By John Lumbard.
Since 1994 Jeffrey Flier, MD, now Dean of the Harvard Medical School, has been offering a plan for health care reform that would rein in the galloping cost increases that threaten to bankrupt our government and make health care unaffordable to the middle class.
His concept—universal health care and a competitive market—would start with a “high deductible” insurance policy for every citizen that would serve as an inexpensive way to ensure that no one is bankrupted by illness. Costs would be controlled by insisting that citizens shop for their care, paying for a portion of every surgical procedure with funds drawn from tax-free savings accounts similar to an IRA.
For the first time consumers would have some skin in the game. When you sign up for knee surgery you never ask the price, so you shouldn’t be surprised to see that the cost has skyrocketed. But until recently LASIK eye surgery wasn’t covered by insurance, so patients shopped for price as well as quality and success rates. Prices responded by dropping dramatically even as outcomes improved—and surgeons now cure a much broader range of eye conditions.
When you buy a camera, a computer, or cosmetic surgery you do your homework, read all the reviews, and then go shopping armed with information that allows you to demand quality and a low price. Why should a knee operation be any different?
Instead you pick a doctor, grant him a monopoly, and tell your health insurance company to pay the bills. We, all of us, like the illusion that health care is free. It isn’t. The “single payer” nations keep costs down by rationing, micromanaging, and forcing you to wait 6 months to get an MRI; but our own politicians have proven that they can’t control costs in this manner. It’s just too easy to buy re-election by offering bigger and better benefits than before.
It makes more sense to emulate the countries that allow competition to flourish, and have begun to lure patients from those single-payer nations by offering excellent care at a terrific price. Want that MRI now instead of next January? Each year more than a million medical tourists visit Singapore and Thailand alone—for complex surgery as well as for MRIs—and the number is growing all the time.
Forcing consumers to shop for care means that we’d have to ban “why not it’s free!” insurance plans that allow patients to buy whatever they want, with little out-of-pocket cost. That would be intrusive—even more intrusive than the new ban on incandescent light bulbs—but the Medicare trustees just announced that Medicare will be bankrupt in 13 years. We’ll need to come up with $25 trillion to cover future expected shortfalls. And Medicaid is busting state budgets all over the nation, despite the fact that the federal government kicks in $277 billion a year. Add in health care for federal, state, and local workers, and programs for children, and you find that government at all levels has been paying for 55% of all health care in the nation.
A good part of that money was borrowed from the Chinese, but in the future it’s going to have to come from the taxpayers. Health care is bursting household budgets as well, but we’re not going to be able to sustain anything like the current system without a huge tax increase on most workers. “Most workers” would surely include the median household, which earns a bit less than $50,000 a year.
If your first thought is that a household making just $50,000 is one that needs help paying for health care, then you’ve arrived at the nub of the problem. How can we possibly afford to subsidize the average household?
Let’s close with a positive example of government action. In 1978 Congress deregulated the airlines, shrugging off the fears of those who thought that airplanes would collide and poor maintenance standards would cause them to fall from the sky.
None of these things happened. Air travel continued to be extremely safe, and airfares declined an inflation-adjusted 30% in the next 12 years. Competition seemed like a dangerous idea, but in fact it allowed tens of millions of working-class Americans to travel the world, knees pressed hard against the seat in front of them. The same will be true in medical care, when we finally get past the prejudices and fears that have made a royal mess of one of our most important industries.