Government Health Care vs. Free Market Health Care
Josh Harding
August 17, 2009
One of the central battles in the health care debate is whether health care is best left to patients and doctors making decisions in a free market, or whether government should step in and make decisions on payments and procedures. Many disparage the idea of health care decisions being made in a free market. Apparently the only way to make health care efficient and affordable is through government involvement. The liberal argument for "universal" health care states that we've had government involvement in health care for years, so don't worry. Besides, government does such a great job making sure Medicare, Medicaid, and VA hospitals run efficiently.
Oh really??
One thing about this assertion is correct: government has been involved in health care for years. So what sort of bang have we gotten for our buck?
Medicare: Undoubtedly, Medicare recipients love their coverage. Afterall, who doesn't receiving virtually free health care? However, since Medicare is funded not through voluntary payments but through coercion (taxation, and guaranteed government sanctions for anyone who doesn't pay), there is very little incentive to run the program efficiently. As John Stossel reports, the lack of oversight has created $68 billion annually in fraud, approximately $133 billion spent annually on unnecessary procedures, and $34 trillion in unfunded liabilities. Medicare spending from 1965-90 was underestimated by 165%. Thanks in part to this waste (although the main reason is discussed below), the program will be bankrupt by 2019.
So far, you don't hear too many horror stories of rationing health care like you do with other single-payer programs such as Britain's NHS (which is not to say rationing hasn't started under Medicare already; recently Medicareīs central planners decided to stop paying for virtual colonoscopies, a key procedure in detecting colon cancer). One reason for this is because, historically, the worker-to-beneficiary ratio has been to Medicare's benefit, with approximately 4 workers for every 1 beneficiary. That ratio will shrink to 2.3 to 1 by 2030. In order for Medicare to continue with that kind of ratio, punitive tax increases will have to be imposed, benefits will have to be cut, and seniors will have to absorb more out-of-pocket expenses.
Medicaid: Simply put, Medicaid delivers a poor quality of health care to its recipients. According to the Heritage Foundation, the emergency department visit rate for Medicaid and SCHIP patients is 80.3 visits per 100 persons (higher than the rate for those in any other payer group) because physicians are less willing to accept Medicaid patients due to low reimbursement rates. Heritage also notes that Medicaid patients with non-ST segment elevation acute coronary syndromes (NSTSE ACS), a form of heart attack, were less likely to receive evidence-based therapies and had worse outcomes (including increased mortality rates) than other patients.
No matter how much government spends on health care, if doctors cannot be fully reimbursed, the quantity of health care becomes scarce. These problems will become more troublesome should the "public option" become the primary form of insurance.
VA Hospitals: The New York Times uncovers some serious problems coming from a VA hospital in Philadelphia. According to their report, peer review did not exist at this hospital's cancer unit. As a result, the hospital botched 92 out of 116 cancer treatments. And kept quiet about their mistakes. The article describes the plight of Ricardo Flippin, bedridden for six months from rectal pain thanks to a botched treatment, resulting in him losing his job at a church.
This hospital is not the only problem child. The West Los Angeles VA Medical Center removed the wrong testicle of an Air Force veteran during a surgery. And just like other government-run health programs, VA hospitals find they have to ration care as well, as they denied enrollment to 250,000 veterans to cut costs.
Despite strong evidence pointing to the deficiencies endemic in government-run health care programs, left-wing advocates will always condemn the free market. One such advocate recently wrote in an article on this website "when will it be understood that unregulated, for-profit markets just donīt work for public health care?" His answer: "They never have, and they never will."
But he also states in his article "the government is already deeply involved in health care and has been for decades." That statement does not just apply to programs like Medicare. Government has been deeply involved in shaping the health insurance market for years. Thanks to government involvement dating back to the New Deal, third-party payer health insurance gained its stranglehold on the insurance market. When you gain your initial market share through government manipulations and maintain it through tax code distortions and mandates, your industry is not a product of a true free market.
Because government has been involved in health care for so long, it is not easy to find examples of true free market health care in action, but some exist.
Dr. Robert Berry of Tennessee does not accept insurance (public or private), and as a result of being freed from bureaucratic red tape, he is able to afford his patients quality treatment for affordable prices.
Lasik eye surgery is another field where insurance (private and public) is minimal, and consumers actually *GASP* shop and compare prices! The result: the price of Lasik surgery has gone down 30%.
Thatīs the funny thing about the free market. When it's tried, it works!!
Sources:
http://www.everydayhealth.com/blog/zimney-health-and-medical-news-you-can-use/va-hospital-problems/
http://blogs.abcnews.com/johnstossel/2009/06/medicares-efficiency-.html
http://online.wsj.com/article/SB124268737705832167.html
http://www.heritage.org/Research/HealthCare/wm1402.cfm
http://www.nytimes.com/2009/06/21/health/21radiation.html?_r=3
http://www.cato.org/pub_display.php?pub_id=8138
http://www.lewrockwell.com/paul/paul175.html
http://abcnews.go.com/2020/Stossel/story?id=8026098&page=1
http://www.americanchronicle.com/articles/view/112641
Oh really??
