Our Titanic Healthcare System Needs Real Reform, Not Deck Chair Shuffling
June 28, 2019
On June 26th and June 27th, millions of viewers were treated to a hodgepodge of “This American Life,” Rosetta Stone, and Rat Race, as twenty Democratic primary presidential candidates in all jockeyed for public support. Issues such as healthcare got plenty of airtime from candidates such as Sen. Elizabeth Warren (D-MA), who argued for greater government meddling in the medical sector. Yet, none of the candidates explained how shifting funding and resources around would fix a deeply dysfunctional sector that clearly needs structural reforms instead of more money. Instead of simply rearranging deck chairs on the Titanic healthcare system, presidential hopefuls should focus on how to get more hospitals and doctors’ offices up and running to serve the needs of millions of Americans at lower, not higher, costs.
When asked about the feasibility of “Medicare for All,” Warren argued that only a lack of willpower prevents lawmakers from ushering in universal healthcare. The “lady with a plan” claimed, “there are a lot of politicians who say, ‘Oh it’s just not possible.’ What they’re really telling you is they just won’t fight for it. Healthcare is a basic human right and I’ll fight for basic rights.”
That, of course, doesn’t answer who is going to pay for such an enormous program. Respected organizations ranging from the Mercatus Center to the Congressional Budget Office find that this new entitlement would break the bank. So, regardless of the mathematical pyrotechnics used to justify “Medicare for All” and attempt to minimize its impact, the middle-class would inevitably have to pay higher taxes to reimburse (well-off) physicians for any new program expenses. Program backers, such as candidate Sen. Bernie Sanders (I-VT), usually admit that ordinary Americans would have to pay more money to Uncle Sam, but they also claim that they’d still save money from not having to pay private premiums. That dubious assertion neatly sidesteps the issue that Bernie’s plan would eliminate coverage that 80 percent of Americans are satisfied with.
Rather than debating who should pay for the exorbitantly high bills that the American medical system produces, candidates and policymakers should spend more time focusing on how to make prices lower. And, based on what we’ve seen from virtually every other sector of the economy, having a greater number of suppliers and allowing competition keeps prices in a downward spiral. That’s why the cost of everything from computing to airfare to (pet) healthcare has declined over the past few decades. Human healthcare needn’t be any different. But it is, because of federal and state laws that keep the supply of qualified professionals and institutions limited for consumers. Across the country, hospitals typically need “certificates of need” before building a new wing, buying new equipment, or offering new services. These Soviet-style documents must attest that every purchase or add-on is needed for their patients, but in practice restrict the care given to patients and drive up costs.
A 2018 report by the Department of Health and Human Services notes that these laws tend to “suppress supply, misallocate resources, and shield incumbent healthcare providers from competition from new entrants.” Meanwhile, onerous insurance mandates imposed by the federal government force patients to pay for services or products they likely don’t need, such as smoking cessation. Instead of allowing smokers themselves to shop around for devices such as e-cigarettes and nicotine patches, the federal government forces non-smokers to foot the bill via insurance and restricts access to vaping via Food and Drug Administration (FDA) regulation.
But, policymakers and presidential candidates seem to take it as a given that healthcare prices will never go down, and shifting costs around is the only “solution” to the affordability crisis. Healthcare can work like virtually any other sector of the economy, as long as government officials treat it like any other industry. At future presidential debates, candidates should ditch gimmicks and half-baked solutions such as “Medicare for All,” and embrace market reforms that drive down costs.
