The main problem with American medicine is that it costs way too much. This could be improved by using market-oriented solutions rather than more government regulation and control. At this point in time, there is ample indication that market solutions would make things better while government solutions will make things worse.
The four areas of medical cost that should be improved upon are misuse of insurance, the unnecessarily high cost of legal liability, the high cost of developing drugs and the third-party payment of medical expenses.
These solutions would not infringe on anyone’s rights or freedoms and they are independent in the sense that any one of the proposed actions will improve things independent of any other action.
The most important factor in running up the cost of medicine is that too many of our medical bills are paid by third parties. This means that the costs are borne indirectly and there is little incentive by both user and provider to cut costs.
This problem could be attacked by reducing the misuse of medical insurance and encouraging the use of health savings accounts. A health savings account is an account composed of before-tax money that can be used tax free to pay for medical bills. The money that is not spent on medical bills remains in the account in the possession of the account holder. There is no “use it or lose it” in this system so the owner of the account feels that the money he is spending is his own money and if he doesn’t spend it he retains it.
This would generate a severe behavior modification in the way people shop and spend for their medical care.
Another must would be the relaxing of rules and regulations pertaining to health savings accounts to allow for better and wider use of these accounts. In conjunction with the health savings account the individual could use high deductible medical disaster insurance to cover unanticipated large medical costs. This insurance should be cheap and represents the proper use of insurance in covering medical costs. Using insurance to cover all medical costs is costly and inefficient.
In order to improve the way medical insurance is used and its cost minimized, the following should be applied:
* Allow medical insurance to be sold inter state. This would reduce the cost through competition and give the customer more choice. Reduce state requirements on what must be covered by medical insurance. Right now the cost of medical insurance is greatly increased by requiring people to buy coverage for things they don’t want or need.
* The cost of individual medical insurance should receive the same tax treatment as employer provided health insurance. The cost of medical liability makes out medical costs go up.
The following steps would lower medical costs as well as costs in all other areas:
* Put a cap on non-financial damages that can be awarded. Right now unpredictable damage awards by juries for such things as pain and suffering and punitive awards make liability cost unpredictable and high.
* Make the loser in a lawsuit pay all of the costs incurred by both parties. This would do a lot to eliminate frivolous law suits.
* The notion of making the person who is able to pay liable for all of the costs independent of blame should be eliminated. This is called the "deep pockets doctrine" in which anyone able to pay can be made liable for all of the costs no matter how little he is to blame. Introducing these reforms into our legal system would help all areas of our economy besides medicine.
The costs of developing new drugs is according to some analysts about 10 times or more higher than they need to be and the development of new medicines and treatments is much slower than it needs to be because of the action of the FDA who oversees the development of drugs and medical procedures.
The powers of the FDA should be either eliminated or cut back to reduced levels such as it held before the Kennedy Presidency. While the FDA may add some safety to the process of developing new medicines and procedures the cost of that added safety is hardly worth the delay in medical treatments or the added costs of medicines.
While elimination or curtailment of the FDA appears drastic, it would really help the situation. This discussion is far from exhaustive.
However, the introduction of any of these reforms would be very helpful to the medical cost problem. Note that nothing presented here would involve coercion or loss of freedom to American citizens and each of these proposals should help.