Nationalizing American Healthcareis the Wrong Prescription

The cost of healthcare has been a major concern for a long time, and though Americans benefit from the large investment of money through advanced medical technology and new and improved medicines, these costs pose problems for consumers and businesses. Over the years, efforts to hold costs down haven’t succeeded.

In 1993, First Lady Hillary Clinton proposed a plan to address the healthcare cost situation that included a national health board, regional health alliances, employer mandates, government imposed budgets and spending caps. Her plan was so broad and intrusive that the federal government would have been making healthcare decisions that you and your doctor ought to be making. Fortunately, that plan was defeated. Unfortunately, healthcare costs are still a problem for many Americans, and a government solution is still a possibility.

President Barack Obama told a joint session of Congress recently “in the last eight years, [health insurance] premiums have grown four times faster than wages. And in each of these years, one million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it’s one of the largest and fastest-growing parts of our budget. Given these facts, we can no longer afford to put health care reform on hold.”

In bringing reform to fruition Mr. Obama proposes a system that might actually be worse than Ms. Clinton’s. Modeling a system proposed by former Senator Tom Daschle, who almost became Secretary of Health and Human Services, but for an income tax problem, the Obama plan calls for the National Coordinator for Health Information Technology to monitor what your doctor prescribes for you to make sure he does what the government deems "appropriate" and "cost-effective."

Mr. Daschle suggests that doctors would have to learn to operate less like doctors and more like government bureaucrats, who know nothing about medicine, but are experts in red tape and over-regulation.

Ultimately, such a government-run system will produce inefficiencies like those found in Canada and Sweden, where healthcare systems require no direct financial contribution by the patient, which encourages overuse of the system, which in turn jams the system up, and causes unacceptably long wait periods for treatment.

In Canada, gynecological surgery is a four- to 12-week wait, a tonsillectomy is a three- to 36-week wait and neurosurgery is a five- to 30-week wait. It has gotten so bad that Toronto area hospitals now ask patients to sign a release that they will hold the hospital blameless if delays in treatment jeopardize their health, and the Canadian government spends over $1 billion each year when Canadians opt to come to the U.S. for care, where wait times are virtually non-existent.

An article published in the Journal of American Physicians and Surgeons last year relates the plight of a Swedish man, Mr. D., who suffered from multiple sclerosis. His doctor prescribed a new drug for him, but the Swedish government refused to pay for it because it was more expensive than existing medicines. When Mr. D. offered to pay for the medicine out of his own pocket, he was prevented from doing so because the bureaucrats said it would set a bad precedent and lead to unequal access to medicine.

But Mr. Obama seems unaware of, or perhaps unconcerned with, these problems and the trade-offs the proposed system would produce.

To support his case he told the lawmakers that healthcare “is a cost that now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes.”

However, Mr. Obama’s data are wrong; there weren’t 1.5 million bankruptcies last year, and medical bills did not cause all bankruptcies.

His statement is likely based on a widely cited 2005 Harvard University study that said health expenses caused a lot of the bankruptcies in 2001. As MSNBC reported in a story about the study, “illness and medical bills were cited as the cause, at least in part, for 46.2 percent of the personal bankruptcies in the study.” Notice it says that medical bills were a factor, not the proximate cause of the bankruptcies. The study’s author said “the figure rose to 54.5 percent when three other factors were counted as medical-related triggers for bankruptcies: births, deaths and pathological gambling addiction.”

A thorough review of the Harvard study’s data showed in fact that only 17 percent of bankruptcies in 2001 were due to medical costs, even though it’s a safe bet that most of those who filed for bankruptcy had some outstanding medical bills. Someone who is having trouble paying the mortgage and the electricity bill likely can’t pay the doctor, either.

Healthcare costs comprise approximately one-sixth of the U.S. economy, and for many Americans they can be a serious problem. But high costs are not a reason to nationalize the healthcare system. Indeed, government regulation and intervention are to blame for the problem as much or more than any other single factor.

The most effective action Mr. Obama could take to lower healthcare costs is to have less government involvement in it, not more.

Cross-posted from Observations