The main problems in the U.S. health care industry are rising costs and diminishing service. The most prevalent diagnosis of these problems seems to be that Americans are inadequately insured. Largely missing in health care discussions is that the real culprits are expanding bureaucracy and parasitical rent seekers that have overtaken the industry.
Clinical psychologist cum novelist Jonathan Kellerman argues in this WSJ op-ed that almost everyone would be better off if most people paid for medical services out of pocket. Kellerman appears to be out to make enemies with the powerful insurance industry, likening health insurers to the Mafia. Kellerman claims that insurance companies are actually worse because they “systematically suck the lifeblood out of the supply chain with obstructive strategies.” He writes:
“You don't need to be an economist to understand that any middleman interposed between seller and buyer raises the price of a given service or product. Some intermediaries justify this by providing benefits, such as salesmanship, advertising or transport. Others offer physical facilities, such as warehouses. A third group, organized crime, utilizes fear and intimidation to muscle its way into the provider-consumer chain, raking in hefty profits and bloating cost, without providing any benefit at all.
“The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of "protection." But even the Mafia doesn't stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional "cost of doing business" increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.
Insurance is all about betting against negative consequences and the insurance business model is unique in that profits depend upon goods and services not being provided.”
Some point to problems such as these to justify greater government involvement in health care. But Kellerman contends that “the consequences of any insurance-based health-care model, be it privately run, or a government entitlement, are painfully easily to predict. There will be progressively draconian rationing using denial of authorization and steadily rising co-payments on the patient end; massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery on the doctor end.”
This is now evident in Massachusetts (see AP article), where bureaucrats contend that their forced health insurance system is a success, despite soaring costs and declining service levels. Cato’s Michael Tanner says that the Massachusetts system “has been an unqualified failure” that has achieved neither of its goals of achieving universal coverage and lowering costs. (Also see Tanner’s 1/29/08 SLTrib op-ed.)
Some contend that the most significant health care problem is unequal levels of service. But the fact is that the only proven way to achieve service equality is by forcing substandard care on everyone and prohibiting the purchase of higher quality care.
Kellerman argues that everyone deserves a minimum level of care. He claims that if health care providers were to “liberate themselves from the Faustian bargain they've cut with the Mephistophelian suits who now run their professional lives,” costs for most services would become affordable through market pressures. Most people would need only catastrophic insurance. And “government-funded county facilities” could serve the “small percentage of indigent individuals [that wouldn’t] be able to afford even low-cost procedures.”
Most Utahns are completely unaware of the state health care task force that is currently ramping up. The task force’s prime directive is to figure out how to ensure that all Utahns get health care coverage. The task force will not and cannot address the real problems in health care because it starts from the wrong premise and is stacked with people representing those groups that stand to gain the most from expanding the existing protection racket. Unless the task force ultimately decides to do nothing, which is highly unlikely, any decision it makes will ultimately exacerbate the problems.
The answers to our health system woes rest, writes Kellerman “on a radically different approach: fewer people insured” rather than more. I would extend that to say that solutions lie in less government involvement in the system; not more. We need eliminate the parasites and return the focus to the most important aspect of the health care system: the direct relationship between the service provider and the patient.