There has been quite a bit of discussion in the blogoshpere as of late regarding the pending hospital closures. Buffalo Hodgepodge ran the numbers and came to the conclusion that economics dictates that we are over supplied and the closures are necessary.
While I agree that we have an over supply, I do not believe the State should be closing hospitals. The State, as well as the Federal Government is part of the problem. What is needed is a solution that attacks the root cause of our spiraling health care costs. That cause is the proliferation of 3rd party payers, including HMO’s and government benefit programs.
These programs have led to a plethora of unneeded medical tests and treatments. The accountability for the cost of services is removed from the person seeking medical care. The current system benefits the insurance companies and government bureaucracies by creating profit and jobs to process the claims for care. The average person gives no thought to the cost of care because the money is not coming directly out of their pockets. What most people don’t realize is that the cost does come of their pockets indirectly, through higher taxes and increased insurance premiums.
The federal government in 1973 passed legislation that led to the widespread growth of HMO’s. This had a devastating affect on health care costs. The same is true for government provided health care benefits. Another problems is that private health insurance is often tied to employment. If people shopped around for insurance and paid directly for it, there would be more pressure to contain costs.
The United States had the finest health care system in the world before 3rd party payers came to dominate the system. Insurance was carried for catastrophic illnesses and procedures. Routine services, such as a doctor’s visit, were paid directly by the patient to the doctor. That is what kept costs in check.
What is needed is a major overhaul of the entire method for financing health care. Then, hospitals, and other providers, would be subject to the natural economic realities of a free market and costs would be normalized. It was common for doctors to treat financially disadvantaged people at reduced charges or free in the past. Today’s system does not allow for that because doctors must work on volume to make a profit under the 3rd party payer system.
The following statement is from Congressman Ron Paul. You can read the whole speech here.
No one disputes the diagnosis: American health care is in lousy shape. As a practicing physician for more than 30 years, I find the pervasiveness of managed care very troubling.
The problems with our health care system are not the result of too little government intervention, but rather too much. Contrary to the claims of many advocates of increased government regulation of health care, rising costs and red tape do not represent market failure. Rather, they represent the failure of government policies that have destroyed the health care market.
It’s time to rethink the whole system of HMO’s and managed care. This entire unnecessary level of corporatism rakes off profits and worsens the quality of care. But HMO’s did not arise in the free market; they are creatures of government interference in health care dating to the 1970s. These non-market institutions have gained control over medical care through collusion between organized medicine, politicians, and drug companies, in an effort to move America toward “free” universal health care.
Nothing is “free” and that includes universal health care. The true costs are astronomical.
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