Supply and demand still applies to health care plan

Competition can control health care costs more efficiently than any other method

Posted: Thursday, August 13, 2009

The current push to pass health care stems from real shortcomings in our present system that need to be addressed. However, the reforms as proposed by the Democrat majority mostly relies on large government solutions. The fundamental shortcoming to this approach is the same as the fundamental shortcoming of our current system: the laws of supply and demand.

Health care is a commodity. If the laws of supply and demand are allowed to work, the costs of health care can be controlled more efficiently than any other method. Competition is given lip service in the bills presently under consideration. However, as presently written, they appear to ultimately lead to a single-payer system, in which the only competition will be by patients trying to get in line for care. That said, the present system of insurance company monopolies by state isn't much better.

The demand for health care is certainly present. What is missing is greater competition to increase supply. Competition can be introduced a number of ways:

• Allow individuals and companies to buy lower cost insurance across state lines.

• Reduce the duration of medical patents, which would increase the cost of innovation on the front end but it would ensure that generics reach markets faster.

• Instead of trying to insure everyone, provide government sponsored clinics by using the current welfare bureaucracy to perform the necessary needs testing.

• And, by all means, give consumers an incentive to save on their medical costs. Consumer incentives appear to be non-existent in the present bills. Without consumer incentives, the only way to control costs will be to control the supply, and that will mean rationing.

A proven way to introduce competition is through tax deferred health savings accounts, whereby enrollees participate in the savings when they are selective with the use of their health savings account. Such plans currently are difficult to initiate due to unwieldy insurance company regulations, but the bills currently under consideration would prohibit them entirely.

There are a lot of other reasons for the rise in health care costs that need to be addressed. Tort reform needs to take place to address the very real (and expensive) legal environment posed by medical practitioners. However, it is illogical to assume that a government program can somehow reduce our health care costs. If that was the case, Medicare and Medicaid, presently representing nearly a third of all health care consumers, would be acting to control costs, not raising them. Presently, most of us paying into private insurance policies or paying our medical costs out of pocket are subsidizing these programs. That's because the state and federal government reimbursement to doctors often do not cover their Medicare and Medicaid costs. The fact that these programs are at risk of bankruptcy is a huge red flag to any notion that a government run program will be less expensive.

Our nation's health care can be improved. However, we all have to remember that most of us, especially in Juneau, have good health care. We are really only talking about the 27 million uninsured that want insurance (of the 47 million people currently without insurance, at least 20 million choose not to be covered). The present proposals appear to do little about costs and would ultimately destroy a system that has produced virtually every major medical advance in the past 50 years.

• Antonio Yorba is a small business owner living in Juneau.



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