People say all the time that the United States has one of the most free-enterprise-based systems of health care in the world. This capitalism grants us massive technology and great drugs, even with its lack of universal access.
I’m not sure what any of that means. None of this is true in the slightest bit.
Yes, doctors are paid by nominally private entities. Yes, consumers shell out for health insurance, mostly through their employers.
That crazy system of employer-provided insurance is due to a weird accident of history. World War II price controls led insurers to get around the controls by paying in other ways. That expanded over the decades, and now we are stuck with it. This has distorted the labor market and impeded worker mobility by increasing the cost of moving jobs.
This also created a wall between the payers and the providers so that the normal process of consumer control has been disabled.
It really must go so that, at the very least, the consumer pays. That would be a good first step. But we cannot even get that no-brainer reform.
As for the producer side, it hasn’t been truly free since 1910. That’s when the so-called Flexner Report came out to push for an allopathic cartel that came to control medical schools, driving up the price of services through a credentialing racket, while blocking alternative forms of care. The wisdom of the ages was toast.
As for pharma, it has not operated in a free market for nearly half a century. The Bayh-Dole Act of 1980 allowed private companies to keep “intellectual property”—a wholly unnecessary monopoly—and pay patent royalties to government agencies, thus integrating the two sectors in a financial racket.
The 1986 National Childhood Vaccine Injury Act was also a catastrophe, allowing mass distribution of untested products to people who have no recourse when something goes wrong. The Public Readiness and Emergency Preparedness Act of 2005 expanded that to all medical countermeasures used in an emergency.
Then there is the prescription system itself, which keeps people roped in even though most people are intelligent enough to know when they need antibiotics or steroids. This system alone is more Soviet than American.
If we really want a free market, all this legislation—more than a century of interventions—needs to be shredded. These interventions have worked together to create an enormous tangle of government and private providers, fueling massive cost increases and the decline of our health. After the past four years, and the ineffective and damaging COVID-19 vaccines, the loss of trust is so steep that people don’t want to go to the doctor.
All that aside, there is one aspect of the crazy system that has become a third rail ever since it was introduced by President Barack Obama with the 2010 Affordable Care Act. This is the idea that health-insurance providers cannot discriminate against “preexisting conditions.” The idea is that insurers cannot take health into account when assessing premiums.
That provision alone means that it is not insurance. It guarantees that healthy people will forever subsidize unhealthy people. It means that there is zero financial reward for getting healthy. Indeed, it is the opposite.
No matter how much you let your health go, you face no financial penalty at all. This has slowly devastated American health. The only way to make this work is to assemble ridiculously generous packages of benefits that most people will not use, as a way of subsidizing ill health.
This is not the way insurance works. Indeed, the very idea that any of this is insurance at all is preposterous. We call it that, but it is not that. Imagine if car insurance worked this way, and no matter how bad your driving records or what the actuarial tables suggested, your premium would remain the same. That would be obviously unfair and absurd. And yet we do this with health and think nothing of it.
Here’s a difficult truth: Much of health is within your control. That which is not can be considered catastrophic: a terrible accident, cancer, a brain tumor, or whatever. There are actuarial tables for this, too, and there is no reason we couldn’t have premiums for this and this alone. But under the current system, the people without such problems pay for those with such problems and thus face no reward for, for example, joining a gym, eating right, and losing weight.
Is it any wonder that obesity has gone sky-high since Obamacare? Is it any wonder that the American diet is so atrocious? This is the reason, or a major reason in any case: We’ve utterly deleted any financial incentive for being in better health.
It’s not quite socialism, but it has many features of it. There will never be serious health care reform in this country until someone takes it on. Sadly, no one dares touch the subject. In many ways, the framing that President Obama put forward here made it politically impossible to address, much less repeal.
So we seem to be stuck. So long as providers cannot adjust premiums based on actual risk, they will not be providing insurance at all, but rather an expensive subscription service that you pay for privately, never to get your money’s worth. In fact, it is outright robbery, disguised mostly because employers pick up the tab out of the wage-earner’s pocket, and yet most people do not know that.
Under the current system, the “co-pays”—the minimal amount you pay for a doctor’s visit—are low, but the “deductibles” are very high for anything you get done outside the office. So if you have an X-ray or blood work, you will pay for that with cash. The deductibles can reach $10,000, and you are stuck paying for that amount even with so-called insurance.
To make this medicine go down a bit easier, government has created what are called health savings accounts that allow you to save up tax-free money and keep that amount invested in stocks until you need to use it. That means a substantial part of your salary is pre-spent to subsidize the ridiculously bloated health care bureaucracy. When it is not being used there, it is pumping up the stock market.
What a racket!
From the beginning, this cockamamie system has been pitched as good for the patient. That’s a lie. It’s been good for the industry, which has largely exploited the consumer in the process.
Did you consume $14,000 in health care services last year? I ask because that’s what you spent on it. I suspect that the answer is that you did not. But that money is going everywhere except to the patient’s health.
As I say, it is not socialism, but it sure isn’t capitalism either. Despite the name, capitalism is fundamentally about putting the consumer in charge. The patient is anything but in charge today. We cannot even know the prices of services before we purchase them. That’s when you know that it is not really about the patient. Indeed, it is about politics these days, as we know from the rise of the grotesqueries of “gender-affirming care.”
The entire system needs to be blown up and restarted on a genuine capitalistic basis, with no patents, no producer cartels, and only real insurance based on actual risk. But today, no politician dares even say that, much less put forward legislation that achieves it. Instead, we could go barreling down the road to corporatism and all the iatrogenic sickness and death that this path entails.
Genuine reform is needed to deregulate the medical schools, scrap the pharmaceutical patents, repeal the Bayh-Dole and PREP acts, establish a genuine system of liability, and make insurance great again by finally and decisively repealing Obamacare, complete with a full deregulation of benefits packages that can be accepted by any provider.
Only then can we get costs under control and reward people for taking care of themselves again. That means making health insurance into genuine insurance in which the actuaries are in charge of assessing and pricing risk.
Only one U.S. senator fully understands the problem and the solution. He is Rand Paul of Kentucky. Should the Republicans win back the Senate, he should head a commission and write a comprehensive bill, and it should be passed. But it will require tough decisions and political courage.
Until then, the system will only get worse. And consumers will continue to do what we do today, which is pay through the nose for a system we dread using while desperately searching for alternatives.
