We Can Have Affordable Health Care

     Affordable medical care is now a major concern for most Americans. Nearly 80% agree that our "health care system is headed toward a crisis because of rising costs."

     In the last five years, the cost of health insurance has increased over 2 times faster than inflation. But if you don't have health insurance, you risk bankruptcy if someone in your family has a serious illness or accident.

     Consequently, many of us face agonizing choices: How can I pay for medical care and still provide for the other needs of my family? Can I accept a new job if it means losing coverage for a pre-existing condition?

     As a solution, Bill and Hillary Clinton have proposed government health alliances and health care taxes - in effect, nationalized medical care. And many states are also considering their own form of government medical care, particularly a "single-payer" system, like Canada's.

     But how well would government-run medicine really work? We can learn from the experience of Canada, England, and other countries that have had national health insurance for decades.

     According to Michael Walker of Canada's prestigious Fraser Institute, the claimed administrative cost-savings in Canada are an illusion: "The Canadian system controls costs not through efficiency, but by rationing health-care delivery."

     Long waiting lists and chronic shortages of equipment and services have resulted in waits of up to 4 years for elective surgery. The delay for coronary bypass surgery is now nearly 6 months. Overall, there are now 250,000 Canadians on waiting lists for government-approved operations - and 45% say they are in pain.

     Britain's National Health Service also "controls" costs by rationing care. According to the National Center for Policy Analysis, over 1 million Britons are now on waiting lists for operations. For those over 65, nearly half of government hospitals refuse to provide kidney dialysis. Over 9,000 elderly people a year die because they're denied dialysis.

     In every country with government-run medicine, the elderly and severely ill are treated like a drain on society and given the minimum possible care. In Sweden, "the delay for coronary bypass operations is more than a year, during which time 30% of the patients will die." [Private Practice, April 1989] In Italy many people now die because of a shortage of beds in government hospitals. [Washington Post, 4/4/94] In Germany, "free" government medicine is used only as a "last resort."

     A government takeover of medicine has made conditions worse in every country in which it's been imposed. But how else can we control costs?

1. Few of us pay our own medical bills, so we have little incentive to economize or comparison shop. Ironically, a key reason why Americans spend too much on medical care is that for individual consumers, medical care costs too little.
        Eighty-seven percent of our medical bills are paid by insurance companies. That means there's little incentive for patients or doctors to restrain their consumption of medical resources. As patients, we seldom ask how much a medical procedure costs, or turn down suggested tests for treatments.
        Over 50% of us also receive government medical care "entitlements" - such as Medicare and Medicaid. Again, someone else pays, so we don't care how much it costs!

2. Federal regulations and state mandates. According to the Pharmaceutical Manufacturers' Association, it now costs $359 million and takes 12 years to get a single new drug approved by the FDA. The introduction of some life-saving drugs - which have long been used safely in Europe - have been delayed for years or decades. FDA delays on just one drug - Propranolol, used to treat angina and hypertension - resulted in at least 30,000 avoidable deaths.
        Insurance companies are also forced to comply with over 800 state medical mandates. These include forcing health insurers to cover toupees, psychiatric services, and teeth-whitening. Although these mandates provide additional income for toupee manufacturers, psychiatrists, and dentists, they increase the cost of health insurance enormously for everyone. The Heartland Institute estimates that eliminating state mandates would cut medical insurance costs at least 30%, making medical insurance affordable to tens of millions of uninsured Americans.

3. Medical Licensing. US doctors are among the most regulated in the world. The declared purpose of medical licensure is to assure quality medical care. But the actual effect has been to drastically limit the number of doctors and greatly increase the cost of medical care.

4. Our Litigious Society. Unfortunately, present laws and the attitude of judges and juries make it easy to sue honest doctors. Our law books are full of cases in which patients have been awarded hundreds of thousands - even millions of dollars - simply because a doctor was unable to cure them.      So the cost of liability insurance has sky-rocketed. Many doctors now pay premiums of $70,000, $150,000, even $250,000 a year. These costs are necessarily passed along directly to you. In some medical specialties - like obstetrics - the high cost of liability insurance has created a national shortage of qualified physicians. And most doctors are now forced to run you through batteries of costly tests, just to make sure they're not sued.

