How much does the average Georgian pay for health care? Too much.
Roughly 15 percent of your income goes towards your health care, on average. Now research from Harvard shows health-care spending will grow faster than the economy for at least the next 20 years.
The Affordable Care Act was supposed to prevent this. Yet Obamacare merely expanded health insurance, a costly system that leaves patients behind and is largely responsible for spiraling costs.
Think back to your 8th grade geometry class. You probably learned the shortest path between two points is a straight line. You can apply this logic to spending. In health care, the two parties that matter are you and your health care provider. You spend the least money when you pay your provider directly.
Now consider how health insurance works. Your money exchanges hands multiple times before it reaches the provider. It first goes to a third party — the insurance company or the government, as in Medicare and Medicaid. From there, these entities negotiate compensation schedules with providers and facilities. Both steps add bureaucratic and administrative costs to health care’s price tag. And though insurers attempt to lock in reasonable prices on your behalf, they often come up short.
Why? Because they’re not spending their money; they’re spending yours. They thus have less of a financial incentive to get the best deal.
The same problem affects you once you have health insurance. Insurance gives you the illusion you’re spending someone else’s money. The health insurance trap thus comes full circle. Insurers and consumers make it more expensive.
At this point, you might want to abandon health insurance altogether, perhaps in favor of the “single-payer” system — essentially, Medicaid for everyone — favored by European countries. Liberal policymakers wanted exactly that in 2008 and 2009; public opposition caused them to choose Obamacare instead.
We’re lucky they failed. Single-payer systems suffer from the same problems, and they add a few more. In single payer, government is the sole provider of health insurance. It thus spends everyone’s money, whereas health insurance companies only spend their customers’ money. The same perverse spending principles apply.
The government recognizes this, so it tries to stop consumers from spiking prices further. It restricts our access to health care through regulation. This leads to poorer quality and long waits. Here in America, this is exactly what’s happening to the single-payer Veterans Affairs system.
If not Obamacare, what else? Reformers should start by giving consumers the freedom to make their own health care choices. We need to return health insurance to the role of taking care of unpredictable, catastrophic health-care expenses, and leave the majority of everyday health-care decisions in the hands of consumers. We know this works.
Doctors can also refuse to take health insurance. More doctors and hospitals are choosing this path. One of my patients did this and saved $17,000 on a single procedure.
Lawmakers should encourage this kind of patient-focused innovation. Instead, they gave us Obamacare. Real reform shouldn’t leave us with a higher bill.
Jeffrey Singer, a surgeon in Phoenix, is a Cato Institute Adjunct Scholar.
