The Market Based Solution to Healthcare Costs

Originally Published March 05

Healthcare reform has been the Democrat’s frontline issue for quite some time now.  As we have all seen the debating via the media as Republicans have opposed the bill and Democrats bribed for passage there is one distinct thing that neither is willing to discuss.  High deductible healthcare plans.

Anyone that has heard my stump speech knows that I know in order for us to bring down healthcare costs we need skin in the game.  President Obama and Congressman Boswell have fought against this concept and Republicans have been scared to commit to it.  I read a great article this week arguing in favor of high deductible plans by Michael Tanner from the CATO Institute.  The point is this; Healthcare reform can’t occur by shifting more of the burden from the consumer to the government.  In his article, Tanner said this:

Perhaps that is because in the long-run, the only way to spend less on health care is to consume less health care. Someone, sometime, has to say no. But the incentives under our current health care system perversely encourage everyone to say ‘yes.’”

Right now, the consumer only pays 13 cents of every dollar spent on healthcare.  That is not insurance, it’s a pre-paid medical plan.  Insurance is something you pay for in case of emergency.  Not when you have a flat tire, the sniffles or your screen door breaks.  The current healthcare bill will lower that consumer burden to only 10 cents of every dollar spent.

Tanner describes it perfectly.

“Think of it this way. If every time you went to the grocery store, someone else paid 87 percent of your bill, not only would you eat a lot more steak and a lot less hamburger – but so would your dog. And food costs would go up for everyone.”

The point is this.  If America wants to get healthcare costs under control than we need to spend less.  We will not do this if we do not place some of the cost burden back on the consumer and stop going to the doctor to hear them say “you’ll just have to wait a few days to get over your cold.”

That’s why HSA High Deductible Plans work.  You think twice before going in because you have a runny nose but will have coverage when you break your leg or need surgery.  We need to stop shifting responsibility from the government and our health insurance companies and start taking personal responsibility for our own healthcare.

It is not unreasonable to ask individual citizens to share the responsibility of healthcare.  If we actually did this, even with a lack of competition we currently have, prices would go down.  It’s basic economics.  As demand decreases for all of those small things few of us pay for right now they would be forced to drop the price otherwise no one would go to the doctor and they would go out of business.

Why we are under the impression that the health insurance companies control the prices is beyond me.  We as consumers control the prices.  It’s based on our demand.  If we stop consuming at the ridiculously high levels that current consumption is at, they will be forced to drop prices to try to get you back in their door.

We need to demand that President Obama, Congressman Boswell and even my fellow Republicans, start to focus on us, not them or insurance companies as the solution.  Rather than passing one 2,000-page bill, let’s start passing smaller bills that have solutions we know will work.  They aren’t trying to reform healthcare, they are trying to build our dependency on the government and based on the current plan, healthcare costs will only increase.