Saturday, October 4, 2008

Health Care Reform

In the United States, there is a growing consensus that our health care system is in dire need of reform. How should we proceed? Well, most critics agree that reform must address three key issues: access (Who can access the products and services they want or need?), quality (How good are the products and services that can be accessed?), and cost (What is the cost of providing these products and services, who pays that cost, and how?). As in the case of education, the provision health care in the United States involves both public and private payment systems. “Public systems” (Medicare, Medicaid, Veteran’s Administration, and Social Security) are financed by tax revenue and private systems are financed by non-governmental payers (patients, insurance companies, charitable organizations). Where does this money go? Well, it goes directly or indirectly into the pockets of a staggering number of health care providers. Hence, these “providers” are really “sellers” of health care products and services. They include: doctors, nurses, allied health professionals, research scientists, malpractice lawyers, hospitals, research laboratories, medical schools, private health insurance companies, financial institutions (banks), credit card companies (Visa and MasterCard), public and private research laboratories, technology corporations (General Electric), drug companies, and the lobbying firms that represent all of the above. For a libertarian, the first step to health care reform is to openly acknowledge and embrace the obvious, inescapable reality that health care is about buying and selling. Because the frontline sellers (doctors, nurses, allied health professionals, researchers, etc.) are highly educated and therefore have substantial college loans to pay back, they expect to earn a substantial return on their investment of time, energy, and resources. If you are a retiree, you probably hold stock investments in corporations that sell health care products and/or services. If so, you certainly expect a healthy return on your investment. Traditionally, pharmaceutical stocks have been a staple of the most lucrative mutual funds. If you own stock in a corporation that provides health insurance to its employees you are probably concerned with the rising cost of providing that benefit. If you are an employee of a corporation that provides your health insurance you are probably dissatisfied with the access, quality, and cost of the health care you receive. So as we explore access, quality, and cost of health care, the basic problem is that it will be prohibitively costly to provide Americans with universal access to high quality health care. Therefore, in the real world, there are three possible rationing strategies: 1.) provide less-than-universal access, 2.) provide less-than-high quality products and services, or 3.) reduce unnecessary costs by increasing the efficiency of the system and/or shell out a lot more money. When health care reformers suggest any combination of these strategies, they invariably alienate stakeholder groups, which contributes to high-stakes lobbying activity. Therefore, given the current political structure in the United States, health care reform will be shaped by access, quality, and cost of hiring lobbying firms that can persuade (or bribe) government officials to ration health care in their favor. Now, what does all of this suggest about the prospects of meaningful health care reform?

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