David Goldhill penned a wonderful article published in The Atlantic with the unfortunate title of How American Health Care Killed My Father. [Hat tip C.A. for the pointer.] It's a pretty good summary of what's wrong with the health care system in the U.S. along with some suggestions for a solution. He's a Democrat, but his proposals are not at all similar to those being touted by leading Democrats.
He outlines how the current situation developed. Group health insurance was introduced in 1929 and was given a big boost during WWII as employers sought alternate ways to compensate employees when FDR froze wages. Then in 1954 Congress made the employers' payments for health care insurance tax deductible, and since the benefits were tax free to the employees the result was that employer funded medical insurance was the most economical means of paying for just about any medical expense. Here's Goldhill:
There was nothing natural or inevitable about the way our system developed: employer-based, comprehensive insurance crowded out alternative methods of paying for health-care expenses only because of a poorly considered tax benefit passed half a century ago.
Medicare and Medicaid came along in 1965, and basically continued the theory that essentially everything should be covered. Health care costs have been rising in excess of inflation ever since. And with someone else paying the bills the customer has no reason to try to control costs. Furthermore, with Medicare setting the prices, doctors have to do more -- diagnostic tests, procedures, follow up appointments -- in order to get paid more.
Another Medicare caused distortion Mr. Goldhill describes is the shortage of geriatricians. It would seem that with senior citizens being the primary recipients of Medicare benefits there would be more geriatricians. However, geriatricians don't get reimbursed as much as specialists, so the unseen hand drives physicians to specialize.
Take Medicare and insurance out of the picture, and prices go down. Lasik surgery is the poster child for market driven medical care prices. Medicare and insurance doesn't typically cover it, so prices are transparent and relatively cheap.
A consumer driven care system is Mr. Goldhills proposed solution. It's not an original idea, but he sets it out concisely. Get rid of private insurance, Medicare and Medicaid, and replace it with a single program of mandatory catastrophic insurance based on a single national pool with premiums based solely on age. Non-catastrophic medical expenses would be paid for by individuals out of a revamped Health Savings Account which every American would be required to maintain.
The government would supplement or pay the premiums for low income Americans. Abolish Medicare and suddenly there's money available to do something like that.
Mr. Goldhill makes a strong case for how bad the current system is and provides many arguments in favor of his solution. What you see here is a brief summary. Read the whole thing to appreciate the magnitude of the problem and the logic of this simple proposal.