Have you ever wondered why health care costs are rising faster than inflation? It’s not because doctors or insurance companies are “greedy”. It’s because the government is not allowing the free market to function.
Health insurance, like any other insurance, is designed for major emergencies. You buy car insurance in case your’e in an accident, and you buy flood insurance in case your home is damaged in a flood. Similarly, you buy health insurance for major medical emergencies, like cancer, heart attacks, or serious injuries.
Insurance of any kind is not designed to cover day to day, routine expenses. The model just doesn’t work. You don’t use car insurance to cover oil changes and trips to the gas station. If you did you would have to pay sky-high monthly premiums that wouldn’t make any financial sense.
The reason health care is so expensive is because government requires routine medical procedures to be covered by health insurance. Insurance companies realize that they will lose money by paying for routine care, so they pass the cost on doctors. Doctors are forced to provide health care services for free and then chase down the insurance company for payment. This can take several months, and sometimes the insurance company decides not to pay at all. This system makes providing health care to patients with insurance a money-losing deal, so doctors will often over-charge patients without insurance to make up the difference. The result: exploding health care costs.
A common argument made by supporters of universal health insurance coverage is that health care is essential to human life, and thus too important to be left to the free market. However, the fact that health care is so important is also the reason why it should be left to the market, free of government intervention.
For example, food is even more essential to human life than health care, and the free market does a fine job of making food affordable and accessible for everyone. The market does such a good job that in first-world countries the biggest health problem we have is obesity, not famine. Consumers can buy everything from cheap fast food to expensive gourmet food. There are even soup kitchens and food drives for the homeless who can’t afford any food. Imagine if we had government mandated food insurance? Everyone would buy steaks, and the cost of food would skyrocket.
To really lower costs and expand accessibility, the government should deregulate the health care industry and allow the free market to do its job. If the competitive forces of the market are allowed to work, health care costs will go down. We’ve already seen it happen in areas not covered by health insurance, such as LASIK. Every year costs come down and LASIK becomes more affordable for everyone.
We don’t have to confine ourselves to the health care industry to see the cost-lowering effects of free markets. Take a look at cell phones and TV’s. When these products were first introduced, they were expensive and not everyone could afford them. Now, through the competitive forces of the free market, the average “poor” person in America has both. Why would it be any different for health care?
If you agree with my arguments and would like to sign a petition to repeal ObamaCare, click here.
I welcome rational arguments in the comments.
Fantastic article Morgan, couldn’t agree with you more.
Fantastic post Morgan, couldn’t agree with your stance more.
Thanks Prath!
So, are you advocating getting rid of health care insurance companies so that we can march forward to a free market economy? However, I’m thinking that the government should still regulate health care providers (e.g. doctors, hospitals). I should know – I come from a country with no health care insurance companies. And we all have access to both affordable and expensive health care services.
Again, the question is why do health insurance companies exist? Because health care is expensive. Why is health care expensive? If we can answer this one, we just may be getting somewhere….
If by “getting rid” of health care insurance companies you mean the government seizing their assets and firing all the employees, no that is not what I would advocate. Health insurance companies would play a vital role in a free market for health care – covering major medical emergencies like cancer, heart attack, accidents, etc. That’s what insurance is designed for.
Health care is expensive for many reasons, but the root cause is that customers don’t know how much their health care costs. Since there are no prices (the tab is picked up by the tax-payer) customers can’t shop around, and if customers can’t shop around, there is no incentive for companies to lower costs. And the reason customers don’t know how much their health care costs is because the government has mandated that insurance cover everything, giving the illusion that health care is a “free lunch.” Times Magazine had a good article about the lack or prices, and other reasons why health care is expensive here: http://money.blogs.time.com/2010/02/25/why-is-health-care-so-expensive-let-us-count-the-conspirators/
P.S. What kind of regulations would you like the government to maintain on health care providers, and why?