Texas Public Policy Foundation

12/07/2017 | Press release | Distributed by Public on 12/07/2017 18:30

Government healthcare balloon' won't fly

Here is the big question we need to answer, with evidence not rhetoric. Why does the U.S. spend more on healthcare than any other nation on earth and yet Americans can't get the care they need when they need it?

In 2015, the U.S. spent $3.2 trillion on its health care system and health care spending consumed 18 percent of GDP. The next closest nation in healthcare spending is Netherlands at just 12 percent.

In 1970, U.S. healthcare spending consumed 6 percent of GDP, which was similar to other developed countries. Growth in healthcare spending closely parallels the growth in healthcare administrators, which increased 3,000 percent from 1970-2010. For comparison over the same time, physician supply increased 100 percent.

Not only are we spending more, we are waiting longer. The average wait time to see family physician is now up to 122 days. That's four months to find out whether belly pain is gas, an ulcer, or cancer.

Some have experience what is called death-by-queueing. For example 304,000 veterans may have died waiting for care. In Illinois 752 people on Medicaid died waiting to see a doctor. Nationally, one third of primary physicians do not accept Medicaid patients.

The unifying explanation is bureaucratic diversion - money that is needed to pay for care is being diverted to pay for bureaucracy. All that administration and regulation costs trillions, between 31 percent and 40 percent of all healthcare spending. As spending on bureaucracy comes first, patient care gets what is left, which isn't enough. That is how America spends more and Americans get less care.

Think of healthcare as a hot air balloon.

The left balloon represents healthcare before Obamacare. This balloon was able to get off the ground, it could fly, meaning that health care services and goods were generally available. Though federal healthcare mandates diverted large sums of money away from care, there was still enough so that most people could get the medical care they needed. While health insurance was very expensive, most people could afford it.

Obamacare massively expanded both the Medicaid-eligible population and the regulatory structure. This diverted trillions, not merely billions, of healthcare dollars away from care to pay for bureaucracy. More than seventeen million people gained insurance, mostly through Medicaid expansion. The weight of all the mandates plus all the newly insured individuals grounded this balloon - it could not fly. This meant people could not get the services and goods they needed when they needed them.

Medicaid expansion forced state programs such as Illinois and New Mexico to cut their reimbursement schedules to providers. These cuts reduced availability of medical services. Obamacare's regulatory bureaucracy consumed so much money that there wasn't enough to pay for care. People died who could have been saved: death-by-queueing.

The evidence is overwhelming from Canada 's single payer to our own VA system, and the Prairie State, where 752 Illinois Medicaid-eligible residents were could not get care in time to save their lives.

Imagine a healthcare system that eliminates the federal government. Without Washington's mandates, inefficient healthcare spending disappears. More than a trillion dollars per year suddenly would become available to pay for actual care.

A government-free system would be based on the free market, eliminating the third party payer. Buyer and seller would be reconnected. Buyers of care, consumers or patients, would have their choice of doctors and services, and a strong incentive to economize. Sellers - providers, hospitals, and pharmaceutical companies - would have to compete with each other. This would dramatically lower prices.

A free market healthcare balloon would not just get off the ground - it would soar! Large numbers of people could get the care they need when they need it from a doctor of their choice at a price they could afford. And patients, not the government, would be in charge.

Do the math. In 2015, the U.S. spent $3.4 trillion on healthcare. That translates to $10,625 for every man, woman, and child in the country. If a family of four had all that money in a large HSA, they would have $42,500 to shop for and pay for all their care, and still have enough to buy catastrophic, or stop-loss, insurance.

The conclusion is clear. Without government diverting our healthcare dollars to itself, i.e., with a free-market healthcare system, there is more than enough money for all Americans to get the care they need without the people or the nation filing for bankruptcy.