In Dr. Howard Sachs recent op-ed, “Socialized Health Care Degrades Health and Our American Values,” Sachs advocates for a pro-free market and limited government solution to alleviating the problems of the American health care system. Although this argument is valid, it does not completely address the core problem of our health care system in that insurers, not physicians, are responsible for the delivery and financing of health care.
A free market economy is a system in which prices are based on competition among the private sector without government interference. There are basic microeconomic principles that could alleviate the problems of the American health care system. For instance, increasing price transparency would give consumers the best information to make decisions about their health care. Secondly, increasing competition among insurance companies would lower prices. However, the free market has produced serious inefficiencies in the American health care system. For instance, insurance companies have traditionally reimbursed physicians on a fee-for-service basis. This compensation method has contributed to high health care costs by encouraging physicians to provide unnecessary medical services.
To an extent, the inefficiencies of the private sector propelled federal policymakers to enact the Affordable Care Act. Conservatives tend to criticize the ACA as an excessive government overreach for regulating the private market. For instance, it mandates that individuals obtain insurance and employers provide insurance to their employees. This criticism stems from ideological grounds that bigger government leads to diminished individual liberty. The ACA has imposed some regulations on the insurance industry, such as banning insurance companies from not providing coverage due to preexisting conditions. However, the ACA is not as intrusive on the private market, as conservatives frequently allege, because the ACA relies on the private sector to expand health coverage. This demonstrates another characteristic of the health care system: the blending of public and private authority. Similarly to Medicare and Medicaid, the ACA is based on private sector arrangements that endow insurance companies with a good deal of financial authority and oversight power over physicians and hospitals.
The arrangement between the public and private sector demonstrates the fundamental flaw of our health care system in that insurers, not physicians, are responsible for the delivery and financing of health care. Instead of enacting structural reform to the health care system, the ACA just merely expanded the status quo, which, in turn, has empowered insurance companies. Thus, it is hardly surprising that consumers are struggling to afford health insurance, despite being provided with federal subsidies.
Policymakers need to institute structural reforms to our health care system that transfer control from insurers toward physicians. They should continue to evaluate the successes of the ACA’s experimental delivery and financing models and explore other possibilities. Just as solely relying on the free market is not the solution to alleviating the problems of our health care system, neither is providing subsidies or tax credits to consumers in order to afford health coverage. While providing subsidies or tax credits assists consumers in the short-run, it fails to answer the question of why health insurance is so costly. Thereby, these options fail to address the fundamental flaw of our health care system in that physicians are not responsible for the delivery and financing of health care.
Leslie McNamara is a public policy graduate student specializing in health policy. She can be reached at lamcnamar@gmail.com.
