Free Market Medicine

In the U.S.A, we have developed a very unwieldy system for funding medical care. It has a big engine, no brakes, and a very loose connection between the driver and the gas pedal. The little clinics do okay, but the hospitals with operating rooms have a difficult time getting ends to meet. They feel compelled to provide medical care to anyone who walks in the door who needs it, no matter how they might pay for it. It is the judgment of the doctor and patient on the treatment, within the confines of guidelines set by the hospital and the insurance companies. In the wink of an eye, the fully insured patient can agree to a $50,000 procedure with only $1,000 out of pocket. It is like driving a car with no brakes!

But hospitals are staffed by hundreds of highly trained and educated individuals who are devoted to providing the best medical care possible. And hospitals purchase extremely rare and expensive equipment to provide the best care they can afford. But who pays for it? The insurance companies pay for it. I believe they are billed at 2-3 times the cost of the procedure, and then they negotiate the price down to something acceptable (or previously agreed upon in a contract). And who supports the insurance companies? Hard-working Americans who have jobs. So we have a trickle down from the wealthy Americans (meaning, those with jobs with medical insurance) filtered through the insurance companies to the perennially broke hospitals.

A government-run medical care system would in fact be very similar, in that we would have a trickle down from the wealthy Americans (meaning, those with jobs paying taxes) filtered through the government to the perennially broke hospitals. And of course the government would have to put restrictions on how the money is spent, and would have to set priorities on who gets the medical care. Injuries before cancer? Youth before age? How will they decide? And it will get ugly, with long waits for simple procedures. Ask any Brit.

So the basic choice is, do we want the government bureaucrat deciding who gets what treatment, or do we want the free market deciding? I think medical savings accounts combined with a free market system will result in the best care at the lowest prices. So I recommend a third system, where the patient buys the medical care that they can afford. Some will get a Mercedes for medical care, some will get a Studebaker, and some get will no medical care. The latter choice is not unthinkable to me, since my grandmother never knowingly accepted any medical care in her life. An employed person accumulates his money in a medical savings account (filled by employer and employee contributions) in their youth, spends it as they see fit to age and die comfortably, and gives the rest to their heirs. This approach encourages the patient and the doctor to be very careful with the patient’s money, which are the brakes that the medical insurance system needs. This approach also allows the patient to shop around for the best deal before getting sick or for elective procedures, instead of paying top dollar with the insurance company paying the bill. This approach will no doubt force states to provide medical care for the truly needy (I'm thinking of children with Down’s syndrome or birth defects), but once again there will be a whole swath of people who don’t work, don’t accumulate medical savings, and still want medical care. We need to constantly remind these people that hospitals are staffed by hundreds of highly trained and educated individuals who use extremely expensive equipment to provide their medical care. Ultimately, these people will be at the mercy of the state bureaucracy, as it must be up to the states to choose who gets the medical care (not the federal government, because that is unconstitutional). But hopefully this approach will motivate them to get a job, accumulate medical savings, and pay for their own medical care. I think it connects the driver with the gas pedal, and puts some brakes on the big spending.