How we pay for healthcare matters
Sen. Bernie Sanders’s policy plans will cost an estimated $18 trillion over ten years, according to a Wall Street Journal analysis. His single-payer healthcare system alone would cost $15 trillion.
Sanders’s supporters say not to worry: Americans already spend trillions of dollars each year on health care, considering both our public and private spending. A single-payer system, they argue, would relieve Americans of private health costs and give everyone equal access to government-funded care.
Americans should reject this argument. How we pay for healthcare—whether we pay out of our own pockets or have government use our taxes to cover the tab—is extremely important. If we want a less costly and more user-friendly healthcare system, we should head in the opposite direction of Sen. Sanders’s proposal, toward less government involvement, not more. Only individual responsibility and market competition will truly improve how our healthcare system works.
It’s understandable why so many people are frustrated with today’s healthcare payment system. ObamaCare could accurately be described as crony capitalism: It uses big government to support big health insurance businesses by mandating that everyone must buy comprehensive insurance coverage and subsidizing the related costs with taxpayer dollars.
As a result of ObamaCare regulations and other bad healthcare policies, Americans don’t have a meaningful choice in health insurance plans, and their insurance plans often dictate which providers they can see and what treatments are covered.
This insurance-centric approach means that most Americans overpay for insurance and would be better off paying individually. A helpful analogy compares this payment system to a group lunch: If everyone is splitting the tab equally, people will be less careful about what they order and how much it costs. This kind of payment system encourages overconsumption and overspending.
There is, of course, a place for health insurance. Like other types of insurance, it should be used to protect us from catastrophic costs that threaten our assets. If someone is in a terrible accident or faces a terrible disease, he or she ought to insure against the related costs. But coverage for a regular check-up makes little sense.
If instead Americans paid for routine health care without a third-party (insurance company or the government), we would see enormous changes. Providers would have to compete, meaning they’d have to share pricing information with patients upfront. And patients would not be tethered by insurance-dictated networks, so they could select providers that provide the best value.
Price competition means lower prices. Lower prices mean greater access.
Sadly, we seem so far from a commonsense system like this. Today, government-supported (and government-mandated) insurance is at the heart of our system. It’s no wonder that so many Americans feel powerless, and therefore might be willing to give up what little choice they have in favor of socialized medicine.
But the solution to crony capitalism isn’t socialism: it’s free markets.
Margaret Thatcher famously said that the problem with socialism is that eventually you run out of other people’s money. This is true of socialized medicine, and even Bernie Sanders could not come up with enough tax increases to cover the cost of his healthcare proposal.
But socialism costs far more than dollars. There’s a cost in the form of lost choice.
In any competitive market, when consumers are unhappy with the goods or services they receive, they can take their business elsewhere. If Americans do not like their insurance company or healthcare provider, they should be free to go to a competing firm that offers something meaningfully different, not another version of an overregulated government standard.
On the other hand, when the government is the sole provider of a good or service, consumers certainly do not have this choice. They must accept what the government is offering and settle for the level of customer care we associate with the DMV.
There’s a basic principle that he who pays the bill holds the control. Government-controlled health care in other nations has resulted in wait lists, rationing, and poor outcomes. And patients in these nations have little recourse.
Americans should resist turning over this kind of control to the government. It may seem that ObamaCare has put us on a slippery slope toward government-run health care, but rather than continuing on this path, we should reverse course and put control in the hands of individual patients.
Manning is director of health policy at the Independent Women’s Forum.