Let’s do a thought experiment. You walk into a grocery store and there are no prices posted for any food item. You fill your cart with what you want, with basically no consideration of costs. When you get to the check-out counter, the clerk knows the prices of the various groceries. You have no idea how the clerk arrived at the prices, but you do know that they are different at every grocery store. Before you actually pay for the groceries, however, someone else steps up and pays for over 70 percent of the food in your cart.
From an economic standpoint, this is the health care system in the United States, where a third party pays for the majority of our health care even though prices are unknown to the patient. It is a fundamental economic principle that when someone else is paying for a service or a good, people will use as much of that service or good as possible.
Beginning in 1943, employers in the U.S. started paying for health care benefits for their employees. At the same time, the government gave employers a tax break for providing those benefits. In 1965, the federal and state governments began paying for health care for seniors and for the poor through the Medicare and Medicaid programs. In 2010, the government expanded its role in health care financing via Obamacare.
So while many Americans are experiencing increases in their out-of-pocket expenses for health care, the fact still remains that the vast majority of a person’s medical care is paid for by a third party, either their employer or the government.
Health care spending in the U.S. in 2022, the last year of complete data, was $4.5 trillion, which may or may not be an appropriate amount. A recent study, however, projects that by 2032, spending for medical care will almost double to $7.7 trillion. This increase is unsustainable.
Whether you believe that health care is a “right,” everyone can agree that health care is a necessity of life. Other necessities of life include food, shelter, and clothing. Yet no third party pays for these items for most Americans. It is the free market that allows people, as consumers, to access these necessities and gives them choices.
At the end of the day, health care is an economic activity, albeit the most personal economic interaction we as patients experience. The reality is that patients today cannot act as savvy consumers of medical care because the existing system will not allow it. Prices are unknown, competition is virtually non-existent, and someone else is paying for over 70 percent of an individual’s costs.
We now have over 80 years of experience with our existing health care system. Without meaningful reform that puts patients in charge of their own health care decisions and health care dollars, the country is on a trajectory that puts government bureaucrats further in charge. When that happens and because of exploding costs, we can look forward to price controls, fewer provider options, less individual decision-making, and ultimately rationing and less medical access.
The most important person in any health care delivery system is the patient, not employers or government bureaucrats. Any proposed medical care reform in the U.S. must treat the patient as an individual and not force Americans into a one-size-fit-all system. Employers and the government don’t tell us what food to eat, or what clothes to wear, or where to live.
We rely on the free market to allow us to make our own choices and decisions. We should let the free market work in health care as well.
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