Debunking myths of America’s health care system
Published: Tuesday, June 21, 2011
Updated: Tuesday, June 21, 2011 22:06
In an era where health care prices are outpacing inflation, the implementation of serious, radical and permanent changes in American health policy is essential.
At this point, health care is the topic about which I have written the most.
There are few other industries as important as health care, as it has literally everything to do with human livelihood and well-being. To even the most casual observer, serious problems permeate through the industry as a whole.
Most people blame high health care prices on the greedy, capitalist system they perceive is present in America and compare it to the much more progressive systems of Europe and Canada as prime examples. To many Americans, the United States is simply behind the curve.
If you're in this group of Americans, who typically prescribe more government for an ailing industry, you've misdiagnosed the disease.
Snarky puns aside, it truly isn't the free market system which makes the health care industry so pricey.
The American health care industry, by many measures, is even more controlled by the government than the European and Canadian counterparts so commonly pointed to as perfect examples, and statistical trends back this information up.
As government spending has increased in health care, so too has health care prices.
In the early 90s the Hoover Institute of Stanford University published an essay by Milton Friedman estimated that only 10 percent of hospitals were actually private and for-profit enterprises.
The level of regulations, bureaucracy, mandates and spending present in the American system exceeds those of other countries. Most of these governmental interventions raise prices much higher than they otherwise would be in the market.
Competition-murdering regulations such as "Certificate of Need" regulations act as barriers of entry for prospective hospitals. These regulations, called certificate of notice regulations permit regional monopolies by hospitals by giving those hospitals the authority to determine whether the area in question is in "need" of another hospital.
Price control regulations have been the answer for many socialized-care nations. These regulations will always result in unintended consequences, however. Price controls always have a negative impact on an economy. Set the price too low, and you have a shortage; set it too high, and you have a surplus. The best way to allocate resources is to allow consumers to tell businesses what, where and when they want goods and this occurs through a natural market process called prices.
Regulations extend to the realm of medicine. The Food and Drug Administration (FDA) delays life saving drugs from entering the market for years on end at virtually no cost to themselves.
In the name of public safety, these drugs are kept from entering the market and getting into the hands of needy consumers. Studies have suggested that the number of lives lost while extensive clinical tests are being undertaken and evaluated far outweighs the number of lives that would have been lost from taking harmful medicines not having been delayed through by the same process.
Furthermore, intellectual property laws have essentially allowed a conglomerate of pharmaceutical companies to monopolize the industry while giving zero economic benefit for either consumers or producers; only the select few lucky enough to obtain patents on the medications.
Bureaucracies are the exact antithesis of efficiency. Threatened with defunding and budgetary losses, these departments must spend their entire annual budget, prompting further investment by the government and higher taxes for the average citizenry.
Mandates lobbied by companies who provide hair plug implants and massage therapy to be covered, by law, by health insurance companies are ever -present. Rhode Island has at least 70 such mandates, Minnesota has at least 68.
Mandates such as these spark overspending in the health care industry and are compounded by federal interventions which incentivize employer-based care through subsidy programs. Obamacare adds to the problem significantly.
The worst part is, these mandates don't even make the individuals more healthy. According to the RAND Health Insurance experiment, a social experiment started in 1971 by the Department of Health and Human Services that gave differing levels of health insurance coverage determined that while spending on health increased as the level of coverage increased, health status and outcomes did not improve.
It concluded that having a higher number of benefits would not improve consumer health on average and further debunked the myth that consumers can't be prudent when it comes to choosing medical goods and services.
As I've shown, there are many myths about the American health care system that need debunking. A few that I've talked about are the level of perceived freedom in the American health care and health insurance industries, the effects some of the regulations, bureaucracies and mandates have on the industry, monopolies created by intellectual property laws and the FDA's effect on medicine prices.
America needs to make health care affordable and the only legitimate way of going about that is abolishing the institutions that make health care so unaffordable to begin with. A free market in health care is not one which takes advantage of the infirm but rather one that enables them.