     Fortunately, we can reduce your medical costs up to 75% without a government takeover. The solution is to empower you - not the government or insurance companies. Here are five ways:

1. Restore Tax Equity. Unfair tax laws are a major reason why few of us can afford to buy medical insurance outside of our jobs. Your employer pays for health insurance with pre-tax dollars. But you have to pay with what's left of your paycheck after taxes have been deducted. It can cost you twice as much to buy medical insurance as it does your employer.
        The solution: Change the tax laws so health insurance is 100% tax-deductible for you. You also should be able to form insurance-purchasing pools with others, further cutting your costs. These changes will also make your medical insurance completely transportable between jobs.

2. Individual Medical Savings Accounts. If someone suggested that we should triple the cost of your auto insurance so it would cover oil changes and tune-ups as well as major repairs, you'd probably tell them they were crazy. But that's exactly what we've done with medical insurance.
        It now costs $50 for an insurance company to process a claim for a routine $50 visit to a doctor's office, doubling the cost. You are unaware of this cost because it's hidden in your medical premiums.      The solution is to create 100% tax-deductible, interest-bearing individual Medical Savings Accounts. You or your employer would put $1,000-$2,000 into a Medisave Account each year for routine medical expenses. That's your money, to spend as you choose on basic medical expenses.
        Because it's your money, you'd have an incentive to comparison shop and economize in selecting a doctor, deciding on tests and treatments. In Indiana, the Golden Rule Insurance Company has reduced their medical costs by 64% since setting up Medical Savings Accounts for their employees a few years ago - and their employees love them for it.

3. Replace the FDA with private certification. There is no excuse for the Food and Drug Administration forcing manufacturers to spend hundreds of millions of dollars to prove the safety and efficacy of drugs used for decades in Europe. There is no excuse for allowing the FDA to ban high-potency vitamins (as it's trying to do) or to mount armed raids on alternative medical practitioners (over 200 such raids were staged in 1993). Private companies can certify the safety of drugs at a fraction of the cost of the FDA. Then it should be your decision (in consultation with your doctor) - not the government's - to decide what drugs to use.

4. Privatize Medicare and Medicaid. Charitable aid for the poor is certainly desirable, but as 80% of doctors agree, Medicare and Medicaid is intrusive and often harms patients' health. Paperwork requirements alone are causing many doctors to quit medicine.
   Medicare is too expensive, too bureaucratic, and is impoverishing young workers. It's also on the verge of bankruptcy.      What's the alternative? For the poor, provide voluntary charitable aid so they can purchase private medical insurance - saving us all Medicare's enormous bureaucratic cost and the horrendous book-keeping requirements (and legal threats) imposed upon doctors and insurers.

5. Curtail Damage Awards. Outrageous malpractice awards are a major cause of escalating medical premiums. Our laws, judges, and juries must distinguish between true negligence, which should be legally actionable, and "acts of God" and human imperfection, which are unavoidable.

     If you want to know how government medicine would work in America, we have lots of examples.

     For over 60 years, the Veterans Administration has handled the medical needs of millions of former servicemen. Investigations of the VA have found abominable conditions bordering on cruelty: long delays for surgery, filthy hospitals, severe shortages of staff and medicines, and hostile and indifferent staff.

     In January 1992, CBS News reported that Walter Reed Army/Navy Medical Hospital was refusing to provide amputees returning from the Gulf War with modern, artificial limbs. Walter Reed even refused to accept donations of modern limbs.

     When reporters demanded to know why soldiers were treated so callously, a Medical Services colonel replied: "I am not going to spend the taxpayers' money if you will just be sitting at home . . . we are the primary health-care providers. And the patients belong to us."

     That's the medical future for all of us, if government takes over medical care. The last thing we need is a government-run medical system with the "compassion of the IRS, the efficiency of the Post Office, at Pentagon pricing." [Quote from HHS official]

     We can have affordable medical care. But the solution is to get government out of medicine and to give you complete medical freedom of choice.

Jarret B. Wollstein is a member of ISIL's Board of Directors and a founder of the original Society for Individual Liberty.

This pamphlet was originally published in 1993. It is part of ISIL's educational pamphlet series.

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