UNITING PHYSICIANS & PATIENTS AS A VOICE IN HEALTH CARE
page: 1 | 2
When was the last time that you went to the mall and purchased some clothing, books, jewelry, saw a movie, had lunch and then went home with only paying a minimal co-pay? The different vendors would simply submit a bill to your home insurance company. The goods would seem cheap but your home insurance costs would be astronomical! With no accountability for costs on the consumer's part, each store would bill the insurance company as much as possible. Suppose the insurance company could arbitrarily decide to not pay for some of the purchases. The stores would try to bill as much as possible. The insurance company would try to pay as little as possible. The established prices would have nothing to do with what the consumer would have been prepared to pay. Such a situation would be a gross distortion of free market capitalism.
The described scenario is preposterous but it is the equivalent of modern U.S. health care. Who is to blame for this bizarre scenario? It was an act of Congress, not the free market that started medical services being billed to third parties rather than directly to the patient. It was also an act of government, not the free market, that established the norm of insurance being tied to the employer. With wage and price controls established during World War 11, employers had to compete for employees by providing insurance. With health insurance tied to employment, choices are limited and problems arise when a person loses their job. There is no equivalent peril with individually purchased life or disability insurance.
In free markets, prices are set at the meeting point between the most that the consumer is willing to pay and the least that the vendor is willing to receive in return for the product. The consumer is free to go elsewhere to seek a lower price and the vendor is pressured to reduce prices to attract business. This pressure tends to reduce the profit margin per item sold. To maintain a viable business, the vendor must sell as much product as possible to as many people as possible. The vendor must continuously strive to make a better product at a low price. If unsuccessful, they will go out of business and someone will step up to the plate and do it better. The business world is in a continuous state of reordering while getting better and better at delivering what people want at lower prices. According to Michael Rothschild, author of Bionomics; Economy as Ecosystem, virtually every consumer product ever studied has dropped in price when measured in non-inflationary dollars if free markets are allowed to work. Because the U.S. health care market is not a free market, double-digit inflation is the norm putting it further out of the range for the have-nots of society.
The key ingredient in an efficient market is the consumer-vendor interaction. The consumer must be able to decide if he is getting sufficient value for his dollar and the vendor must be pushed to provide that value. In American and Canadian health care, this interaction is negated. With a third party payer system, the patient does not function as a consumer. The inflated prices seen in U.S. health care are not an example of "market failure" but the result of failing to make health care a market. With a minimum of 43 percent of all health care costs borne by government, the potential market for health care is further undermined creating a greater disconnect between patients functioning as consumers. The proposed bill under discussion today would increase that figure further thereby worsening the problem.
I admire the moral imperative of what you are attempting to achieve with this proposed legislation. I, like you, desire to see as many people as possible have access to affordable quality health care but disagree with the method that you propose. I believe that government should work to extricate itself from the delivery of health care and allow market processes to flourish so that costs may drop and more people can access care. Although administered by the individual provinces, health care in Canada is a form of national socialism. With the control by multiple third parties, health care in the United States is a form of corporate socialism. Moving towards one or the other will not produce something new or different. We need to think outside of the box, and rather than empowering government or third parties, we need to empower individuals through free markets. With health savings accounts, appropriate tax credits and tax deductions people should be empowered to cover their own health care needs. Perhaps the state should experiment with using some of the funds now spent on the needy and directing these into HSA’s for the poor. Obstacles to delivering private charitable care should be lifted. Furthermore, there should be more flexibility to purchase insurance independent of the employer so that individuals and their families own health insurance as they presently can own universal life and whole life life insurance. Perhaps whole life health insurance could be purchased with the costs amortized over decades just as a mortgage is. If markets were allowed to work a plethora of new ideas may unfold that force prices down and availability up. When Frederick Hayek wrote of the power and importance of markets in the 1940's, he stated that no one can know what the collective actions of millions of people interacting in a market can produce. True to his prophecy, he could not have foreseen the marvels of the computer age and the writing of this testimony on a computer. Likewise, if we empower markets rather than empower government, we have no idea what great things we could achieve in health care.
Thank you.
Lee Kurisko MD FRCPC
leekuriskomd@mn.rr.com
Consulting Radiologists Ltd.
March 10, 2006
page: 1 | 2