I know a woman who had a baby girl. The baby was born with a life threatening birth defect. Correcting the birth defect required multiple surgeries. The woman asked every doctor with whom she talked if they could save her little girl. She asked about the risks of recommended surgeries. She asked which doctors were the most skilled. She asked which hospitals offered the best care. She asked about alternative treatments. She never asked what saving her daughter would cost. Whatever it cost, she would find a way to pay it. The only thing that mattered was saving her little girl. For this woman, her daughter’s life had infinite value.
Free market is a summary term for an array of exchanges that take place in society. Each exchange is undertaken as a voluntary agreement between people. The market is “free” because choices, at each step, are made freely and voluntarily. Two factors determine the terms of any agreement: how much each participant values each good in question, and each participant’s bargaining skills.
Insurance is a way to spread the cost of a good or service that is used infrequently or may not be used at all. Insurance companies earn money by betting that the people that buy insurance will never need to use the insurance. For insurance companies to be able to pay when a service is necessary, insurance premiums must be high enough to cover the cost when someone uses the service for which they are insured. If the cost of the service goes up, the cost of insurance goes up. Insurance cannot control the cost of the service for which it pays. It merely spreads the cost among a lot of people who may have to use the service.
The value of life and health are infinite. Consequently, the free market doesn’t work for health care. Because insurance is based on free market principles, insurance cannot control health care costs. More insurance will not control health care costs. It is likely to have the opposite effect.
Requiring all Americans to have health insurance will not solve the problems delivering quality health care. Insurance does not address the root problem. Health care in America costs too much because it based on free market principles. The problem is, because the value of life and health are infinite, health care providers are free to set any price they choose for their service. Those that need health care have no bargaining power. Few, if any, people will voluntarily choose to risk dying rather than seek treatment because the treatment cost too much.
When the free market breaks down, some alternative to the fee market must be found. Fortunately, an effective and affordable alternative to the free market for health care exists.
For 50 years Medicare has been providing quality health care to Americans aged 65 and over. Medicare controls costs by using a formula based on usual, customary, and reasonable charges. This system is imperfect. It is, however, better at controlling costs that the free market.
The Federal Government needs to expand Medicare to cover all Americans beginning with prenatal care. Expanded Medicare would work much like the current system. No one would be required to participate in Medicare. However, it would be available to all who choose to use the system. Deciding not to use Medicare would not relieve a person from paying taxes that support the system.
Expanding Medicare will:
- Provide quality health care for every American.
- Promote growth by eliminating the need for private health insurance. Health insurance costs are one of the biggest barriers that entrepreneurs face when deciding to start a business.
- Allow resources that are now being wasted on fraud, insurance, and lawyers to be redirected to providing care.
Expanding Medicare eliminates the need for:
- The Affordable Care Act “Obamacare”;
- Direct payments for Social Security Disability;
- Tax incentives for private insurance;
- All other Government subsidies related to health care.
The cost savings from ending these programs would pay for the Medicare expansion.