Want to Cut Healthcare Costs? Make People Pay More

We can agree the system needs fixing. The real question is how to best do that.

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By Mary Kate Cary, Thomas Jefferson Street blog

Today's Wall Street Journal lead editorial is a long examination of the White House's argument that we must enact healthcare reform immediately because we need to control costs. But what if there isn't any cost savings? What if healthcare becomes a new entitlement that is impossible to repeal while further bankrupting our government? Before we nationalize healthcare, the Journal argues, we need to look at the arguments being used to "rush through the greatest social spending program in American history."

Rather than a single payer system—in the mumbo-jumbo language of healthcare, "single payer" means "the government"—providing "free" universal healthcare, here's what the Journal argues:

A far better alternative is to increase individual responsibility for medical decisions. In 1965, the average American paid more than half of his health care out of pocket. Spending has since increased sevenfold, but the amount that consumers pay directly hasn't even doubled. When people aren't exposed to the true cost of their care—though it is paid in foregone wages and higher taxes for public programs—they consume more care...

Increasing cost-sharing would discipline the health spending curve and give it a more rational bent. As societies grow richer, it makes sense that people will invest more in their own well-being ... The U.S. health cost "crisis" is that we spend so much without incentives to weigh the costs against the benefits.

Yet the entire Obama agenda is about increasing political, rather than individual, control of the health markets. Ted Kennedy's draft health-care bill offers insurance subsidies up to 500% of the poverty line—for a family of four, that's $110,250. In that kind of world, all costs will climb even higher as people use far more "free" care and federal spending will reach epic levels. Bureaucrats watching the bottom line will try to ration care while simultaneously locked in a death match with interest groups guarding their turf. Congress will join the fray and make things worse, as it always does. Caught in the political crossfire will be patients, as they always are.

The editorial uses a lot of healthcare jargon, but the arguments against government-run healthcare make a lot of sense to me. We all agree that the current system needs fixing; the only question is, what's the best fix?

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