It's Not About Healthcare

No doubt we have just witnessed some pretty historic legislation with the passage of the Democratic healthcare reform bill.


So much political capital was spent to make it happen because a majority of the country didn't want it. Arms were twisted, deals were made, and threats were levied to members of the Democratic Party in order to secure the votes necessary for passage.

Depending on whose numbers you believe, this bill will either save a small amount of money or will cost us trillions of dollars. I venture to guess that the risk is pretty high that this will cost us as a nation a great deal of money. Every other entitlement program we've passed has ended up with ballooning costs. Why should this one be any different.

We will hire more than 16,000 IRS workers to enforce compliance with the law that fines American citizens for not buying qualifying medical insurance. This is done under some twisted rationalization that the Commerce Clause of the Constitution gives the Federal government this authority. The cost to our liberty on this part of the bill is extremely high in my estimation. I am no Constitutional scholar, but I am pretty sure that the Federal government is over stepping its bounds by mandating that an individual purchase anything.

This certainly seems like a lot of cost anyway you look at it.


This risks of enacting this bill (HR3590) are tremendous.

  • Entire new bureaucracies are being created.
  • Mandates on individuals, states, and businesses are being made.
  • Lines never crossed before are leapt over in single bounds.

Whether or not they prove to be costly, or violating freedoms, or breaking the Constitution's limits on government power, or any other negative effect that is being reported that this bill will have, these simple facts remain and cannot be denied.

Not sure about you, but that is a LOT of risk.

Our Current Fundamental Problem

Healthcare costs have gotten increasingly worse for the consumer. While I have yet to experience this myself (even when pricing private insurance for my family), no one is denying that this is a problem. There are also reports of increasing numbers of people getting denied due to pre-existing conditions. This has a direct affect in meaning greater out of pocket costs for the people that are denied coverage. Again, can't argue with that but don't have first hand experience with it either.

It's all about the costs. Not the delivery system. Not the quality of care. After all we are the envy of the world for our level of care and our capacity to innovate. It's why people from around the world come here for treatment.

Root Cause

So what is the root cause. Why would costs inflate faster than other services in the market in terms of pricing? We know that in a competitive environment costs are kept low while quality continues to improve. You may have spikes in pricing but in a competitive and economically efficient market, these rise in prices will reflect the raw material costs inflating, not the profit.

I think we do have to realize that we are a growing and aging population with a shortage of doctors to care for that growing and aging population, so demand must be going up. Doctors are being driven out of business from the high cost of mal practice insurance and decreasing reimbursements from the national healthcare system we already have - Medicare/Medicaid. The combination of these puts a crunch on doctors and pharmacies. It further makes going into medicine a less attractive endeavor for our brightest students.

The actual costs of providing healthcare services should be relatively constant as well since it's mostly time you are buying. And sure the doctor's time has become increasing more expensive as they must cover the cost of increasingly expensive malpractice insurance (can you say tort reform).

So if it is not Demand and not Input Costs, then it must be an inefficient, non-competitive market.

Ding. Ding. Ding.

In 1973 Congress passed the HMO Act, in response to the Medicare/Medicaid programs ballooning costs, which basically monopolized healthcare insurance. It mandated that employers with more than 25 employees offer HMOs. The government also permitted the HMO to deny care. In addition as much as 40% of medicare rolls were pushed into HMOs by different states using Section 1115 waivers (circa 1980). This combination pretty much made certain very good profits for the HMOs with little risk.

So there you have it, big, highly profitable insurance companies propped up and protected by federal legislation, would never really have any incentive to compete for business. Therefore natural market forces were short circuited and not allowed to function.

Try This First

Knowing this, why couldn't we at least try the fallowing before trying the same thing that we've tried over and over again (government run programs -- they always end up costing too much):

  • Make private and group insurance the same from both HIPAA and tax perspectives.
  • Tear down any and all regulation on insurance companies providing healthcare coverage.
  • Allow them to sell to whoever, and wherever.

  • Allow the innovation of new pricing structures and contracts.

  • Bust apart the FDA/Pharmacy conflict of interest

There are a few more ideas that would certainly help and would 1) get the government out of this mess, and 2) would cost the tax payer nothing.

There is zero risk in trying this, and it could quickly have positive results. Why not give it 3-5 years and see what happens? If it fails, we could always revert to passing massive government takeover stuff. But it's very hard to reverse what we have now if it doesn't work (e.g. Social Security, Medicare, etc.).


There are a lot smarter people than me working on this problem which leads me to believe they are not trying to solve the problem of high healthcare cost. It seems obvious there are easier things to try if that were the case. Why do the same thing that we have done repeatedly in the past and expect a different result -- some would call that insanity. Why do we continue to try to solve market inefficiencies created by government meddling with more government solutions.

We can simply not afford any more mandatory spending which is exactly what these entitlement programs become.

We will end up defaulting.

There are other motives at play here. The end game is to not fix healthcare costs.

I believe the end game is creating a larger class of government dependents than already exist. It's much easier to influence and thus control people who are dependent on a good or service. As for what these politicians think about crashing the US economy for their own power lust -- I don't have a good answer.

I hope I am wrong.