand.

According to the Canadian Fraser Institute, hospital waiting times
have increased a dramatic 51% since 1993, when the median wait for
Canadian patients to receive treatment was already 9.3 weeks.

Why? Because with government paying health care bills, there is no
reason for individuals to economize. As a result, every minor ache or
pain is viewed as a legitimate reason for a medical visit. So Canadian
physicians suffer from case overload, while Canadian patients wait.
And wait. And wait.

As Guy King, former chief actuary for the Health Care Financing
Administration, noted, "When people, either patients or doctors, are
spending other people's money, they do not worry about the cost or
number of services consumed."

That's the problem in a nutshell. Today, almost half of all American
health care dollars are spent by governments -- not by private
individuals or companies. In addition, reams of regulations further
burden health care providers.   

Rather than further enmeshing the government in medicine, we should
dramatically reduce its role -- and, by doing so, make health care
more affordable. To that end, politicians should:

* Replace the FDA. According to the Food and Drug Administration
(FDA), getting a new drug approved costs a pharmaceutical company $300
million on average, and can take as long as 10 years.

This regulatory hoopla not only boosts the price of drugs, but it
keeps potentially life-saving medicines off the market. As a result,
patients suffer and die.

Take the case of Propanalol. In 1968, the FDA approved this drug, but,
for almost a decade, refused to allow it to be used for angina or
hypertension. A study by Arthur D. Little, Inc. estimated that roughly
10,000 Americans died for lack of the drug each year the FDA prevented
doctors from prescribing it.

Not only does the FDA keep prices high and waiting periods long, but
as Robert Goldberg of Brandeis University said, "The FDA has sat on or
rejected drugs for depression, schizophrenia, kidney cancer, and
epilepsy -- not because they were unsafe, but because in the final
analysis the agency didn't think the drug was so important or
effective."     

If we disposed with the FDA, patients and their doctors would be able
to decide whether a particular drug is "important or effective" -- not
health care bureaucrats.

Moreover, private certification associations could fill that niche,
similar to how Underwriters Laboratories (UL) currently certifies
electrical appliances. UL is an independent, not-for-profit
organization that develops standards and rates electrical products,
giving them a non-governmental seal of approval if they are safe.


* End Medicare and Medicaid. Passed in 1965, Medicare is a compulsory
medical welfare program for the elderly, while Medicaid is a medical
welfare program for the poor.

According to former LP presidential candidate Harry Browne, the
average senior citizen now pays more than twice as much from their own
pocket for health care as they did before Medicare -- even after
allowing for inflation. In addition, there are over 100,000 pages of
Medicare regulations in the Federal Register.

Meanwhile, the payroll tax to fund the programs continues to rise. In
1965, the tax was just .9%, divided between employer and employee.
Today the total tax is 2.9%, taking over $1,200 from the average
worker's income.

According to Browne, "Because these programs impose so many
requirements, the health-care system now has far more administrators
per patient and far fewer doctors and nurses per patient. Those big
medical bills aren't paying your doctor's country club dues -- they're
financing a bigger and bigger health-care bureaucracy."

If the government ended these programs, the government-mandated
administrative costs would disappear, and the price of care would drop
dramatically.

* Institute a universal medical tax credit. About 90% of workers with
health insurance are covered through their employers, who are
permitted to write off health care coverage from their taxable
business revenue. As a result of this tax code enticement, many
American workers consider health insurance to be "free."

A medical tax credit would, by contrast, encourage consumers to pay
closer attention to how their health care dollars are spent.

Under such a system, each taxpayer would personally pay for health
insurance and medical costs -- and then deduct those payments, dollar
for dollar, from his or her tax bill.

According to the actuarial firm Milliman USA and the Council for
Affordable Health Insurance, an $800 per-person tax credit could cover
90% of a typical health insurance premium. As for the "universal"
component, individual taxpayers could choose to write off an
additional amount and donate it to hospitals or low-income
individuals.     

Merill E. Mathews, Jr., director of the Council of Affordable Health
Insurance, said, "A tax credit would be the most efficient way to
assist uninsured Americans who do not get health insurance through an
employer."

* Deregulate insurance companies. Currently, the government forces
insurance companies and HMOs to cover certain maladies and services --
regardless of whether you need them or not. One example is
gynecological services, which must be offered even in a plan bought by
a man.

Politicians also force insurance companies to cover pre-existing
medical conditions -- such as glaucoma or cancer -- under their
policies. A study by the American Society of Actuaries found that
claim costs rise by an average of 38% wherever a guaranteed-issue rule
is imposed.

Instead of further driving up costs, Congress should focus on
deregulating the health care companies, and allow consumers to choose
a less inclusive plan tailored to their individual needs.

Considering the current trend toward a nationalized health care
program, the prognosis for the ailing American system looks bleak.
However, the situation is still curable if we enact a healthy dose of
free-market initiatives -- not additional centralized controls.

As the debate rages over how to fix America's health care system, many
falsely claim the debate is about who should get more power: The
government, or big health care companies.

But Michael Tanner of the Cato Institute said there's another way.

"It doesn't have to be more power to the government or more power to
the HMOs," he said. "It could be power to the people."

He's right. Only by expanding consumer choice, freeing people to spend
their own money, and unshackling the free market can America save its
ailing health care system.



Archive: http://politics.marcbrands.com/newsletter
=====================================================================
Quote:
- Freedom is the quality of being free from the control of regulators
and tax collectors. If I want to be free their control, I must not
impose controls on others. --Hans F. Sennholz
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