ONLY MARKETS WILL SAVE HEALTH CARE

You may have picked up on the recent media blitz relating President Obama’s meeting with a coalition of health industry leaders pledging to voluntarily cut $2 trillion of health care spending over 10 years. Don’t take it seriously. It won’t happen.

In fact, nothing currently proposed by the Democrats, the Republicans, or the health industry will effectively restrain the medical inflation that has outstripped the CPI for the past 40+ years. The cause lies embedded within the genetic code of our employer- and government-dominated health insurance system. No amount of tinkering around its edges will fix it.

The fundamental problem is an unrecognized market failure, namely that there is no naturally-arising market mechanism that will allow everyone to purchase the health insurance they require to afford the full range of life-sustaining medical services.  Instead, we have a failed employer-based insurance system that has locked millions out of insurance coverage. Rather than simply correcting the market failure, our governments (state and federal) have given us laws and programs to treat symptoms rather than the disease.  That’s why we have Medicare, Medicaid, SCHIP, TRICARE, HIPAA, COBRA, ERISA, RBRVS, CPOM, AWP (etc., etc., etc.).  Each such attempt to lop off the monster’s head has resulted in the hydra-like emergence of yet more and bigger problems.

So what’s the solution?  Our nation must grip the reality that our unsustainable health system requires root-and-branch reform—no more tinkering!  Once we attain that political will, Congress must do two things.  First, it must replace the Babel of health insurance laws, programs, and regulations with an overarching set of boundary rules within which dynamic insurance and medical care markets can deliver high-quality, affordable health care to everyone.  Second, it must provide a unified safety net for the aged, poor, near-poor, and disabled who can’t otherwise function in such markets.

Before dismissing the idea as a delusional rant, consider this: it’s from regulated markets that we obtain all of our other essential needs in life: food, clothing, housing, and transportation.  There is nothing inherent in medical care to prevent us from achieving the same results there.  What is different is a fundamental market failure that we can fix, once we have the political will to do so.  Failing that, a European-style government-run system of rationed care will be our only option. And that’s un-American.

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