Real health care reform

I’ve been accused by some of flinging accusations at the left and playing dirty without offering any substance of my own to the health care debate.  Well today I will provide some substance – an outline of market reforms that would work to reduce health care costs without allowing a government takeover of the industry and at no cost to taxpayers.

Six months ago the mere mention of “market reform” would beckon the response that capitalism has failed us and we need to look elsewhere.  The credit crunch beginning in the fall of last year, the bailout, and shady financial practices all combined to trigger one of the greatest market failures in American history.  Journalists were quick to question the merits of capitalism and the state of the economy, along with the widespread disdain of GW Bush, elected a President who had long felt this way.

But capitalism is not dead.  Unfortunately, with free markets from time to time we will come upon periods of adjustment where unscrupulous business practices negatively affect the economy.  But that’s all these periods are – they are adjustments and the economy adjusts itself by shaking out the shady business practices.  Of course many Americans lost a ton of money in their 401k investments as stock prices tanked, but the savvy investor was able to ride out the storm and is now generating retirement income once again.

So back to what I believe would reform the health care industry in a beneficial way:

• Open up competition for health insurance across state lines
  • Insurance premiums vary widely across the country – interestingly enough they are highest in Massachusetts where a ‘public option’ was launched a couple of years ago.  Currently, consumers cannot purchase insurance across state    lines because of the McCarran-Ferguson Act dating back to 1945
  • Erecting walls around the fifty states guarantees limited competition among the insurance companies operating in each state, tearing down these walls would vastly increase competition and lower costs

• Reform medical schools
  • We need more medical schools.  The American Medical Association (AMA) has repeatedly lobbied Congress to limit the number of medical schools in the country.  The supply of doctors has been reduced by 30 percent over the last 30 years and very few medical schools have been allowed to open since the 1980s.  Once again, market forces are at work here.  The extreme shortage of doctors drives up their salaries.  McKinsey & Company found in a 2007 study that physician compensation increases health care spending in the United States by $58 billion every year.
• Tort reform
  • Health care practitioners currently must spend exorbitantly on insuring themselves against lawsuits – between $20 billion and $40 billion each year.  Over the last two or three decades we have become an extremely litigious society with only lawyers benefitting in the end.  This problem, of course, touches many other industries than health care, but it certainly adds unnecessary costs to practicing medicine.
• Insurance tax breaks
  • Yes tax breaks to fix everything.  When consumers have more income available at their disposal, they are more willing to spend it.  Raise taxes and consumers spend less money.  Maybe some of us on the extreme left equate paying taxes with their “patriotic duty” but the rest of us find that ridiculous.  Give consumers who need to purchase health insurance on their own a tax break for doing so and they will.

So there you have it – health care reform in a nutshell all at no cost, but maximum benefit, to taxpayers.  No the plan wouldn’t guarantee coverage for everyone and it shouldn’t.  Health care is not a guarantee in the United States but the freedom to lift one’s self up to improve their situation is – a free market guarantees that.