Our current healthcare system is a mess, and leaves individuals in situations where they are forced to pay an arm and a leg for treaments that years ago were hardly expensive. Often, because of these costs, the sick cannot get treatment at all, and many die because of this fact. Unfortunately, our political leaders and the mass media have painted this as a grim situation with only two possible answers: increase government oversight of the health care industry, or leave the situation as is.

This is just as false a dichotomy as the supposition that we, as voters, have only the Republicans and Democrats to choose from, and must choose between neoclassical or Keynesian economics.

The assumption has been that our medical/health care industry has been largely a free market that has led to constantly increasing costs because of the “greed” of health care/insurance CEOs seeking profit. These assumptions are false. The truth is that the high cost of health care today is a direct result of numerous years of gradual government intervention in the health care industry.

During World War II, in an attempt to counter mounting inflation, the federal government instituted a wage freeze. Wages are the main way that companies compete for labor, so companies had to look for other ways to compete for workers. Companies overwhelmingly favored offering health insurance benefits to their employees, and over the years the government has instituted more and more incentives – usually through tax breaks – for companies to provide health benefits to employees. These tax incentives, and the employer mandates that eventually followed, were the key reason that employer-provided health insurance became a mainstay. It was never a natural result of the free market.

This increase in benefits gave the incentive for individuals to visit the doctor more often than they normally would (even for rudimentary colds and such) because they did not pay directly for benefits. It acted as a price control, driving up costs and creating shortages, reflected in waiting times at doctors’ offices and hospitals.

Additionally, the entire system has helped to shift insurance’s use from covering risk to paying for the basic health care necessities like hospital visits. If our auto insurance system were run like our current health care system, auto insurance would cover checkups, gasoline, oil changes, and tire rotations, rather than just the chance of crashes, and we’d pay co-pays to auto insurance companies. But this isn’t the case, because the government never got itself so entrenched in the auto insurance business (It is no coincidence that you don’t see people in Congress and the media calling for “single-payer auto insurance” and saying that “auto care is a right, not a privilege!”).

As a result, we now have a cartel of insurance companies that make tons of money because the government has placed them into an arbitrary middleman role in paying for health coverage. Costs are rising because of decreased efficiencies and increased demand from the moral hazard of additional insurance benefits.

There are also other factors that no one in politics or the media is talking about. The American Medical Association limits the supply of health providers by pursuing legal action against those who do not have the adequate licensing and training “needed” to perform the job, forcing prices higher.

Medical patents stifle competition by granting pharmaceutical companies monopolies on ideas. Abolish patents, and competition would flourish, developments would progress, and big pharmaceutical companies would likely cease to exist, replaced by a more diverse and less economically stratified medical business field.

Food and Drug Administration regulation, which requires medical companies to gain approval for various drugs and technologies (approval which favors big medical companies like Pfizer because of insane approval costs), contribute to big pharma’s oligopoly as well.

Greater government intervention in the health care industry is the equivalent of trying to put a Band-Aid on a finger you just sliced off with a butcher knife. It will give consumers short-term relief while driving prices and shortages up within no time, ultimately failing. To reform the health care system, we need to return the health care industry to the free market, not take what little is left of its market involvement and socialize it. Insurance must be returned to its classic role as a hedge against risk, not as medical middleman. The AMA’s influence must be curtailed, medical patents must be abolished, and prices must be allowed to rise and fall at will to insure that people economize their health care dollars. Only when this is accomplished will our health care system reach pristine quality.

The mission of Young Americans for Liberty (YAL) is to train, educate, and mobilize youth activists committed to “winning on principle.” Our goal is to cast the leaders of tomorrow and reclaim the policies, candidates, and direction of our government. www.yaliberty.org

Tags: health