By Richard P. Huemer, M.D.
Not so many years ago—within my lifetime, anyhow—health care was a two-party transaction between provider and patient. You went to the doctor or the hospital, received a service, and paid for it. Now, owing to the multifarious intrusions of government into that basic transaction, third parties have become inextricably involved in health care. This has resulted in costs peaking as service shrinks.
Health insurance (an old plank of the Socialist platform) got a boost long ago when the government offered tax breaks to employers who provided it. Later, government monopolized elder care via Medicare, while fixing fees for service, foisting HMOs and PPOs on doctors and patients, and preventing a free market in pharmaceuticals. All of this has redounded to the benefit of insurance, hospital, and pharmaceutical industries. It is largely due to governmental action that a giant disconnect exists between the costs of health care and consumers’ ability to control them through prudent, free-market choices.
As the Obama Administration has rightly pointed out, health insurance increases the cost of health care. It accounts for perhaps 30 percent of total expenditures. As anyone who has ever dealt with an insurance company knows, they are all in the business of maximizing profits while paying out as little as possible. Thus, an inherent and irresolvable conflict of interest lies at the heart of health insurance. Another costly factor is the rapacity of lawyers filing malpractice claims, which adds to the insurance burden in the form of malpractice premiums.
Some politicians anticipate that health-care costs should diminish under a “public option.” The Administration disingenuously proposes that this will occur through competition, but that scenario seems improbable. Competition requires a level playing field, and government doesn’t use that playbook. Most likely, health insurers will close shop as the public option gains customers, leaving finally only a single-payer system with no mechanism to restrain costs.
What’s wrong with a single-payer system? Everything that Republicans have pointed out: burgeoning costs, limited array of providers and services, rationing of care, bureaucrats making medical choices and mandating end-of-life decisions, and much more. People with friends abroad, in countries with single-payer systems, know all the problems. The major defect in any single-payer system is simply this: a third party is still interposed between provider and patient, only this time it’s the government.
Everyone knows that buying wholesale saves money by cutting out the middle-man. It actually is possible to eliminate the middle-man in the health care transaction! Here’s how: The government issues vouchers, in the form of medical scrip, that are redeemable only for health care. The patient, not the government, chooses how to spend the scrip—for allopathic medicine, chiropractic, psychological counseling, even Christian Science—and the government has no say in the process. This ensures that patients will receive the services they want, and will shop for the best value, thus allowing free-market competition to determine prices.
A medical-scrip system is similar in concept to food stamps and school vouchers, examples of government returning some of its
| revenue to citizens. I propose that medical scrip be issued to everyone, not equally but individually, on the basis of statistical probability of illness based on data such as age, gender, domicile, occupation, and ethnicity, all easily ascertainable from the census. Nobody would receive zero scrip. (This departs from the model of need-based food stamps and school vouchers, but comports with the widespread view of health care as an innate right to which everyone is entitled.) |  |
Medical scrip could be exchanged for dollars only by specially licensed providers of health care, who would receive government checks as reimbursement. To minimize fraud in the system, scrip would not be redeemable through banks or other intermediaries. Unused scrip could be put aside against future need or returned to the government, at a discounted rate, as a credit against income taxes.
Inevitably, there are outliers—people who don’t fit the statistics. Patients with special needs would receive medical review, similar to existing prior authorization procedures for Medicare. Upon approval, they would be granted extra scrip to cover surgery, chemotherapy, dialysis, or other specified services. In addition, nobody would be kept from spending out-of-pocket dollars for more or better care (unlike Canada).
Other reforms for our broken health care system are feasible, such as allowing Americans to purchase pharmaceuticals offshore, and capping malpractice awards for pain and suffering. These would reduce costs somewhat, but the main cost-containing factor—the one largely absent from American health care for many decades—must be the complete restoration of free choice to the patients, to whom it properly belongs.
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A shorter version of this proposal was submitted to Antelope Valley Press. The author presented this idea in July to Dr. Ron Paul, who encouraged him to publish and discuss it.