Monday, May 07, 2007

Do We Really Need Universal Health Care by Akindele Akinyemi

Concerned about rising costs the number of people in Michigan without medical insurance, nearly everyone is these days about a day goes by without a presidential or a magazine calling for something drastic to be done. Each advocate maintains that their plan will bring skyrocketing costs under control, make health care accessible to low-income people, and bring health insurance within the reach of the thousands of people in Michigan who currently do without it.

But people here in urban communities in Michigan are being handed a choice between full government control of the medical insurance industry and mandatory provision of insurance by the nation's employers, with the government as insurer of last resort.

There is a real alternative solution that relies on competition in the open marketplace. That solution recognizes that the undesirable aspects of the current system are not the result of the free market, but rather are the outcome of decades of governmental intervention in the health-care industry. Elimination of that intervention would shift power and responsibility from impersonal bureaucracies to consumers. The resulting free market, characterized by prudent consumers spending their own money, would control costs and let the American people have the kind of medical care they want.

Those who call for greater governmental involvement are fond of comparing how much Americans spend on health care with how much is spent in other countries. For example, in 1999 the average American spent about 40 percent more on health care than his Canadian counterpart: $2,354 versus $1,683. The West Germans, French, Japanese, and Britons spent even less. The 12 percent of gross domestic product that the United States devoted to health care in 1991 ($650 billion) is double the portion so devoted in Great Britain. By the year 2000, total spending is expected to reach $1 trillion or 15 percent of gross domestic product. Costs are increasing at 15 percent a year, much more than the general rate of price increases. The cost of employer-provided medical insurance increased 21.6 percent from 1989 to 1990.

But these comparisons are misleading for many reasons. For example, the demographics of the countries are different. A younger population, such as Canada's, would be expected to spend less on medical care than an older population, such as that in the United States. Moreover, the United States is the richest country in the world, and more affluent societies tend to spend more on health care than less affluent ones. There are many other reasons why those cost comparisons are deceptive.
The government pays for about half the health care purchased in this country, through the national health insurance for the poor and elderly known as Medicaid and Medicare. Both State and Federal governments have spent well over $300 billion on health care. The costs of these programs have exploded over the years. Since Medicaid and Medicare patients pay little or nothing for health care, they demand more of it than they would otherwise. They have no need to shop for the best value or to be prudent about elective procedures.
The call for universal health care would not be the solution either. The more we look into so-called universal health care we see how this is no good. Many Democrats, as well as a coalition of Big Business and Big Labor, like to engage in what is known as "play or pay." Under this plan, the federal government would require all employers to provide health insurance to their workers or to pay a new payroll tax (over 7 percent), the revenue from which would provide insurance. The supporters of "play or pay" also favor regulations on insurance premiums and various methods of cost containment.
Moreover, as the price of insurance continued to rise, the system would create incentives for small businesses to pay into the government fund, moving us closer to national health insurance. And when "play or pay" failed to improve the health-care system, the statistics would inevitably say, "Private enterprise was given a chance and has failed; now it's time for the government to take over."
The call for a Canadian-type system, which would make the government the sole health insurer in the land would be disastrous. In Canada, bureaucratic planning has created shortages, rationing, and long lines for service. For example, Canada has 11 heart surgery facilities, one for every 2.3 million people. In the United States there are 793 facilities, one for every 300,000. The wait for a coronary-bypass operation can last from four months to a year in Canada. Bureaucratic strangulation has also prompted a significant number of doctors to emigrate or take early retirement. The system has failed to even control health-care costs; the growth in spending for Canada and the United States is almost the same.
The Republicans offer no fundamental change in the current system, merely some crumbs to low-income people to buy insurance as well as a cap on malpractice awards.
If the government did not dominate the health-care industry through its insurance programs, costs would fall to the reasonable levels we would expect of a free market. That would enable even the lowest-income people to buy medical care and health insurance.

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