The ongoing debate over healthcare and medical insurance has taken a new turn, now that we have a new US administration that has pledged to repeal the existing Federal ‘Obamacare’ and ‘replace’ it with something else. In the ensuing debate over the nuts and bolts of Federal and State policy, one overriding value is liable to get lost, and that is the foundational principle of the United States: liberty, the freedom and dignity of the individual. Is it possible to reconcile this value with the need to make sure that some 350 million citizens of the Republic have access to medical services, and to medical insurance (a term that would have been foreign to our Founders)? I think that it is possible; what follows are some of the principles that will help us to work through the complex issues of healthcare while maintaining our focus on the freedom of the individual. Those who want a quick summary may skip down to Section 12. But please come back and read the whole thing.
1. Insurance is Not Healthcare
Health insurance and medical care are not the same thing. The idea of an insurance plan covering routine and minor medical treatment is like having your homeowner’s insurance pay for repairing a leaky faucet. The confusion came about with the growth in the mid-twentieth century of prepaid ‘group’ health plans that included routine care in addition to insurance against serious or catastrophic events.
My parents in the Washington, DC area in the late ’40s belonged to such an organization, called appropriately Group Health, Inc. I think at the time it was a relatively rare setup, but the idea spread over the succeeding decades, to the point where giant insurance companies now employ armies of clerks and computers trying to keep track of every pill and preventive service their clients receive. You can see right away this is bound to be a system that only a dedicated bureaucrat could love. In point of fact, it has proved to be such a huge burden on private doctors in small, local offices, that they are all now on the verge of giving up and joining large groups that can (more or less) afford the staff to process the constant stream of real or electronic documentation, without which no one in the group can get paid. Or they ‘go concierge’, essentially forming a club of well-to-do clients willing to pay membership fees for personal service.
2. Third Parties Destroy the Free Market
The inevitable consequence of turning over all the payment for medical-care transactions to third parties is the loss of freedom. Health care, like auto repair, or home repair, or computer repair, is a service, and like any other service is best managed between provider and consumer, in the free market. Free-market competition keeps prices reasonable, and allows consumers to shop for quality. Anything a third party pays for will require a multiplicity of rules and regulations, and specialized managers and clerks to administer them. The third party inevitably inserts itself into the management of patient care, not only rejecting treatment options, but requiring many the patient never wanted and the physician sees as unnecessary.
It has now become routine for doctors proposing tests or a course of treatment to employ staff who must contact the patient’s insurance company and obtain ‘pre-authorization’ before they can proceed. Not only does this delay things; all of these people working in the doctor’s offices and the insurance companies, all of them have homes and families; they have to be paid. In addition to driving a wedge between the doctor and the patient, how could it not drive up costs?
Some years ago, Medicare (the biggest third-party of them all) was said to have 40,000 pages of regulations. Imagine, as some argue we must have, ‘a Medicare for all’!
3. Expertise Is Not an Impediment
It has been argued that because medicine is such an arcane and difficult subject, generally imponderable to the layman, that a free market in healthcare is not possible. Between different doctors, or different courses of treatment, how can the patient make an informed decision? The same argument, of course, could be made in any other service industry, like auto repair, or investment advice, or for that matter veterinary medicine. The evident fallacies are that John Q. Public is incapable of learning enough to make an informed decision, that medical professionals are incapable of (or resistant to) explaining things clearly, and that patients will never compare notes. These all might have been true to a degree, but given the incentives (i.e. a free market), you’ll find consumer groups sprouting all over like wild flowers in the spring, and the Internet will provide the fertile ground. It’s already happening; just go to WebMD.com, and dozens of sites devoted to specific ailments and conditions. Nothing interests people so much as their own health, and rare is the patient who wants to know less.