by Mary J. Ruwart, Ph.D.
Everyone knows that health care costs are soaring every year, making medical bills and insurance unaffordable for many. No relief is in sight with the health care bills being considered in Congress, which are estimated to cost us at least $1 trillion over the next 10 years. Given government’s abysmal record in estimating costs, we should expect to pay much more.
Judging from what has happened in other nations with “universal health care,” many of us, seniors especially, will die waiting for treatment. Health care is so expensive that there is only so much to go around; it has to be rationed.
But why is health care so expensive? Why does it cost so much more every year?
The health care industry is one of the most highly regulated in the country. These regulations drive up costs enormously. About 80% of the costs of new drugs, for example, are due to regulations that are intended to make them safer. In practice, however, these regulations cause millions of premature deaths by adding 10 years to the drug development time of life-saving drugs and favoring new, expensive drugs over nutrients and older pharmaceuticals with good safety records.
Very few nutritional supplements are put through the FDA testing process. Consequently, manufacturers are banned from advertising their products to doctors. Lovaza, a prescription fish oil supplement, is one of the few exceptions. Even with their insurance company paying most of the cost, patients pay almost as much for Lovaza through their co-pay as they would for virtually identical over-the-counter pharmaceutical grade fish oil at the same drug store!
In addition to driving up the costs of drugs, regulations have created a shortage of health care professionals by limiting the number trained each year. When the number of practitioners go down, prices go up. Physicians are more likely to overlook potential treatment options and make major medical mistakes when they put in the long hours generally required of them because of regulation-driven doctor shortages.
Even when doctors do all that is medically possible for their patients, juries often find them liable in order to give patients with poor medical outcomes access to the “deep pockets” of their physicians’ malpractice insurance. Premiums have gone up so much that doctors are leaving some specialties, notably obstetrics and neurosurgery. Those who remain estimate that 10% of health care spending goes to order tests that are done solely as “defensive” measures.
These distortions of the market drive up health care costs. Insurance goes up too. However, some states double these already high insurance costs by “mandating” that every policy cover treatments that many people consider “optional” such as massage therapists, in-vitro fertilization, and hair transplants.
Most insured individuals never realize what their true medical costs are. They have little incentive to shop for the physician or pharmacist providing the best value. What they pay is fixed, especially if they have low-deductible insurance policies through their employer. When workers lose their job, they often lose medical coverage because they cannot afford the high COBRA payments their former employer offers. They discover that their “free” health care is actually quite costly and that if they pay for it themselves, they can’t deduct the cost to the extent that their employer can.
Workers with Health Savings Accounts (HSAs) fare better than their coworkers when they leave a job. Workers or their employers make tax-deductible contributions to employee HSAs, which grow tax-free. Individuals pay their insurance deductibles from their HSAs and take the account with them when they leave their employer.
HSAs are available to those who have high deductible insurance. Since individuals can eventually use this money for other expenses, they have an incentive to shop for cost-efficient high quality service. Since high deductible policies are less expensive, employers pay less for insurance and employees benefit from the tax benefits and portability.
Clearly, lowering health care spending by doing away with wasteful practices should be at the top of our health care reform list. Such reforms include:
1. Allowing individuals, as well as businesses, full tax credits/deductions for medical insurance and/or medical expenditures. In the interim, encourage the use of HSAs by increasing the amount of tax-deductible contributions (currently $3000) that a person can make each year.
2. Ending insurance mandates that states impose. As an interim measure, allow insurance sales across state lines so that consumers can choose the insurance plan that best fits their needs, rather than be limited to what state legislatures allow.
3. Making doctors and their insurers liable only for actual negligence and malpractice. In the interim, caps on non-economic damages, such as those in California and Texas, lower insurance costs, but may prevent victims of actual malpractice from being appropriately compensated.
4. Ending the regulation of medical professionals and employing a system of voluntary certification instead. Studies show that certification increases the amount of quality care delivered, especially to the poor. Since practitioners are usually certified on the basis of competence, rather than on politically-correct regulations, their number and quality increases, while prices decrease.
5. Ending FDA regulation of pharmaceuticals and employing a system of third-party certification instead. The FDA doesn’t test any drugs, but simply looks over the data provided by manufacturers. Underwriters’ Laboratory (UL), which certifies electrical appliances, actually tests the products that bear its “Seal of Approval.” Such third-party testing is an excellent model for drug certification.
In the interim, passing bills such as Congressman Ron Paul’s HR 3395 and HR 3394 removes the FDA’s jurisdiction over all nutrient-disease relationship claims and prevents the Federal Trade Commission from taking action against any advertiser that communicates a health benefit unless it can establish that the claim is false and harmful.
Each of these measures by itself can decrease health care costs by at least 10%. Taken together, they can slash health care costs by 50% or more. This is true health care reform.
Your representatives in both branches of Congress now are trying to create a compromise bill. That's why it's more important than ever to call each of them personally. Tell them to vote against this compromise, which will create health care rationing, especially for seniors. Tell them to vote for real health care reform, as outlined above. The life you save may be your own!
Mary J. Ruwart, Ph.D. is an At-Large Representative on the Libertarian National Committee, Inc.
