I have written about this before; however, it seems no one ever catches on. As a retired airline captain, I am used to looking at accident reports and the root cause of an incident. Most of the time, the cause is not glaringly obvious and is not one big thing, but a combination of smaller things that snowball into an insurmountable problem.
Healthcare is a disaster, and no one is looking at the root causes of the problem, so once again, it will not be “fixed.” It is akin to fixing a broken window with a band-aid. I did recently a short video about this, and you can watch it here.
In 1908 a Ford Model T cost $850, and in 1925, it cost $300. Why did the price come down? Competition forced Ford to streamline the production process, and the market forces brought the cost to less than half. By the way, that $300 in 1925 is the same as about $4,200 today. Can you buy a new car for that price today? Of course not, but then today’s cars offer much more.
Technology and advancements make things cheaper, and we see that in many things. What did the flat screen TVs cost when they first came out, $10,000 or more? Now they are better and cost about $500. What adds cost is government regulations. After new and stricter regulations were put in place in 2007, (yes, under a Republican president) the relative price trend has increased the cost of a new car by over $6,200.
The Heritage Foundation recently released a research paper comparing the recent price trends to the predicted trends. It shows that without the federal standards enacted, cars would be between $3,975 and $7,140 cheaper today. These changes were ostensibly enacted to slow global warming. However, this massive expense buys us less than two-hundredths of a degree according to the Obama administration’s own estimate.
What does that have to do with healthcare? Well, the common denominator is the federal government.
I searched in vain for the cost of a visit to the doctor’s office in 1925. We well know that healthcare has taken leaps and bounds forward just as automobiles have. There is no comparison between what we had then vs. today. I read a report from 2011 that said an office visit cost $100, and that office visit required eight people and 45 minutes of work to make that 10 minutes with the doctor happen. Add in the cost of the building, utilities, computer systems, phones, cleaning, etc. It’s a business and costs are high. The highest expense in that equation is the eight people, their salaries, and benefits. The reason they are the greatest expense is insurance and government regulations.
I believe the biggest problem with healthcare today is the federal Progressive Income Tax. This is tied to the progressives' wealth redistribution and social engineering for equal outcomes. Obamacare was not the goal, but a stepping stone to their ultimate goal-- full blown socialized single payer medical care.
Historically, insurance has been available to the public for well over 100 years. They were largely accident policies, but in time they offered plans covering sickness. This was largely a personal choice until unions began to add insurance to employee packages that they demanded from employers.
There was a dramatic shift to employer-provided healthcare during WWII as a direct result of wage and price controls imposed by the federal government (more unintended consequences). The increased demand for goods and a shortage of workers made the labor market tight during the war. Federal law prevented manufacturers from raising wages to attract workers. However, the War Labor Board ruled that fringe benefits were exempt from those controls. Thus, health insurance, sick leave, and such were used to attract workers.
Under President Truman, there was an effort by organized labor to push for public health insurance, a national, yet optional system open to all Americans. The insured under this program would pay a monthly fee which would cover all the cost of medical expenses during a time of need. The government would pay expenses to any doctor who chose to join the program plus a cash benefit to the worker for time off work. The public liked it, but the Chamber of Commerce and the American Hospital Association strongly opposed it.
Unions soon realized they were facing a long and expensive battle, so they began to sponsor employer paid insurance in earnest as they saw this as a more achievable goal. Corporations and public sector employers soon followed suit. With the government ruling that insurance and other benefits were to be untaxed income, the stage was set for an explosion in the ranks of the insured. Between 1940 and 1960, the number of insured Americans grew from 20,662,000 to 142,334,000, and by 1958, 75 percent of Americans were covered by some sort of health insurance.
Now giving an employee a “raise” by giving them better, more inclusive insurance led to a couple of issues that make healthcare more expensive than it should be. If it costs nothing to go to the doctor, or very little with a low deductible, then people will go to the doctor rather than deal with it themselves as we had for centuries before. I’m talking routine colds and flu, minor scrapes, and bruises. This natural consequence is why Obamacare has such high deductibles. It is an effort to keep people from going to the doctor unless absolutely necessary.
Insurance that covers everything is great. I have that now in relation to my job with United Airlines. I have also had no insurance and major medical only insurance, both by choice. I still use my health insurance as if I had none. I rarely go to the doctor, but I am not average. Consider if cars and gasoline were free, or you only had to pay a nominal fee. Would that change your choice in cars? Would your driving habits change?
We have what we have and to think we can get away from the income tax is likely a pipe dream, one I often have! I just think we need to understand that we are not dealing with a single issue. If there were no income tax, businesses would not have a write off benefits and salary. An employee making $10 an hour, actually costs the employer $17 an hour. Without the income tax, social security, Medicare tax, and other benefits, you could have that money to do as you see fit.
Originally the Republicans argued over a clean repeal vs. Obamacare “Lite.” Now it is always some variation of Obamacare Lite. Senator Mike Lee has suggested making the new Senate plan optional so states can opt out and do what is best for its citizens. Imagine if we had 50 laboratories for a solution! That would be, not only amazing but exactly what the founders envisioned.
I have little faith we will ever see a free market solution.