Following up on our coverage about the polluted health care debate and its citation of the disproportionately high costs of medical care per capita in the United States compared to other First World countries, this article will answer the simple question of how it all came to be so bad.
Today, almost half of all spending on health care in the United States is government spending. Ever since President Lyndon B. Johnson created Medicare and Medicaid through the Social Security Act of 1965, health care in the United States has come to be understood as a right rather than a product to be traded voluntarily on a free market — like food, clothing, and so many other goods and services are. This entitlement mentality directly brought about the current third-party-payer system: a blend of government programs, as Medicare and Medicaid, and government-controlled employer-based insurance.
All was done in good intention — to relieve people of the supposed burden of paying for their own health care. But as a result, health care costs skyrocketed. Throughout the 1970s and 80s, expenditures were soaring so out of control that the government intervened, with more coercive measures: price controls were imposed on medical services; medical benefits were cut; and every aspect of the medical industry was thoroughly regulated.
Quite possibly the greatest restriction on free health case is the American employer-based system. Tax laws have made individually purchased insurance far more expensive; far too expensive for many people to afford. As a result, they are bound to their employer (diminishing their full freedom on the labor market) and oftentimes, to whatever insurance their employer decides to provide for them.
An American citizen’s inability to buy whatever insurance from whatever company is further infringed upon by the mandates required by state insurance boards. Companies and individuals are forced to purchase insurances that cover all sorts of treatments that the state may deem necessary; prenatal and psychiatric care, for instance. The costs of insurance go up of course while the consumer is left with fewer options. In many states, it is simply impossible for a person to insure himself again medical catastrophe alone. In no state is the health insurance business a free market anymore.
Another obstructing factor is that for many treatments, states require licensed physician to carry them out — even when it concerns a simple procedure that an experienced nurse can perform with or without supervision. But because a doctor must be involved, the costs of treatment are higher, therefore, so is the insurance.
Today, health care in the United States is still among the most expensive in the world while in spite of decades of government financing and regulation, tens of millions of people are left uninsured. America’s health care system is in desperate need of reform. Unfortunately, the reformers promise only more government interference all the while blaming the market for not providing adequate, cheap medical care. In truth, there never has been a truly free insurance market since the end of World War II, in virtually no Western country.