Free Market Health Care

It's time for a truly radical proposal

Democratic presidential hopefuls have identified health care as the issue for the 2004 election. They are all offering various proposals to increase federal government involvement in the messed-up medical system. Meanwhile, Republicans are busy playing the War on Terrorism card and hoping the issue will go away. No one is offering a true solution to the health care "crisis."

First, how much of a crisis is it, really? Politicians typically claim that 41 million Americans do not have health insurance. Please note that lack of health insurance does not mean lack of health care. However, a new Congressional Budget Office study has found that the number of Americans who are uninsured at some point during the course of each year is 59 million. But before someone screeches that the "crisis" is 50 percent worse than we thought, the study also notes that the number of Americans uninsured over the course of the entire year is actually much lower, between 21 million and 31 million, depending on which of two surveys one accepts.

Who are the people uninsured for a year or more? It turns out that 60.5 percent are under the age of 35, and 80.2 percent are under 45. Furthermore, 86.1 percent of those uninsured for a year consider their health to be "good" to "excellent," and they are not wrong. Consider the risk of death faced by those under 35. In 2000 there were 134,419,000 Americans in this age bracket. Of the 2,404,598 Americans who died that year, 112,005 were under 35, or about 4.6 percent. Using death as a crude measure for serious health risk (can't get more serious than death), the under-35 uninsureds were risking one chance in 1,200 of dying from whatever causes in 2000. And while 60.5 percent seems like a high number, keep in mind that the rate of the uninsured among the population as a whole remained small—only 7.3 percent of those under 19 were uninsured for the whole year; the 19-24 bracket was at 14.4 percent; and the 25-34 group came in at 12.3 percent.

So the vast majority of those who died under age 35 died with health insurance. But it may be specious to emphasize such correlations anyway. After all, we don't blame the 1,801,459 deaths of people over age 65 in 2000 on the fact that they are the beneficiaries of the federal government's Medicare program.

But how many die prematurely from lack of health insurance? The United Steelworkers of America gives an estimate of 18,000. That's bad, but let's put the number in perspective: In 1999 there were 29,199 suicides, and a year later 41,821 people died in traffic accidents. So the health care "crisis" does not mean that America's streets are clogged with folks pushing tumbrels yelling, "Bring out your dead!" Americans are not dying in droves due to a lack of health insurance.

To the extent a crisis exists, it's because nobody in the health care "system," least of all patients, feels that they are in control of their health care arrangements. Patients feel insecure about losing their coverage first because it's tied to their jobs—either their employers will drop their benefits, or they'll lose their jobs outright. Second, while most patients say they are satisfied with their managed care plans, a significant proportion feel that such plans deprive them of control over their health care choices. Meanwhile, discouraged physicians are being turned into paper-pushers handling mass quantities of government and private health insurance paperwork, while being limited in the tests and drugs they can order for their patients. Physicians are also being squeezed by federal government restrictions on what they can charge their patients. This means that doctors typically lose money on Medicare and Medicaid patients, which forces them to raise prices on their privately insured patients to make a decent living.

Another problem is that, since patients are not paying for medical services directly, they have no incentive to curb their use of the services provided. This dysfunctional incentive structure leaves that burden on both government and corporate third-party payers who have to raise taxes and prices to cover their uncontrolled medical expenses. And health insurers have to meet myriad state and federal mandates that expand paperwork and prevent them from offering lower-cost alternatives. The system is so complicated and screwed up that policy makers, the public, physicians, insurers, and corporations may well entertain a radically simple solution to the problem just because the status quo is so absurdly annoying. That's why the Democratic presidential candidates are hoping that the voters will swallow their tired universal health care nostrums in 2004. But there are radical proposals, and then there are really radical proposals.

Perhaps the time has come in which some brave policy makers can step forward and advocate true free market health care. Already, patients and physicians are seceding from today's barely disguised system for rationing health care, and moving to free market models. Consider the case of SimpleCare, which is spreading across the United States. In SimpleCare, patients agree to pay physicians in full on the spot. This cuts out the morass of administrative paperwork, allowing doctors to slash their fees by between 30 percent and 50 percent. Uninsured people can access SimpleCare physicians by paying an annual $20 fee. Since patients are paying up front for routine maintenance, they can afford to buy high-deductible catastrophic insurance policies to cover emergencies like cancer and heart attacks.

Another promising phenomenon is the rise of "boutique" medicine, in which patients agree to pay primary-care physicians an annual fee, in return for the physicians' agreeing to limit their number of patients and make themselves available on a 24/7 basis. The fees can also cover expenses like antibiotics, exams, and in-house diagnostic testing, in addition to the easy access.

If such models can flourish in the midst of the current health care mess, think how much more could be accomplished if all the money and time now being wasted were put in the hands of individual patients, who could then make their own health care choices? The government and corporations would be eliminated as third-party payers, and would no longer face uncontrolled health care expenses; health care options would multiply to meet the preferences and needs of individual patients; and the insurance industry, once freed of mandates, could offer a wider variety of coverage to meet the budgets and circumstances of individual clients. SimpleCare and boutique medical practices are pointing the way toward a future of free market medicine and the end of the health care "crisis." But do we have politicians and policy makers courageous enough to advocate such a future?