Health Care Competition

If the policy elite really wanted to cut costs, they would deregulate medicine.

The statist establishment would love a single-payer health-care system like Canada's if it were politically achievable. Barack Obama said that if we were starting from scratch, single payer is what he'd back. But, thankfully, Americans are still libertarian enough to cringe at turning the medical system entirely over to government.

So with single payer out of reach, the fans of government control have grabbed for second best: the "public option." This would be government-run health insurance that would "compete" with private insurance. (It wouldn't compete fairly because it could do something no private firm can do: milk the captive taxpayers.) But the public option is proving hard to get. Even some Democrats are nervous about it.

What's a statist to do?

Leading Democrats in the Senate say the answer might be nonprofit health cooperatives. Sen. Charles Schumer wants some method "to keep the companies honest," and if the "public competitor" can "do those things in a co-op form, I think we're open to it."

One sign that this may be the way things are heading is that the New York Times, the mouthpiece of the statist establishment, ran a front-page article last week that begins with glowing praise for a co-op where doctors have lots of time to spend with patients because of its "collaborative model of primary care." Among the media it's an article of faith that the "collaborative model" is more consumer friendly than a profit-seeking business.

The Times connects the dots in case anyone missed the point. "On Capitol Hill, those innovations have made Group Health a prototype for a political compromise that could unclog health care negotiations in the Senate and lead to a bipartisan deal. … [T]he Senate Finance Committee seems poised to propose private-sector insurance cooperatives … as its primary mechanism for stoking competition and slowing the growth of medical costs."

Give me a break. Since when is government needed to stoke competition? Competition is what happens when government lets people alone. I defy anyone to give me an example of lack of competition that doesn't have its roots in government intervention.

Since co-ops are nonprofit organizations owned by their members, the Times' story subtly implies that the profit motive is responsible for the absence of competition and higher medical costs. But that's ridiculous. In a free market without government barriers to entry, it's the quest for profit that produces competition and lower costs.

If health cooperatives were really more efficient and innovative, wouldn't they be copied all over the country? That's how the market works. When someone comes up with an innovative way of doing business, it is quickly imitated and improved on. But buried late in the Times story is the revealing fact that the co-op is "a rare survivor among the hundreds of rural health insurance cooperatives."

Hello? Don't the Times editors see the disconnect? If co-ops worked well, today there would be thousands of them. Why should taxpayers fund a method of delivering health care whose success is "rare"?

The newspaper story made another point that is a favorite of the policy elite: Preventive care will save tons of money. If that's true, there is nothing (but government) to keep people from implementing that principle. But is it true?

This seems to be one of those things we know that isn't so.

I take Lipitor. The drug may extend my life. But this doesn't lower my health-care costs. Years of pill-taking increases costs. If the pill works, I may live long enough to get an even more expensive disease. And maybe I, like millions of others, take Lipitor unnecessarily because we would never have had heart attacks. We then spend more, not less, on health care.

Health-care expert John Goodman of the National Center for Policy Analysis says there are "literally hundreds of studies from over the past 40 years that show preventive medical services usually increase medical spending … Contrary to popular belief, checkups for children and adults do not save the health care system money."

If the policy elite really wanted cost-cutting competition, they would deregulate medicine. No one has ever found a better way to stimulate competition than freedom.

John Stossel is co-anchor of ABC News' 20/20 and the author of Myth, Lies, and Downright Stupidity.

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