Skip to comments.14 Reasons Why Government Makes Healthcare Expensive
Posted on 03/23/2013 11:28:53 AM PDT by DeprogramLiberalism
[Today is the third anniversary of the signing of Obamacare. This thread is a piece of an essay written in plain language to liberals in the first person, but also for conservatives that focuses on how government interference in the marketplace inflates the cost and degrades the quality of healthcare in America. It also exposes the real vultures of American healthcare with a 13% profit margin! Enjoy...]
As Herman Cain poignantly states, We don have a healthcare crisis in America. We have a healthcare cost crisis in America.
A liberal mantra has been that America needs Obamacare because the free market based system is too expensive and has failed. I have a question for you, American neighbor: What free market based healthcare system? Is Medicaid free market based? No, it is government run. Is Medicare free market based? No, it too is run by the government. Is Veterans Affairs healthcare free market based? Nope government run. Is the Childrens Health Insurance Program free market. No again. What about the Health Care Financing Administration that Newt Gingrich said he hoped would wither on the vine? It just morphed into another government agency now known as the Centers for Medicare & Medicaid Services, so no it is not free market based either. In fact, very little about the American healthcare system previous to Obamacare was free market based. It was all under the jurisdiction of a government command-style regulatory system that has meddled in virtually every aspect of it. Do you want to know why American healthcare costs are so high, American neighbor? Ill tell you why and it isnt because of the free marketplace. Think of the 2008 financial crisis in slow motion. Just as with that crisis, liberal meddling is the problem with the American healthcare system. And so, what is the liberal solution? Why, more liberalism of course. Here is your new healthcare system American neighbor: [*32b58j2, *3yo52at]  (800 pound gorilla alert!) Why would you put any faith in government projections? They have a history of notoriously underestimating costs of virtually every government program ever implemented. The first of the following links illustrates the history of this fact, and the other three links prove the truth of it with Obamacare, which has already doubled in expected cost if implemented from $1T to $2T over its first ten years: [*kseyk8, *7t64knp, *6n3locp, *dxhnbjn]  In reality, if implemented it will probably cost even more than that.
When liberals complain that American healthcare is too expensive, what they are saying is that free market healthcare is too expensive, and that if only government ran healthcare instead, costs would go down. The problem with this line of thinking is that everything that makes healthcare expensive is as a result of a distorted consumer marketplace because of government interference progressive-fascism. There are many reasons American healthcare is needlessly expensive, and none of them have to do with a supposed free market system soaking Americans. The health insurance companies who are supposedly the villains because they are supposedly gouging Americans to make inflated profits, are not making out like bandits as has been propagandized by liberals. In fact health insurance industry profits are relatively small.
Lets get some perspective, American neighbor. In 2008 the health insurance industry in total had a profit of $8B (billion dollars). Whereas Medicare fraud alone amounted to $60B. [yzu5dfz, yfqm2ek]  Read those numbers again, American neighbor. If fraud in Medicare could only be pared 13% that would be equivalent to ALL health insurance industry profits. Maybe it would have been better if the Medicare management bureaucracy had been allowed to wither on the vine hmmm, American neighbor? Certainly Blue Cross or some other private company could have done a better job at protecting taxpayers money than the government has hasnt. In fact, no private company could survive such fraud. Senior management would all be fired. Some might be investigated, perhaps charged. Do you think any government bureaucrats were fired, American neighbor. No, I dont think so either.
You can see for yourself that health insurance industry profits are hardly significant in the cost of American healthcare when compared to just the money that slips through the fingers of just one government bureaucracy. Health insurance industry profits for 2008 were 2.2%. Lets compare that with some other industries like construction and farm machinery at 5%, Yahoo at 5.9%, Hershey at 6.1%, Tupperware Brands at 7.5%, Molson Coors Brewing at 8.1%, Yum Brands (think KFC, Pizza Hut, Taco Bell) at 8.5%, Clorox at 8.7%, the railways at 12.6%, and the network and communications industry at 20.4%. [28weqab]  Here is a list of many more: [yk8zw9b]  So much for the healthcare-insurance-industry-profit-gouging theory. If anything, their cupboard is looking a little bare, but that really isnt any surprise wait until you have seen how much the government interfered in the healthcare marketplace even in 2008, before the increase in interference of Obamacare. Its a wonder the healthcare insurance industry made any profits at all. Their CEOs should be given medals of honor just for keeping them in business. In fact, pity the poor doctor literally. Government meddling in the healthcare system has virtually made practicing medicine unprofitable. Read this and worry big-time, American neighbor. [*88mrebu] 
As you read the following list of causes for the high cost of healthcare with your Mr. Spock demeanor and third person analysis, ask yourself how many of these reasons are a result of the free market and how many are the result of progressive-fascism:
We have already discovered that there is $60B worth of fraud each year in the healthcare system. This is the government getting fleeced because of the incompetence and unaccountability of its own bureaucrats. Lets let them wither on the vine, or better yet, just cut the suckers off and let the private healthcare management industry run the system, since they are accountable to their stockholders, and can be held accountable through the courts by taxpayers. Problem solved tens of billions of dollars saved right there.
