A majority of Americans are very apprehensive about Obama’s new health bill. This is exemplified by pink lady Mary Cole at Fish Medical Center who said, ”I hope Florida Attorney General Bill McCollum can have it declared unconstitutional.”
Virtually, all Americans are unhappy because health care costs a lot more than it should. However, the solution is not to destroy our existing excellent health care system with a government takeover; the solution is to fix the problems that are driving the cost up and up.
The main factors driving up the cost of health care are indirect payment of health care costs, rules and regulations on health care insurance, government interference in the development of medicine, and a predatory legal system. In short market forces are distorted and weakened to the point that they don’t work very well to hold down costs.
First of all, we need to level the playing field from a tax angle so there is no tax incentive for Americans to handle their health care costs through a third party such as their employer or an insurance company. In other words the tax consequences should be the same no matter how health care is paid for. This will enable and encourage the individual to handle his own health issues.
The rules and regulations put on health insurance at the state level need to be mostly eliminated.
Mandates that require policies to cover things that a buyer may not want or need should be removed and it should be legal to purchase health insurance from out of state.
As it now stands states put requirements on policies that make them much more expensive for some people especially the young. Some states mandate that such things as acupuncture, breast reduction, hair restoration and other things that most people don’t want or need are included in policies that are sold in their state. It is estimated that these mandates raise the cost of insurance as much as 50%.
In addition some states require that the minimum deductibles be quite low. This keeps people from using the insurance the way it should be used. Proper medical insurance use is to buy policies with high deductibles to cover catastrophic illnesses while small ordinary medical costs should be paid for out of pocket.
The tort system needs to be reformed so that predatory trial lawyers can’t pillage the medical community and drive up medical costs.
Non-monetary damages such as pain and suffering need to be capped. The loser in a suit should have to cover all of the expenses of both parties. This will greatly reduce the frivolous law suits that are entered into so that plaintiffs will find it cheaper to pay than fight the suit even when they win. Note that in virtually every other country the loser pays all.
The “deep pockets” legal liability practices should be eliminated.These dictates that anyone with enough money can be made to pay all of the costs independent of how little blame he has in the affair.
Note that fixing the legal system in this manner would not only reduce the cost of medicine but would reduce the cost of most of the other things we have to buy.
Today, the vast majority of medical costs are paid by third parties rather that the patient receiving the treatment. This drives the cost of medicine sky high while infringing on the doctor patient relationship and quality of medicine.
Since the patient is removed from the medical payments he no longer puts forth much effort to find the most cost effective way to handle his problems including not seeing the doctor for things that are not very urgent.
The obvious cure for this problem is to use high deductible medical insurance for major high cost medical problems and pay the rest of the medical costs out of pocket. One good vehicle for doing this is the health savings account or HSA.
The HSA combines high deductible insurance with a savings account that can be used to pay for the ordinary medical costs at the patients discretion. The money out of the savings account is tax free and any money not spent stays in the account to grow in the patient’s possession.
This accomplishes two things: Third party is removed between the patient and doctor and the patient is paying with his own money because any money not spent stays in his possession
The patient is now motivated spend more carefully and look for more economical ways to meet his medical needs. There is no “use it or lose it” pressure that leads to unnecessary trips to the doctor. On the other side of the transaction hospitals and doctors would be forced to look for ways to cut their costs. The result would be that medical costs would go down
HSAs should be encouraged by loosening up on the regulations that pertain to them and educating the public on the advantages of using the HSA philosophy. Note that there are companies such as State Farm that offer packaged HSAs.
This philosophy could be used just as well on a personal level especially if the playing field is leveled from a tax standpoint and restrictions on medical insurance deductibles are lifted.
One great cost-cutting move that is seldom mentioned is to lift the dead hand of the FDA off of the development of new drugs. It has been estimated by various economists such as Milton Friedman that the actions of the FDA increase the cost of medicine development at least ten-fold and extend the drug development time by about four times.
Whatever small increase in drug safety we get from the FDA action is paid for dearly by a 10 to 1 increase in the cost of drugs and maybe a decade or more delay in the advancement of medicine.
Since no one in his right mind would purposely put a dangerous untested drug on the market for unsuspecting people to use and since drug companies test their drugs extensively the safety added by the FDA process is probably surprisingly small while the added cost is quite high.
There are other things that should be done to reduce the cost of medicine such as the introduction of retail health clinics and the freeing up nurse practitioners to do a wider range of patient treatment.
It should be noted that the ideas discussed here will actually work. They will not incur tax increases or necessitate unleashing an army of IRS agents and other government agents on the hapless business community to insure compliance to a unintelligible mass of government regulations.
The hugely capable medical institutions and personnel we already have in place will not be damaged in any way but will be freed up to work even better.