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August 18, 2009

FLASHPOINT: Cure for the health care system: More capitalism

Those who favor nationalized health care insist capitalism has failed us (in this area) as costs continue to climb and 45 million Americans remain uninsured. Those on the other side of the debate note that there hasn’t been a free market approach to U.S. health care in nearly 50 years, due to Medicare. Moreover, they claim it’s no coincidence that medical costs began rising shortly after Medicare was instituted.

Medicare proponents insist that skyrocketing costs are not due to the nature of the Medicare program itself, but rather from the continuing sharp rise in health care costs throughout the U.S. system. Admittedly, the cost of modern technology plays a major role. In 1953, when I was born, the largest expense for most hospitals was linen.

Concerning the alleged 45 million uninsured: Mark Steyn notes that one-fifth have access to medical coverage (Medicaid) but haven’t enrolled; one-fifth aren’t Americans; two-fifths are young, mobile and roughly 25 years of age (read: immortal); the remaining fifth are wealthier than the insured population. Steyn cites a 2006 Census Bureau report indicating that 19 percent of the uninsured have household incomes over $75,000. He thinks the wealthy have been “fleeing insurance” as they seek to make medical procedures a normal market transaction.

To that point, analysts agree that prices won’t moderate until third-party-payers (whether government or private) are removed from the equation. Unless Americans begin paying for their medical care out of their own pockets prices will continue to skyrocket. Thus, the growing popularity of health savings accounts (HSAs) which allow individuals to negotiate prices with their providers.

One sector of U.S. medicine where capitalism thrives is cosmetic surgery. (Lasik eye surgery being a good example.) Even as the technology increases, prices continue to plummet. The reason for this is that there is no third-party-payer. Consumers shop for the best price because they are writing the check. As a result, fee competition among doctors is fierce.

Regina Herzlinger suggests we change “the income-tax system so that employed enrollees understand that their income funds the purchase of health benefits. The most direct way would be to make the money spent on health insurance available as cash, tax free, to employees. For example, my employer, Harvard University, could offer me a tax-free raise for the $15,000 of my income that it currently spends to purchase my health insurance. As I would, many of Harvard’s employees would opt to take the money and buy their own insurance, helping to create a genuine consumer-driven market.”

Herzlinger says, “a public payer can reduce costs only by rationing health care, especially to the sick, who account for most of the expenditures. Thus, the United Kingdom’s single-payer system features the lowest usage of cancer drugs among the Big 5 European economies, and commensurately low cancer-survival rates.”

To expand on Herzlinger’s point: What is the moral justification of having the state decide what medical care to ration? Such policies have an Orwellian flavor that many Americans find distasteful.

Some insist Medicare is more efficient than the private sector. “In comparison, Medicare seems efficient,” writes Herzlinger, “but only if some inconvenient truths are ignored. If Medicare followed private-sector accounting, its yearly expenses would increase by $1 trillion to reflect its $34 trillion in unfunded liabilities. And it must be taken into account that private insurance firms currently subsidize the discount of roughly 15 percent that the monopolistic Medicare extracts from its suppliers.”

Consider: Medicare faces $34 trillion in unfunded liabilities and President Obama wants to add 45 million people to the bankrupt system.

Obama’s health-care model is the Canadian system. Canada’s mortality rate for colon cancer is higher than the U.S. because the Canadian government refuses to purchase the two most effective drugs to treat the disease. The proportion of middle-aged Canadian women who have never had a mammogram is twice that of the U.S., and three times as many Canadian women have never had a Pap smear. John Goodman, of the National Center for Policy Analysis, suggests this lack of screening is partly responsible for the fact that the mortality rate in Canada is 25 percent higher for breast cancer.

Nor is it all about medicine. Industry experts note that about 70 percent of medical costs are “lifestyle driven.” The CDC reports that 26.1 percent of Americans are obese. It’s estimated that if we could get Americans back to 1991 weight levels we would save a trillion dollars. Physicians at the famed Cleveland Clinic draw a sharp distinction between “health care” and “medical care.” Health care is (your) responsibility, not your doctor’s.

Studies demonstrate that Mormons live about 10 years longer than the rest of us. Does Utah have better docs? No. The answer lies in the fact that Mormons embrace lifestyle choices that are less destructive than those chosen by the general population. As with so much in life, personal responsibility plays a major role in remaining healthy. Many readers are probably nodding in agreement … as they reach for another slice of extra-thick bacon.

Those advocating a public option point out that America’s health-care system ranks a dismal 37th, according to the World Health Organization.

Comparing the heterogeneous population of the U.S. with the homogeneous populations of European countries is an old canard and rarely yields useful data.

Utah compares favorably with any country one cares to cite. Whereas Texas, with its high minority population, tends to compare unfavorably. But these outcomes have little to do with the health care systems in the two states.

Infant mortality is another area in which the U.S. appears to be lagging (until one looks at how the data are gathered). U.S. doctors and hospitals do heroic work in saving very-low-birth-weight infants. While many nations make little or no attempt at saving such infants. They aren’t even recorded as “live born” and are not counted in infant mortality statistics. British guidelines advise against care for babies born before 22 weeks.

The fact that many women in the U.S. fail to avail themselves of prenatal care — even when it’s free — cannot be blamed on the fault of our health-care system.

While we might debate its affordability, there is no debating the fact that U.S. medicine is the best in the world. When American billionaires become seriously ill — as did Steve Jobs, earlier this year — they seek treatment (here).

Much is made of the fact that U.S. life expectancy is a bit shorter than that of other countries. But if you adjust for violent crime and automobile accidents Americans have the longest life expectancy.



— Reggie McConnell

Terre Haute

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