One thing about this assertion is correct: government has been involved in health care for years. So what sort of bang have we gotten for our buck?
Medicare: Undoubtedly, Medicare recipients love their coverage. Afterall, who doesn't receiving virtually free health care? However, since Medicare is funded not through voluntary payments but through coercion (taxation, and guaranteed government sanctions for anyone who doesn't pay), there is very little incentive to run the program efficiently. As John Stossel reports, the lack of oversight has created $68 billion annually in fraud, approximately $133 billion spent annually on unnecessary procedures, and $34 trillion in unfunded liabilities. Medicare spending from 1965-90 was underestimated by 165%. Thanks in part to this waste (although the main reason is discussed below), the program will be bankrupt by 2019.
So far, you don't hear too many horror stories of rationing health care like you do with other single-payer programs such as Britain's NHS (which is not to say rationing hasn't started under Medicare already; recently Medicareīs central planners decided to stop paying for virtual colonoscopies, a key procedure in detecting colon cancer). One reason for this is because, historically, the worker-to-beneficiary ratio has been to Medicare's benefit, with approximately 4 workers for every 1 beneficiary. That ratio will shrink to 2.3 to 1 by 2030. In order for Medicare to continue with that kind of ratio, punitive tax increases will have to be imposed, benefits will have to be cut, and seniors will have to absorb more out-of-pocket expenses.
Medicaid: Simply put, Medicaid delivers a poor quality of health care to its recipients. According to the Heritage Foundation, the emergency department visit rate for Medicaid and SCHIP patients is 80.3 visits per 100 persons (higher than the rate for those in any other payer group) because physicians are less willing to accept Medicaid patients due to low reimbursement rates. Heritage also notes that Medicaid patients with non-ST segment elevation acute coronary syndromes (NSTSE ACS), a form of heart attack, were less likely to receive evidence-based therapies and had worse outcomes (including increased mortality rates) than other patients.
No matter how much government spends on health care, if doctors cannot be fully reimbursed, the quantity of health care becomes scarce. These problems will become more troublesome should the "public option" become the primary form of insurance.
VA Hospitals: The New York Times uncovers some serious problems coming from a VA hospital in Philadelphia. According to their report, peer review did not exist at this hospital's cancer unit. As a result, the hospital botched 92 out of 116 cancer treatments. And kept quiet about their mistakes. The article describes the plight of Ricardo Flippin, bedridden for six months from rectal pain thanks to a botched treatment, resulting in him losing his job at a church.
This hospital is not the only problem child. The West Los Angeles VA Medical Center removed the wrong testicle of an Air Force veteran during a surgery. And just like other government-run health programs, VA hospitals find they have to ration care as well, as they denied enrollment to 250,000 veterans to cut costs.
Despite strong evidence pointing to the deficiencies endemic in government-run health care programs, left-wing advocates will always condemn the free market. One such advocate recently wrote in an article on this website "when will it be understood that unregulated, for-profit markets just donīt work for public health care?" His answer: "They never have, and they never will."
But he also states in his article "the government is already deeply involved in health care and has been for decades." That statement does not just apply to programs like Medicare. Government has been deeply involved in shaping the health insurance market for years. Thanks to government involvement dating back to the New Deal, third-party payer health insurance gained its stranglehold on the insurance market. When you gain your initial market share through government manipulations and maintain it through tax code distortions and mandates, your industry is not a product of a true free market.
Because government has been involved in health care for so long, it is not easy to find examples of true free market health care in action, but some exist.
Dr. Robert Berry of Tennessee does not accept insurance (public or private), and as a result of being freed from bureaucratic red tape, he is able to afford his patients quality treatment for affordable prices.
Lasik eye surgery is another field where insurance (private and public) is minimal, and consumers actually *GASP* shop and compare prices! The result: the price of Lasik surgery has gone down 30%.
Thatīs the funny thing about the free market. When it's tried, it works!!
Sources:
http://www.everydayhealth.com/blog/zimney-health-and-medical-news-you-can-use/va-hospital-problems/
http://blogs.abcnews.com/johnstossel/2009/06/medicares-efficiency-.html
http://online.wsj.com/article/SB124268737705832167.html
http://www.heritage.org/Research/HealthCare/wm1402.cfm
http://www.nytimes.com/2009/06/21/health/21radiation.html?_r=3
http://www.cato.org/pub_display.php?pub_id=8138
http://www.lewrockwell.com/paul/paul175.html
http://abcnews.go.com/2020/Stossel/story?id=8026098&page=1
http://www.americanchronicle.com/articles/view/112641
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