Let the Marketplace Decide About Health Care

The “marketplace” is really people like you and me participating freely in a system of exchange of goods and services. Just like capitalism has no single hand guiding it, so too we can let the marketplace dictate what healthcare system it prefers. Don’t let those central planners from on high try to manipulate a “managed competition” to supposedly benefit all of us who can’t afford health care today. The top-down reforms just don’t work, as we’ve seen already.

In the first place, the tax code penalizes people who want to buy health insurance by making them pay for it with after-tax dollars. Second, even if they’re self-employed, only 25 % of their premiums are deductible. But companies can buy health insurance for their employees with pre-tax dollars! So what happens is that they, instead of their employees, are the primary purchasers. What does it mean? The users of health insurance are not actually the purchasers, so they don’t really care how many times they use it if it basically costs them the same. And even though more people are receiving better treatment than ever before and are living healthier lives, costs have gone up rather than down.

Why not let the market decide through open competition? First the tax code has to be revised to let people by health insurance with pre-tax dollars. Second, let people set up something like a medical IRA for their families which could be used to pay for ordinary health expenses. Everybody would choose this because everybody wants to control their own health care decisions. Probably a lot of people would choose high deductibles so that their premiums would go down and in turn, when doctors see their patient loads come under control, they’ll be more inclined to offer competitive rates.

Companies could offer their employees an incentive not to use their health care except when they really need it: they could keep the difference between their claims and $500, for instance, and then double it. In the end, you would see less frivolous use of health care that they are not the primary purchaser of. Everybody’s cost-conscious all of a sudden! Everybody’s costs would go down and all because people would be making their own health care decisions.

When you micromanage a system and remove the primary user from being the primary purchaser, you take away control of that system from the people who are using it. When people are free to make their own decisions for their own lives, and they have a stake in it, then they feel like they have some control. If there is incentive to be frugal and try to be judicious, people will act accordingly. And everybody benefits. The central planners from on high are penalizing companies and small businesses that are the backbone of this economy. And let’s remember that those “market forces” are really you and me.