Universal Healthcare Increases Unaffordable Care
One of the first lessons in my freshman year economics course was the relationship between the supply of money and the price of goods. At its simplest level (and all other things being equal), an increase in dollars in a system raises prices for that system’s goods and services. This would be inflation.
This principle is important as it relates to healthcare coverage today.
We have gone part-way in providing dollars into the system via insurance and government programs. The results are that the price of care has risen and at the same time an estimated 46 million Americans are not participating in the system.
This combination - rising prices with a reasonably large (15% of all americans) not covered and therefore coming out-of-pocket for their care - has created a panic in the social and political dialogue about healthcare.
Fairly so. A large number of our unisured citizens are at serious financial risk if they need care because they do not benefit from the economic support of the system. By choice or by error, they are outside the insurance system.
The conventional wisdom is that these people must be brought into the system. As a result, they too would have affordable be covered.
This conventional wisdom ignores a stubborn fact that a second alternative exists as a solution to affordable healthcare: eliminate price supports in the system and establish instead a pay-as-you-go model.
The immediate effect would be a collapse in the pricing of products and services. Why? Because the layer of price support is eliminated.
Remember the first days of economics. The inverse of the first lessons is that fewer dollars in a system leads to lower prices for goods and services.
For example, today patients pay a co-pay. The doctors then collect additional monies from the insurance company/government.
In a pay-as-you-go system, there are no further dollars to collect beyond the co-pay what the patient pays. Furthermore, the soft costs evaporate related to the enormous bureaucracy associated with processing goods and procedures through the insurance companies and government.
Who loses? In this analysis (that admittedly ignores many philosophical points related to health, society, democracy) the paper pushers, doctors insofar that the list price for their services are lower but offset by lower administration costs, government bureaucrats who were necessary earlier to maintain the system.
The winners? The patients. Costs become transparent and the pricing thereof better reflects the value of the service or good. Therefore, collectively, society becomes a winner.
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