Hello friends this is Iattacku. It has come to my attention that you guys are curious as to why I support a more market-based health care system over a single payer healthcare system. One thing we all can agree on though is that our current system is an overpriced and inefficient mess. Well you are in luck cause this paper shall answer this question. The first portion of this paper shall be dedicated to explaining some of the reasons why healthcare in the United States is so expensive, the second portion will show some of the downsides of a single payer system , and finally I will show how a more free (not completely free though) market based approach to healthcare will lead to cheaper prices and better service.
Why is Health Care So Expensive?
So first thing’s first, why is healthcare so expensive in this country?
Limited Physicians
One such reason is due to the number of physicians being limited largely by the American Medical Association(AMA).
Since its creation the AMA has been lobbying congress to create laws and policies that would limit the number of doctors. Their first big win lies in the Flexner Report which was written by Abraham Flexner in 1910. This report for the sake of achieving “Higher standards and superior qualifications” cause the closure of 80 percent of medical schools. In the twenty years from the report coming out the ratio of doctors in the U.S dropped from 175/1000 to 125/1000 (American Conservative). This shortage can be felt even today with a prediction of an up to 120,000 physician shortage by 2030 (“How to Make Health Care Unaffordable”).
As such the remaining physicians will enjoy a highly lucrative salary while being overworked.
Third Party Medical Costs
The second big factor into why healthcare is so expensive has to do with third parties taking up most of the medical costs.
According to economist Mark Perry almost 90% of healthcare are paid for by a third party. This largely means that patients have no desire to monitor prices and be cost conscious (Perry, What Economics can teach you about”).Thus medical providers have no incentive to keep the cost of their services down.
Another problem caused by keeping insulating customers from the price of their medical care is that they get unnecessary medical care. This overinflates the demand for such services and costs an additional 200 billion dollars per year. This also leads to 30,000 additional deaths each year (“How to make healthcare unaffordable and inaccessible”).
Competition Limited by Regulation
The third factor is government regulation that further limits competition and make medical care expensive.
For example, certification of need(com) laws “requires providers to first seek permission before they may expand their practice or purchase new devices or technologies” (“how to make healthcare unaffordable and inaccessible”). COM is estimated to drive up the cost of healthcare in the state of North Carolina 200 dollars per capita, the state of Georgia an extra 187 dollars per capita, and D.C an extra 459 dollars per capita.
Another regulation that limits the supply of medical care providers are scope of practice laws. These laws constrain many medical tasks to the more costly physicians whereas the cheaper nurses and nurse practitioner can perform many of these tasks.
The purpose of adding these laws is to ensure quality to care but they seem to be more about driving up the costs. For example, allowing physicians assistants and nursing practitioners to prescribe drugs reduces medical costs between 11.8 and 14.4 percent (“Healthcare License Turf Wars”, Timmons).
The Food and Drug Administration
The final example of restrictive government practices I will mention is the FDA.
The FDA helps to drastically cut pharmaceutical competition through a very strict and lengthy approval process. On average it takes a drug 12 years to go from experimental to on the shelf. To make matters worse only 5 in 5000 drugs actually make it to human testing.
Drawbacks of Single-Payer Health Care
Now that I have showed some of the reasons for medicine being so expensive I will show some of the pitfalls of single payer healthcare. Nationalized healthcare sounds good on the surface but there is a good reason why most of the first world don’t use such a system.
Wait Times
The largest and perhaps most pressing issue with a single payer system is the longer wait times for surgery and to see a specialist. For example, in Canada less than 40 percent of Canadians are able to see a specialist within 4 weeks of their referral compared to 70 percent of Americans. Similarly, after being advised that they need a procedure done only 35 percent of Canadians had their surgery within a month compared to 61 percent of Americans (“America outperforms Canadians in Surgery Wait Times”).
Hospital Crowding
The second major problem that a single payer system can cause is overcrowding of hospitals. During the winter of 2017 in the UK 9 out of 10 hospitals experience over 85 percent occupancy. This was due in part to the how long it took to discharge patients.
Government Control of Decisions
The third and probably the scariest issue of a single payer system is that the government is largely in charge over whether you can receive a treatment or not. Journalist/nightclub owner/ tv presenter Tony Wilson learned this hard way when the NHS refused to pay for an expensive cancer treatment. “I’ve never paid for private healthcare because I’m a socialist. Now I find you can get a tummy tuck and cosmetic surgery but not the drugs I need to stay alive. It is a scandal”, Tony explained before he died (“myth free market healthcare”). A more tragic example of this is the death of Alfie Evans. The NHS in the UK decided to pull the plug on his life support. What makes it more horrifying is that the Vatican was willing to accept him for continued treatment but the UK courts blocked him from traveling and thus surrendered him to death.
Free Market Solutions
Healthcare can be cheapened and improved in quality by taking a more free market based approach.
This can largely be done by rolling back the many rules and regulations the AMA and big pharma lobbyist use to limit competition and ensure their pay day. Many of these regulations include the various Scope of Work laws and necessary mandates that insurance companies are required to have. These rollbacks would boost the number of healthcare providers and create more competition between providers.
Naysayers such as Dr. Roy Benaroch, believe that such policies will do the opposite and merely keep the price up but facts show the opposite. One such surgery that has gotten cheaper overtime is LASIK eye surgery. LASIK eye surgery is not covered by insurance and thus is subjected to market forces.
Where as other medicine saw a rise in price LASIK saw a drop in price from $8,000 in 1997 to $3,800 in 2012 (“ To Lower Health Care Costs, Try Freedom”).
Most cosmetic surgeries also face a drop in price due to them not being covered by insurance. Examples of these are botox, laser hair removal, and chemical peel which had their nominal price drop by 23.6% , 31.2% , and 30.1% ( “ What economic lessons about health care can we learn from the market for cosmetic procedures? , Perry).
If the whole of medicine were treated like this then we can expect the price of healthcare to drop tremendously as providers will have to compete more for customers. A market driven approach will also prevent the overcrowding seen in UK hospitals as it will ensure the proper allocation of resources through supply and demand.
Since this is an article on an obscure blog this is about as much as I will write. Hopefully this will help everyone on here think about a more market based approach to help. Cheers
Sources
https://fee.org/articles/why-the-uk-suddenly-is-suffering-from-a-physician-shortage/
https://www.acton.org/publications/transatlantic/2017/02/08/socialized-medicine-created-humanitarian-crisis-nhs
https://www.theguardian.com/society/2018/sep/11/nhs-suffering-worst-ever-staff-cash-crisis-figures-show
https://www.dailymail.co.uk/health/article-7087309/Record-138-surgeries-closed-year-GPs-early-retirement-change-career.html
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