Health-Care “Reform”: It’s All About Power


Sheldon Richman
Campaign for Liberty
November 20, 2009

If the politicians who are bent on redesigning the medical and medical-insurance industries really wanted only to curb rising prices and help the uninsured get coverage, they would have zeroed in on the previous government interventions that created those problems. Instead, they are pushing grand schemes to turn our medical decision-making over to bureaucrats. That indicates that the so-called reform campaign is about power.

health care

Medical care is too expensive. Prices for services rise faster than other prices, and there’s reason to believe much of the money is wasted. Expensive medical care equates to expensive insurance, which prices some people out of the market.

This has been called a failure of the free market, but that can’t be: There is no free market. I defy the advocates of government control to name one aspect of medicine or insurance that government doesn’t dominate.

The anti-market system politicians have put in place — as pleasing as it is for the insurance and pharmaceutical industries and organized medicine — harms the public. Yet it would be easy for them remove the harmful interventions.

For example, they could end the adverse tax treatment of people who buy their own insurance. If your employer buys insurance for you, it’s paid for with pretax dollars. If you buy your own, you pay with after-tax dollars. That’s a hefty penalty. But the price of avoiding that penalty is high: You must cede control over thousands of dollars in cash wages as well as your medical coverage to your employer. You can’t tailor coverage to your own needs. To get a better plan you have to change jobs. That’s just stupid.

The system creates the incentive to overspend on medical services. Since insurance premiums appear to be paid by your employer and since the policy covers routine elective services and tests, you have no reason to shop wisely in the medical marketplace. That’s one reason for the price inflation. Why ask about the price or the necessity of a test if someone else seems to be footing the bill? Doctors know that and will err on the side of more rather than fewer services.

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