Subject health care to the market
New Health and Human Services (HHS)Secretary Dr. Tom Price and Clinton News Network (CNN) anchors Wolf Blitzer and Dana Bash held a televised Town Hall on March 15.
Blitzer and Bash obviously struggled to understand Price’s free-market, patient-centered ideas. The Republican Health Care plan, according to Price, was “about the carrot, not the stick.” When Blitzer stated only the individual mandate can keep young people buying insurance so the exchanges won’t collapse, Price’s response was one of the best I have heard on a corporate news show. “What I hear you saying, Wolf, is you want to force young people into buying a product they don’t want, correct?” Price went on to say that young people should be able to buy or not buy the health insurance of their choice.
When Blitzer kept pointing out that under the plan Medicaid would be cut by billions, Price told him patiently that he should not measure the effectiveness of a program by how many tax dollars are spent on it, but whether it works for people. Numerous studies have shown that Medicaid does not produce positive health benefits. Its main benefit can be mental, in that it removes fear of medical bankruptcy. That goal can be accomplished outside of Medicaid itself.
When Price suggested that the Republican plan would incentivize more community health clinics to spring up, Bash asked incredulously, “How would they just pop up?” Bash, how does any new business just pop up? It’s called free market capitalism, Bash. Remove government obstacles, and supply will meet demand. It has already begun with basic health clinics at Walmart and Walgreens.
The left believes that health care is a right, but the Republicans correctly understand it is a service. Once you demystify its essential nature, it becomes easier to analyze using standard economic tools. Price understands that insurance coverage does not equal health care. The Affordable Care Act (ACA) is failing because it lost sight of basic principles like freedom of contract. The left as usual focused on equality of outcome, which cannot be attained, even with state coercion. In fact, the coercion built into the program only made their centrally planned and bureaucratically controlled plan even more unstable.
Price wants to bend the cost curve down and increase the supply of health care services by political angioplasty—removing the regulatory cholesterol clogging the arteries of commerce. The ACA gives an enormous amount of power to the HHS secretary to examine regulations and remove those that do not work.
If Price is serious about regulatory reform, he will have to look at his own profession. American doctors earn on average $250,000 a year, more than twice the world average. A good deal of the disparity is due to the Progressive era crony capitalist government privileges they enjoy. The American Medical Association has actively lobbied for laws that limit the supply of health care providers since they kept Florence Nightingale and her nurses from ministering to the poor in America’s immigrant ghettoes. Occupational licensure laws, hospital residency requirements, obstacles to medical school admissions and barriers to immigrant doctors artificially inflate the cost of health care by restricting the supply of doctors.
The new Republican administration needs to cut the regulatory barriers to entry that keeps health care demand outpacing the supply of providers. There is talk of draining the precautionary principle swamp at the FDA to lower the approval cost of prescription drugs. Free markets always do the best job of matching supply with demand. The Republicans have the power, and they have the ideas. Let’s get ’er done!