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'45 Million
Americans' - Who Are These Guys? Part 3 Larry Elder Thursday, July 02, 2009 "President
Barack Obama says that he can pay for his goal to provide health care
insurance for every American without it. Why isn't that good enough for
you?" Elder: Yes, the
President says that he can "pay for" his goal of providing health
insurance for every American without it. Care to bet on that? When government
proposes a program, the ultimate price tag inevitably exceeds projections. In
"Why Government Doesn't Work," libertarian Harry Browne wrote:
"Most older people now find it harder to get adequate medical service.
Naturally, the government points to the higher costs and shortages as proof
that the elderly would be lost without Medicare -- and that government should
be even more deeply involved. When Medicare was set up in 1965, the
politicians projected its cost in 1990 to be $3 billion -- which is
equivalent to $12 billion when adjusted for inflation to 1990 dollars. The
actual cost in 1990 was $98 billion -- eight times as much." Congress, from
the outset, placed Medicare on autopilot because of a growing, aging and
longer-living elderly population. Congress, from time to time, attempts to
"rein in" increased costs by imposing fixed reimbursement
schedules. This simply creates an incentive on the part of doctors and
hospitals to schedule a lot of unnecessary tests or to "pingpong"
patients from specialist to specialist in order to evade the artificial
limits. This also forces doctors and hospitals to charge more from private
carriers to offset the low reimbursement rates provided by Medicare. Everybody gets
hurt -- the elderly because the medical profession becomes less efficient,
innovative and cost-effective, and the non-elderly because practitioners
charge them more to offset the lower reimbursement rates provided by the
government. "We need
to require all employers to provide health insurance." Elder: We end
up paying more, not less. During World War II, Congress imposed wage freezes.
Business people who wished to attract employees had little recourse but to
offer non-cash benefits. The government, recognizing business people's
"plight," allowed business to deduct the cost of health insurance
as a business expense. This put, for the first time, something between doctor
and patient, distorting the traditional fee-for-service system, used so successfully
up until then. It also created the incentive to get your medical care through
your employer rather than pay for it directly. I once lived in
a large apartment complex that included utilities paid by the landlord. During
hot summer months or cold winter months in my previous apartment -- where I
paid for utilities -- I turned the thermostat off when I left the apartment
and put on the heat or air when I returned. Once I moved into the
"utilities-included" apartment, I left my heat and air on all day,
thus ensuring a perfect climate when I came home -- sometimes as long as 12
hours later. Now, I knew
that somehow I paid, but the cost would be distributed over all the tenants
in the building. So the conscientious tenant who cut off his or her air
subsidized my carefree use of utilities. Eventually, we all pay, but the
effect becomes gradual and diffused over a number of people who have little
incentive to "conserve." This applies to
employer-provided insurance. Employees have less incentive to refrain from
seeing doctors for minor reasons, less incentive to watch and manage their
own health, and no incentive to cost compare among competing insurers and
health care providers. "I'm a
supporter of free markets and competition, but that doesn't apply to
medicine. Improved technology and research costs just drive the price of
medicine up." Elder: New
technology -- in most any field -- initially costs a lot. Consider the cost
years ago of computers and calculators versus what we pay today for equipment
and applications far faster, easier and more powerful. Remember the price of
calculators 30 years ago? Today they are so cheap some outlets give them away
as gifts -- loss leaders to get you into the store. Government-imposed
rationing sacrifices quality and innovation while imposing long wait times.
But you cannot control costs without removing the incentive to improve and
innovate. How many medical-care breakthroughs occur in Canada? How many new
drugs to improve patient outcome come from Canada? Without the profit
incentive, you get fewer entrepreneurs and fewer investment dollars because
you've diminished the likelihood of reward. Want
efficiency? A friend of mine who serves on the board of a hospital in Ontario
recently wrote: "We have actually had to send money back to the
government because the surgeries -- scheduled months earlier -- didn't occur
because patients went to the U.S. for treatment instead. Funding is specific
to some procedures, and if not used, the money is sent back. Right now we are
losing the surgery money because we have a bed shortage for folks who can't
return home because of the level of care they need, but there are no
facilities for them to transfer to. Why, you ask? Government regulations make
it next to impossible for private people to make a profit. And so the vicious
circle continues." Welcome to
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