How America’s Health Care Fell Ill

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With individuals, instead of companies, buying insurance policies, insurance companies would have to cater to individual needs and persuade individuals to “self-insure” against the relatively minor medical expenses that are now paid for with “front-end” policies. This could have two important and immediate effects. First, it would make individuals much more conscious of preventive medicine. It is now more true than ever that an ounce of prevention is worth a pound of cure. Giving people a reason to act on that truism would save a lot of money and improve both the quality and the length of human life. The second effect would be to make people far more conscious of the relative costs of alternative remedies. Doctors and hospitals, at long last, would have a powerful incentive to find ways to cut costs; they would have to in order to maintain their patient loads. The enormous waste and duplication now built into the system would begin to be wrung out.

A third reform would be to require insurance companies to indemnify policyholders rather than pay service providers. The point, again, is to encourage “shopping around.” To be sure, the laws of the marketplace cannot work perfectly as a cost-control mechanism for the provision of medical services. And certainly someone with a heart attack or a severed major artery is in no position to drive a hard bargain or indulge in comparison shopping. But emergency medicine amounts to only about 15 percent of the medical services rendered in this country. The other 85 percent of the time the marketplace could powerfully influence the cost of medical care.

There would also be a great benefit to doctors if insurance companies paid patients rather than them. Thousands of tons of paperwork would disappear, as would the increasing tendency of insurance companies to second-guess doctors in the hope of holding down costs. Doctors could go back to healing the sick instead of clerking for insurance companies.

Adopting such reforms would certainly not produce a medical utopia. No matter how well things went, there would still be those who could have been cured and were not. The poor and weak would still be more likely than the rich and powerful to fall into the cracks of the system. But to insist on a perfect system in an imperfect world is futile. And there would be many short-term winners and losers as the reforms were phased in and began to have their effect. Good hospitals and doctors would prosper as never before while mediocre ones would suffer. There would undoubtedly be a rich harvest of horror stories on the local news.

But when the dust settles, American medicine would be much more economically efficient. Thus there would be that much more money to cure the sick, comfort the dying, and search for the medical miracles that lie ahead in undoubted abundance. The cost of the economic inefficiency built into the medical system five and six decades ago was at least $66 billion in 1990 alone. That money today is simply being wasted. That is why it is not only in our national self-interest to find a better, more economically efficient system of health care but our duty as moral beings as well.