Bad Trend

Neither Party Does A Thing About It

That's a 249% increase since 2000 (5.8% per year). (Note: US CPI inflation has increased 2.5%/year) (Per Charlie Bilello on Twitter) For what it’s worth, the big inflationary years have been since 2020. Inflation was relatively tame ahead of Joe Biden.

Barack Obama tried to institute socialized medicine with Obamacare. His ideas around medical care were absolutely horrible and would have meant only the super-wealthy got care while the rest of us were rationed. Unfortunately, John McCain cast the deciding vote and we are still stuck with some form of Obamacare.

Here is an absolute fact:

The more government spends and regulates health care, the more expensive it will be.

Hence, the Inflation Reduction Act which had regulations around things like insulin did nothing to curb inflation and increased the cost of insulin despite the $35 price ceiling. Price ceilings create shortages since demand outstrips supply at that price ceiling. This is an economic fact.

It is really hard to get clean data on health care because of the federal policies around it. However, states have different policies too! The water gets muddier. That makes it easy to politicize the data to bolster whatever policy or opinion you want to project.

The better way to solve the increased spending on health care is to rely on principles. Principles work across the board and will overcome policy to a point.

Here are some basic principles that the feds and states should enact and you will see health care costs come down, rapidly. This isn’t rocket science. It’s not hard.

1. Competition. The way our current system is set up, it protects everyone from competition. Insurance companies are protected. Hospitals are protected. Doctors are protected. As demand goes up, the protected classes know the elasticity of their supply curve and can raise prices accordingly.

2. Separate employment and health care. The centralized bureaucratic president FDR left a lot of shitty legacies and one of them is the fact that your job provides your health care. FDR capped raises and so employers began offering health insurance as a benefit to get around the cap. By separating and simultaneously increasing competition, people will be able to get insurance on their own at a cheaper cost.

3. End mandates. Let insurance companies innovate. Suppose I don’t want all the things in a policy? Let the market dictate what policies are offered. Right now, I pay a lot because there are federal and state mandates in place on coverage. I have to pay for stuff I don’t need which is really a tax on me benefitting someone else.

4. End Third Party Payer. There are legions of people who work as employees in both insurance companies and doctors’ offices trying to figure out how to bill and code stuff to get paid. By making the consumer the payer directly to the doctor, it ends layers of distribution and gets rid of middlemen. That brings costs down.

5. Price Transparency. How much do you pay for services? In medicine, you really have no idea. There are several layers of rates. It’s gotten so bad, you cannot pay cash for anything because see line item four, everything runs through the bureaucratic govt/insurance company thicket to try and derive a price.

6. Medicare/Medicaid. Here is where reform gets really hard. These two systems need to be radically changed. The scope of a blog post is too small but there is way too much government interference in the market so it is not efficient. Every time a politician tries to talk about this, they are demonized unless they are expanding the program.

We know the costs keep going up but no one has the intestinal fortitude to do anything about them.

There is no sanity when the issue is healthcare. At least if the first five principles were put in place, costs would come down to a point. That would allow people to begin the conversation about the sixth point and reform them.