Why we need both Obamacare and a new consumer-led system.
The following appeared as an ad in the back page of Roll Call on June 7, 2017.
Obamacare has doubled premiums and doubled deductibles while restricting doctor choice. It has failed.
Even so, it isn’t necessary to repeal it totally. If Congress would just end the Obamacare monopoly and allow a consumer-led healthcare system to grow up alongside it, that is all that is needed to drive costs down.
Here is one example of today’s crazy costs. A teenager went to an emergency room for food poisoning. The bill was $8,000. The insurance company knocked it down to $4,000. But what about the uninsured? They would have been told to pay the full $8,000 and even face bankruptcy if unable to do so.
How can we get medical costs down? You hear that medicine is so expensive because of technology. Nonsense. Technology in most industries reduces costs.
Basic economics tells us that in order for prices to fall we must get supply of products and services up faster than demand. That automatically reduces prices. The only way to get supply up (and improve products and services as well) is to create a system in which all suppliers are allowed to compete with one another for the dollar of the consumer.
Who are the suppliers being shut out of today’s market or severely restricted by law? In the medical field, they include millions of nurses, who are rarely allowed to use their full training, chiropractors, four-year-trained naturopathic doctors, and other qualified practitioners. It also includes generic drug companies, supplement companies that could make generic drugs and other treatments, compounding pharmacies, and food producers. Science tells us conclusively that food is a powerful medicine. But walnut and cherry growers have been threatened with jail for speaking of the proven health benefits of eating these foods, because it’s illegal to make these types of claims, unless made by a drug company about a commercially available drug. Restrictions even apply to describing exercise as medicine.
To make this expanded supply network flourish, the consumer must be in charge—not the insurance companies or the American Medical Association or other agents or allies of government, all of whom will only seek to make market-restrictive deals with regulators. Only a consumer-controlled market with free flowing information and real competition can give us better services at lower and lower prices. We have seen this in computers and automobiles and so many other fields. How much do you think food or computers or autos would cost if run like healthcare?
So what exactly is wrong with the way healthcare is run today and why has it led to such high costs? The answer is again quite simple. Government, in its effort to protect people, has actually created a monopoly system in which big drug companies are protected from competition by patents and multi-billion FDA approvals. Meanwhile, hospitals and doctors are protected from competition by price control rules and unnecessary licensing restrictions.
The Medicare system fixes the practitioner prices (these are monopoly prices favoring hospitals in particular). Economists on both left and right agree that price controls never work. They backfire by discouraging investment and thus limiting supply. Government subsidies for consumers are a band aid that cannot possibly keep up with the spiraling monopoly prices. Government subsidies for big insurance companies are even worse. More medical crony capitalism we do not need.
Government should not try to define what healthcare is or what an insurance policy is. Leave that to the consumer. Let them decide on the kind of coverage they want and how much they will pay. But meanwhile, don’t force everyone to accept a consumer-led market. Let anyone who wishes stay on Obamacare or in the Medicaid medical ghetto.
It is quite enough to open up the Obamacare system to competition from a consumer-led system. Then let consumers (and voters) decide for themselves which they prefer. This way all the transition problems associated with repealing Obamacare disappear. Nobody will lose coverage. On the contrary, millions more will likely gain coverage. The idea that 23 million consumers would lose coverage if given more choices and options was always completely bogus. But if both systems are available, the argument collapses.
Let’s also be honest. The House bill does not repeal Obamacare. My state must ask the federal government for a waiver from the Obamacare mandates. Many states will not do this, so their residents will not be allowed to take advantage of consumer-led healthcare. If the waiver is granted by the federal government, it only lasts for ten years. A new president could refuse to grant any more waivers and the Obamacare monopoly would be right back. In the interim, medical providers won’t have the certainty they need to create more healthcare supply.
Are you worried that a new consumer-driven system cannot be created through Senate reconciliation? Don’t be. Just add modest fees payable by consumers or providers to participate in or to offer the new system. Consumers and providers will gladly pay for the privilege of being exempted from the Obamacare monopoly and their payments will add up. Before long, when the new system is bringing prices down sharply, the fees can be dropped out of the billions of savings for the federal government. Meanwhile the voters will hear that the fees were in effect imposed by senators supporting an Obamacare monopoly.
Other articles in this week’s Pulse of Natural Health: