Monday, September 7, 2009

Health Care Overhaul Not Needed

This article appeared in the Knoxville News-Sentinel on September 6, 2009.

The nation is engaged in a spirited debate on health care, and it is wonderful to see democracy in full voice. Is there justification for a government takeover of health care?

First, is the debate over the quality of health care itself? Certainly, there is no dispute that cancer survival rates in the United States are dramatically higher than in managed-care countries. What about the delivery of health care? In Canada, a million people are waiting to see specialists, while another million are waiting for operations. This is in a country of 33 million! Can you imagine 18 million Americans waiting either to see a specialist or for an operation? Certainly, the issue is not access to health care since hospitals do not deny treatment to those who show up at their doors. Thus, the reason cannot be poor U.S. health care.

Second, is the debate over insurance? The Administration's estimate of 47 million "Americans" without insurance is bogus. Of that number, perhaps 12 million are illegal immigrants. Some 16 million make more than $50,000 a year but opt not to have insurance, and 9 million are unemployed but are typically without insurance for less than four months.

That leaves about 10 million citizens or 3 percent of the total population. It is irrational to dismantle U.S. health care for so small a number. A system could be constructed to cover this 3 percent and to provide catastrophic care for a fraction of the costs of a government takeover.

Third, is it because the rising costs of health care are the result of little competition? The president argues that a "public option" run by the government would create competition in the insurance marketplace and drive down costs. His example of the postal service giving competition to FedEx and UPS is laughable, and everyone knows it. It is the other way around. The postal service loses $7 billion a year and would lose more if its monopoly on first class mail were repealed. The reason why there is little competition and that costs are high is because the government prohibits competition. States set the rules, prohibit interstate competition and set costly mandates that drive up rates. If the president wants competition, the way to provide it is to take the government-imposed restrictions off the provision of insurance.

Fourth, is the proposed takeover because of costs? The president has stated that we pay a larger percentage of our gross domestic product (17 percent) for health care than any other industrialized country and that this cost is a "threat to our economy?" As Craig Karpel pointed out in the Wall Street Journal, would we be less threatened if we spent 8 percent like Haiti? Health care would be a threat to our economy only if it resulted in a net loss to the country. But does it?

Health care is a good like any other good. It employs 10 percent of the U.S. work force, contributes significantly to American exports, and its existence has lessened the impact of the recession. Karpel points to a study by Bob Hall of Stanford University and Charlie Jones of North Carolina State University that finds that by mid-century, the optimal amount of U.S. health care spending should be 30 percent of GDP.

If the president's assertion of a "threat" is true, it is true not for the health care industry, which is a productive part of U.S. society. The threat comes from the portion of the economy that is a net loss. It comes from the net loss of enterprises such as the post office, Amtrack, Social Security, Medicare and Medicaid. It comes from the federal government.

No comments: