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Archive for August 11th, 2009

Philip Klein of the America Spectator has an excellent article puncturing some of the myths in the health care debate. He was particularly eloquent in his debunking of the claim that America relies on free markets for health care:

Both in terms of direct spending and regulation, government plays a dominant role in health care and impedes the formation of a marketbased system in the U.S. In 2007, the cost of all government health care programs at the federal, state, and local level added up to more than $1 trillion, representing 46 percent of the $2.4 trillion in total U.S. health care expenditures, according to the Centers for Medicare & Medicaid Services. That same year, an analysis of Kaiser Family Foundation data shows, 31 percent of those covered received their health insurance through the government. While the rest of the nation obtains its health care privately, government policies still distort the insurance market. The most significant way the government meddles in the market is through the tax code, which discriminates against those who purchase insurance on their own to the benefit of those who are insured through their employers. The policy dates back to 1943, when the Internal Revenue Service ruled that workers did not have to pay taxes on health benefits purchased through their employers. With wage and price controls in place during World War II and labor scarce, many employers took advantage of the favorable tax status and offered health benefits to attract workers, and this later became enshrined in the tax code. As a result, by 2007, 63 percent of the insured population was receiving their coverage through their employers. Having such a system restricts choice, because workers are limited to whatever health benefits are offered. It impedes mobility, because insurance cannot be taken from job to job. It compounds the problem of unemployment, because losing a job often means losing one’s health care. And ultimately, it drives up spending—since most Americans don’t have to pay the out-of-pocket costs for their medical care. Roughly 6 percent of the covered population purchases its own insurance without the tax advantages enjoyed by those who obtain it through their employers, but even then they must navigate a highly regulated individual market that leaves them with few options. Many states impose onerous regulations on insurers requiring them to provide certain benefits. Some of the benefits insurance companies have been forced to cover include in vitro fertilization, morbid obesity treatment, and lockjaw disorders. Currently there are nearly 2,000 benefit mandates nationwide, according to the Council for Affordable Health Insurance, driving up the cost of polices by 20 to 50 percent, depending on the nature of the mandate. That means that even if a person who is relatively healthy wants a cheaper, basic plan that would cover him in the event of a sudden catastrophic illness or freak accident, he’s still forced either to purchase expensive comprehensive coverage or go uninsured. However one would describe the convoluted U.S. health care system, a free market it is not.

The right lesson to learn from Klein’s article is that the flaws in our health care system exist because of government intervention. Yet President Obama wants to expand the policies that have caused som many problems. More government does not solve the problems caused by too much government in the first place.

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