And speaking of healthcare bureaucrats, it is not just their incompetence and unaccountability that drive up costs in the healthcare system. Government bureaucrats are grossly overpaid and over-benefited, and virtually cannot be fired for any incompetence and waste (like $60B being fleeced right out from under their noses). Their pension plans alone are completely out of proportion with the rest of the country, and all of the lopsided public sector health benefit packages also unbalance the healthcare marketplace and add to the costs the taxpayer must absorb. Additionally their public sector unions are the most aggressive lobby organizations in the country for larger and more costly government. Ever heard of a public sector union offer ideas for saving the taxpayer money that would cost their bottom line, American neighbor? Me neither. Eliminating government bureaucracies is another area where untold billions of healthcare dollars could be saved each year. [*cnsatqm, *ykw3sro, *2det4t5, *24m7xwd, *bmdzbet, *3afd923] 
Insurance with automatic deductions from paychecks removes the consumer from his purchasing decisions. If one buys a car, one compares quality, availability, price, etc. before signing over the money for the purchase. This leads to competition for customers among auto dealers. Not so with employer/government based healthcare insurance where the consumer never really sees the money paid and may not even have the luxury of choice. The hiding of the true costs leads to little competition, which when buying a car minimizes prices. Healthcare consumers should at least have to pay a percentage deductible of the total cost out of pocket so that they have an enticement to search out the best deal, thus creating competition in the healthcare marketplace, reducing monopolization, and minimizing prices. [6pbzdpe] 
Remember from earlier I mentioned that government spending projections on healthcare have always been ludicrously out of whack with reality? Heres why. Private market healthcare spending by necessity must respond to marketplace factors like a downturn in the economy, whereas government healthcare spending does not respond to marketplace realities like the 2008 recession. The overall 2008 healthcare spending growth rate of 4.4% was the lowest since 1960, but this was because of lower private sector spending. Medicaid was up 8.4%, Medicare was up 8.6% and the Childrens Health Insurance Program was up a whopping 13.4%! Read this link, American neighbor its a real head shaker: [*yehtrp9] 
Doctors must carry very high malpractice insurance due to extremely high litigation awards by the courts, and of course these costs must be passed on to patients and the system in general. This drives doctors to practice what is known as defensive medicine, over-prescribing drugs, hospitalizing patients not necessarily needing it, and ordering many more tests than would normally be necessary in order to cover themselves from any possible lawsuit. Read about this following study and ask yourself how many doctors do you think lied to this study from fear of being found out, American neighbor? [*y78pqxc]  The CBO has calculated that over $5B per year could be saved just simply from tort reform. [ckcqsrp]  Remember, the health insurance industry only made $8B total profit in 2008. And get this, American neighbor. While the health insurance industry averages a 3.3% profit margin, trial lawyers who benefit from high litigation awards by the courts (also conveniently run by lawyers) average a 14% profit margin per year! [yfqu7na]  Liberals love regulation. If there was ever an issue where liberals and conservatives could agree on government imposed restrictions, this is it. The trial lawyers are bloodsuckers living high while bleeding the healthcare system for every dime they can get. 14%!!! So who exactly are the villains now, American neighbor? This could easily be remedied, except that the trial lawyers have the Democratic Party in their pocket, being one of their largest financial contributors as a group. Indeed Obamacare, instead of remedying the problem, exacerbated it by providing additional legal jurisdiction for even more lawsuits. [3xvzw5u]  So implement tort reform and this will easily solve another problem with additional billions saved each year, and also clean up a segment of the Democratic Party fundraising Laundromat.
Employees who get their healthcare coverage through their employer dont pay taxes on it as a benefit. However those who purchase their health coverage independently do not receive this advantage, and if a couple is not married and one depends on the others employer plan, it is considered taxable. There is no good reason for this discrimination that adds inefficiency to the system.
Economics 101 teaches that increased competition and choice reduce consumer prices, but the states limit competition in health insurance, and mandate service coverage, effectively removing choice from the consumer. This artificial production of monopoly situations naturally leads to higher consumer prices and less choice of plans. This also contributes to the ranks of the uninsured. [*2bweymc, *bqpgx7y, *l7kab9]  It also removes any financial incentives for maintaining ones health to save money.
Monopolization of insurance coverage is not the only monopoly in healthcare. Doctors and other healthcare workers are also a monopoly. Besides limiting immigrant doctors from getting American accreditation, the AMA has created a cartel over healthcare manpower, and as with any monopoly, without competition prices remain artificially high to become a doctor and to perform as a doctor. [clzw5j5, 7fzcbvz]  Remember our link from above about doctors going broke.
