Comments and observations on social and political trends and events.

Sunday, September 13, 2009

Political Malpractice | CEI

Here is an analysis from a free market perspective that challenges the often heard claim that the market isn't working in health care. That's right but for a different reason than is alleged: the current market for health care is far from free. Be sure to read the entire PDF document that accompanies this story. Below is some of the text from the landing page.

Political Malpractice | CEI

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Most Americans agree that our health care system is broken and must be fixed. But it is increasingly clear that what ails health care is not too little, but too much government intervention. Federal and state tax preferences for employer-sponsored health insurance distort the market in a way that limits choices for individuals, reduces competition among insurers, and artificially inflates costs for health care services. For most working Americans, switching jobs often entails switching health plans and doctors or losing coverage altogether, while many others find non-employer-sponsored insurance unaffordable or difficult to obtain.

Efforts by federal and state governments over the past few decades to solve these problems have generated additional burdens and distortions, leading to increasingly bigger problems. To ensure affordable coverage for those in poor health or with potentially expensive medical conditions, governments have implemented guaranteed renewability, guaranteed issue, and community rating laws that force healthy individuals to subsidize those with higher health care costs. Many states require insurance policies to pay for niche specialists, including acupuncturists, pastoral counselors, and massage therapists, or to cover alcoholism and substance abuse treatment, smoking cessation, and in vitro fertilization. But these regulations further raise the price of insurance coverage, leading many healthy individuals to forgo insurance altogether.

Similarly, numerous state and federal restrictions on who may provide medical services and how they must be delivered have hindered the development of innovative ways for medical professionals to offer more convenient and lower-cost health services to consumers. A combination of government and medical professional lobbying has restricted the supply of new doctors, creating an artificial scarcity and contributing to rising prices. And medical products regulation substantially raises the cost of producing new drugs and medical devices, often without increasing their safety.

Instead of reducing these burdens, Democratic health reform proposals would impose more regulations on insurers, place mandates on individuals and employers to purchase health insurance, provide subsidies for individuals to pay for health care coverage, expand Medicaid, and create a new government-run “exchange” through which individuals and businesses could purchase strictly defined coverage from private insurers. But more government intervention will only add cost and complexity to the health care system; without solving the underlying problems.

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