Consider this bit of folly when pondering government’s role in health care. Recently, while waiting in line at a local convenience store, I curiously scanned the prices displayed on the rack of cigarettes behind the register.
Amazingly (to me), I noticed several brands were nearly $7 a pack. Of course, much of the cost of a pack of cigarettes is due to high taxes along with the Tobacco Masters Settlement Agreement.
Why did U.S. states sue Big Tobacco, and how do states justify the high taxes on tobacco products? Exactly: To “recover” their tobacco-related health care costs. The Medicaid lawsuits filed by the states eventually led to a multibillion-dollar settlement, which is still being paid out today.
Now we have cities like New York wanting to ban large sodas and buttered popcorn, again in the name of “health care costs.” Why do individual health care issues require a government solution? The answer, of course, is because government has so immersed itself into the health care industry.
Most of the problems with U.S. health care come down to two issues. First of all, almost no one knows what anything really costs. Think about it. What does a routine checkup cost you? Fifty dollars? Twenty-five dollars? Zero? How much is your insurance company billed? How much is an X-ray? What is the true cost of your prescriptions? Who knows?
Don’t feel bad; it’s not just patients who are cost ignorant; the doctors are, as well. Dr. David Belk, MD, notes in “The True Cost of Healthcare” that, “unlike any other business in America, almost all of the financial transactions in health care are hidden from the providers as well as the patients. We order tests, procedures and medications to manage our patients, but very few doctors, or other health care providers, have any idea how much any of those things cost.”
To highlight this, consider medications. Belk continues, “Anytime you go to a store (say, a grocery store), you expect to see all of the products being sold with their prices plainly displayed. When you go to the checkout, that’s the price you expect to be charged. You also expect to be able to check the price of the same or a comparable product in competing stores so you can shop around. That’s how the free market works.”
Now imagine your trip to the grocery store was more like a trip to the pharmacy. As Belk points out, “Imagine what it would be like if a grocery store never displayed the price of anything. And the price you’re charged might be totally different from the price the next customer is charged for the same product. In fact, suppose you couldn’t even pick your own groceries. A grocery list would be handed to you by a food expert and you’d be billed based on your particular ‘grocery plan.’”
The first issue with health care costs is a result of the second: The manner in which we purchase health care differs greatly from how Americans purchase any other item. About 90 percent of Americans with health insurance have it through a third-party payer system provided by their employer or the government.
In other words, by-and-large, most Americans do not directly pay for their health care. It is this third-party payer system that has made us so ignorant of the true cost of our health care. According to FreedomWorks.org, in 2008 the average visit to the doctor cost $199. However, the patient only paid $28 of this cost. As FreedomWorks notes, “Most of us have simply no idea how much medical procedures or regular checkups actually cost.”
This is not how we purchase homes, automobiles, or even other forms of insurance. As usual, when our free-markets falter, look no further than Big Government. In 1960, Americans paid over 55 percent of their medical care costs out of pocket, while the government covered just over 21 percent of such costs. According to the National Center for Policy Analysis (NCPA) in 2010, for the health care system as a whole, Americans pay only 12 percent out of pocket.
Many of our politicians continue to preach how they intend — through some government action — to “bring down the cost of health care.” Americans, of course, are being duped. What they really mean is that they want to lower the price paid by the patient (voters).
Such politicians never reveal that these lower costs inevitably mean higher taxes (or at least more debt) on a significant portion of Americans. One doesn’t reduce the cost of health care simply by legislating who pays for it. The free markets must be allowed to work in order for health care costs really to decline.
Trevor Thomas is a Hall County resident and frequent columnist.