Government regulations and price controls are causing drug shortages that naturally drive up prices, while stockpiling and black markets exacerbate the problems. Patients are literally dying because of this over-regulation. [*3q636pp] 
Illegal aliens are a huge ongoing, mandatory cost. [*b9xs7r]  If you dont think this is going on around the country it is time for you to wake up, American neighbor. The cost is so high dozens of hospitals are simply closing because of the burden. [*dam2hq]  Incidentally, the job losses due to these closures are also expense increases to society that can be attributed to the government mandated healthcare system, but wont directly show up in their numbers. Price controls also decrease availability: [*6zwyn97] 
Emergency wards by law are mandated to treat walk-ins for free if they cannot pay and have no coverage. This naturally means their healthcare costs much more than those with coverage who normally go to their doctor for most medical problems (much cheaper for the system than going to the Emergency Service). This also encourages overuse of Emergency Services for even trivial problems, causing longer wait times for everyone and more cost for those who do actually pay.
It is often stated that Canadian healthcare costs much less than American healthcare. This is a misnomer because of unseen and unaccounted for factors. Canadian costs are set per procedure. Developing new treatments is very expensive and America leads the world in healthcare innovation and the purchase of it. [ygnzh4t]  Canada benefits from that American innovation while having to pay little for its development. In Canada if a higher quality, but more expensive procedure is desired it is often denied, and the patient cannot make up the difference through private insurance or cash, whereas in America before Obamacare, patients had the choice to pay more for higher quality procedures. Also, hidden healthcare costs are high in Canada because of excessive wait times. The costs of under or non-performance at work due to these longer wait times are huge costs on employers and the economy, not to mention the individual patients who are laid up (again not directly accounted as healthcare costs, but real nonetheless). These are the hidden factors that hide the truly MASSIVE cost of universal healthcare in Canada. And if you think universal means everything is included, you can forget that too. Drugs are not included except when in the hospital. Dental is not included. Neither is eye care or ear care. If you need lab work, x-rays, massage or chiropractic treatment, physiotherapy, occupational therapy, senior care, disabled care, etc. most is paid out of pocket or with supplemental insurance, if available. They dont include these additional costs in the cross border comparisons either. Neither included are the costs for many Canadians getting expensive treatments in the U.S. or elsewhere around the world because they are not available in Canada, or because the wait times are too long. Factoring in all of these hidden costs actually makes Canadian universal healthcare much more expensive than American healthcare prior to Obamacare.
Massachusetts is the only state that has a healthcare system comparable to Canadas. Unsurprisingly average per person monthly premiums are by far the most expensive of the fifty states, over twice as much as the American average. Yet, hospitals cant afford to stay open. [7z7cwrv, coof5bu] 
Bankruptcies caused by excessive medical expenses have long been a problem with an American healthcare system based on government meddling that drives up costs in all areas. However, there is a claim that medical bankruptcies would become a thing of the past if America were to adopt a universal healthcare system similar to Canadas. Wrong. Up to 2005 bankruptcy laws were too dissimilar between the two countries to allow an accurate comparison, but were then reformed to be quite similar, allowing a direct comparison. In a Fraser Institute study of the years 2006 and 2007 (2008 was ignored due to the housing bubble meltdown in the U.S. that did not happen in Canada, and would skew the results) found that in fact, medical bankruptcies were higher in Canada for both years. [*7pvbccq, 8344fh9]  Of course we have already witnessed that universal healthcare does not mean that the government pays for everything far from it. It just means that there is more regulation and even higher related costs. The more the government meddling, the higher the costs, and the more the victims.
So there are literally a dozen solid reasons that American healthcare costs previous to Obamacare were grossly inflated all solely due to government meddling. Not one has to do with a problem of the free market. Every reason was a result of government regulation and manipulation of the healthcare marketplace progressive-fascism.
Think Dentistry. It is not covered by Canadas universal healthcare system, so consumers are left to fend for themselves in the free market. So they either purchase private insurance coverage or pay out-of-pocket. In Edmonton where I live, there are 43 Yellow pages devoted to Dentists and Denturists in a metropolitan area of only 800,000 population! Lots of competition lots of choice for consumers. People seem to have pretty nice teeth in Edmonton. How can that possible be without government involvement? [/sarcasm] Think about this: How often is the high cost of going to the dentist in the news? Never. How often are there news stories about people falling through the dental market cracks. Never. How often does one read about dental care rationing? Never. Thats the free market at work. Dentistry is the most reliable, timely and cost-effective healthcare there is all without the government. Actually, because the government stays out of it.
If you want to decrease the cost of American healthcare, American neighbor, the obvious answer is nothing like Obamacare, which would only magnify government involvement, driving up costs and driving down quality and availability, [6bqrkbr, *y9l6mvh]  but instead reduce government interference in the healthcare marketplace (and reduce litigation awards). The free market is where your self-interest lies, American neighbor. As a Canadian with supposedly free universal healthcare let me sternly warn you: If you think American healthcare is expensive now, wait until it is free like mine.
Oops - that should have 14% in the intro.
“Affordable Care Act” = Newspeak
Thank you for this article — it’s useful ammo in my discussions about healthcare with my Canadian family.
You’re welcome. Glad I can help.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.