Quality care requires competition

The root of America’s health care problem is not quality but cost. Health care procedures are too expensive, and rises in costs make proper health care inaccessible to individuals who aren’t insured.

Under the Patient Protection and Affordable Care Act, the health care system will be reformed so those who don’t have insurance coverage will.

The government insists that adding 32 million additional people into the market — along with Medicare reform — will help reduce the costs of medical treatment. Its assumption is that people who weren’t previously covered would now go in for regular check-ups, which would help prevent them from having catastrophic medical emergencies that require higher-cost emergency care.

This solution, however, only throws more money at the problem, because it does not address the underlying issue of why medical costs are out of control — the over-utilization of health insurance itself.

The actual problem lies within the existing insurance mandate from the government.

The government gives tax benefits to employers that provide employees with health insurance. If you earn wages, your employer can give you a portion of that income tax-free in the form of health insurance.

As it stands, the employer gives this benefit to its workers and both receive a tax benefit by participating.

Of course, workers are going to want to have every medical expense covered and paid for by the insurance company. This causes the over-utilization of insurance in common health care procedures that should be paid out-of-pocket.

Insurance is supposed to only cover catastrophic events such as heart attacks or cancer treatment. By already having government involvement in the distribution of insurance and insurance policies, free market forces are not allowed to function.

As competition is effectively eliminated, this leads to a rise in cost.

Individuals don’t care about the costs because, with insurance, they do not directly pay for treatment. Having someone else pay causes prices to spiral out of control because individuals only care about the service with no regard for the cost.

As a result, private practices and hospitals can raise costs, mainly to cover bad tort law policy, with little resistance.

This prices out individuals with no insurance who are forced to pay the actual cost, or it leads to lesser care for those on Medicare because of price fixing.

Ideally, individuals would be allowed to shop for noncritical health expenses and compare costs. Doctors would be forced to compete with one another to provide quality, cost-effective treatment.

A comparable structure can be seen in health practices not covered by insurance, such as elective procedures or Lasik eye surgery. People care about the price of Lasik because they pay out of pocket; when they go in for a checkup at the family clinic, they aren’t concerned with the price of a procedure or whether they really need it because it’s covered.

The easiest solution to the health care problem — aside from tort reform — would be to completely eliminate the government’s involvement with the insurance industry.

If state governments repealed regulations on what portion of costs insurance companies had to cover and the federal government allowed employers to give employees health care benefits in the form of cash, tax-free, most people would take the tax-free payment and buy a cheaper insurance policy that only covered what they needed.

Such insurance policies would most likely cover less with higher deductibles and much lower monthly payments. Under this system, going to the doctor for a routine visit would exclude insurance entirely, and people would be able to shop around for doctors who charge reasonable amounts.

By introducing competition, costs would plummet as they would in any facet of the economy where free markets are allowed to function. Also, by removing mandatory health insurance from jobs, the issue of pre-existing conditions would be eliminated, as people wouldn’t need to qualify for new insurance policies if they changed jobs.

Disconnecting insurance from government regulations accompanied by tort reform is still not a perfect fix. It is, however, a fix that actually addresses the fundamental flaw in the cost of medical care, and it could be enacted immediately.

Brandon Wynn is an engineering junior and may be reached at [email protected]