RALEIGH – Medicare, the federal health program for seniors that some politicians and activists want to expand to the entire U.S. population, distorts the medical marketplace and currently has an unfunded liability of nearly $90 trillion. Medicaid, the federally funded state program for the poor and disabled, is eating up budgets at both levels of government and offering a promise of free nursing home care to middle-class Americans that can never be fulfilled at less-than-ruinous tax rates.
And in the so-called private market for employer-provided health insurance, an artificial construct created by foolish and regressive tax subsidies, consumers continue to face perverse incentives to consume medical services unwisely.
Is all lost in health care reform? Not at all. Recent years have also brought promising innovations in the financing and delivery of medical services, innovations that point the way towards real reforms to give patients more power, information, and choice among competing service providers.
One promising innovation is called concierge medicine. As the Wall Street Journal’s Melinda Beck reported last week, some physicians have been moving away from fee-for-service practices with large patient caseloads towards a system in which the docs give a higher level of care to a fixed number of patients. The concept began more than a decade ago among physicians treating affluent patients in the Seattle area, but is now being used by medical practices treating patients of average incomes.
The most-competitive segments of the medical marketplace involve services that aren’t covered by most third-party payment plans, such as eye care and cosmetic surgery. With patients spending their dollars directly on services, rather than indirectly through taxes or insurance premiums, there’s a strong incentive for providers to keep prices low and earn repeat business.
Another good example of medical innovation would be the “minute clinics” now springing up in drug stores and retailers across the country. They typically have a nurse practitioner or physician’s assistant on site to address minor conditions and prescribe some medicines.
As consumer gain more control over their health care dollars and decisions, such innovations will proliferate. That’s one of the potential benefits of the consumer-driven health care model. Health savings accounts, health reimbursement accounts, and similar plans are growing rapidly, working as intended, and delivering real benefits to millions of Americans. They are prying open the system, giving patients the ability to try out new services that save them time and money – rather than pretending that “someone else” will pay for whatever services they consume from doctors, hospitals, and pharmacies operating the same old way.
That way never worked well, and it’s becoming increasingly impossible to finance. The solution is not to toss out medical markets in favor of bigger government. The solution is to liberate medical markets from excessive regulations and tax subsidies, so they can serve to coordinate the varying interests of individual patients and providers at the lowest possible cost and with the least-possible intrusion by government bureaucrats.
The other path does not lead to a pretty destination.
Hood is president of the John Locke Foundation