Wednesday, September 5, 2018

The Costs Of Government Controlled Health Care

Because people reply on insurance to pay for medical needs, they never know, nor care, how much it costs. All people care about is how much they will pay out of pocket. This is a lot like the rent-to-own industry, people just want to know what the monthly payment is, and not what they are paying in total. The total of that rent-to-own product is far more than the retail cost. A rent-to-own television might cost $1000 more than retail. If we had free healthcare, people would use the system even more because there would be no financial pain for abuse. Sometimes there is no choice when it comes to medical treatment, but often there is one.

Every aspect of the American medical system is over regulated, whether it be government or insurance companies. Government and insurance companies dictate which tests patients must, or cannot, have. Government usually demands certain tests for certain possible illnesses, while insurance will demand fewer tests so their payout will be less.

If you talk to any medical professional, they can make a list of things they do that are unnecessary. How many times have we heard of an aspirin costing $50 or more? This is done because hospitals are not allowed to charge more than a set price for things such as rooms, so they recoup the losses through needed items such as food and medicine. Once again, this is government's fault.

The one thing of which you can be sure, is the more government you have involved in healthcare, the less efficient it will become. With government control you will see a lot more bad doctors because the doctors of the past will no longer be doctors because of the drastic cut in pay. Some will say that doctors no longer having to pay for medical school will offset the cut in pay. Today, many doctors never pay for medical school because they choose to work in low income areas for a set period.

Recently, I leaned of CON (Certificate Of Need) laws. Those laws, basically, set up a monopoly for hospitals. One example, a doctor wanted to buy an MRI machine so he could provide tests far cheaper than the local hospital. Local laws would only allow him to rent an MRI machine, which meant he had to charge more than if he purchased one himself. The last thing the government wants, is for medical costs to drop because politicians don't want to lose donations/bribes from medical lobbyists. If government controlled the entire medical system, these things would only get worse. You can be sure there would be no competition.

You might have heard people talk about socialist Sweden where they have free healthcare and education. What people don't seem to realize is that Sweden has one of the least regulated capitalist systems there are. Sweden allows businesses to operate with little restraint.

Another thing where Sweden differs from the US, it doesn't share a border with a 3rd world nation, unless you want to put Finland in that category, If the US had free medical care for all, we would be providing care for a quarter of the world. Right now, the US effectively has open borders. We have an estimated 20 million people in the country illegally and the Democratic Party is calling for fully open borders. Leftists might tell us that those 20 million would be paying taxes to support the government medical system. Sure, some will be paying taxes, but right now we have the top 10% earners paying 69% of all taxes, so you can be sure that illegal aliens won't be paying enough taxes to cover their medical care. With open borders you would also have people entering the country just for treatment.

We also have 50% of US citizens that pay no taxes. That means everyone else is paying for 50% of the population. Be sure that 50% not paying an income tax, will pay it in the form of a VAT (Value Added Tax) if the USA adopts a national healthcare system. A VAT is how Europe pays for it's free healthcare and education. The average VAT across Europe is 20%. You might think that a 20% sales tax doesn't sound too bad until you learn that a VAT isn't a sales tax. It is a tax added to every thing bought and sold in the country. Suppliers, manufacturers, distributors and retailers all collect the value added tax on taxable sales.

Let's use the auto industry to see how a VAT works. Ford builds a car. They will need to buy tires for that car. Ford will have to pay the 20% VAT for each tire they buy. The same 20% will be added to the entertainment system for the car. Anything Ford doesn't manufacture themselves for that car, they will have to pay the 20% VAT for that item. You, the buyer, will reimburse Ford for those taxes. The buyer will then pay the 20% VAT when they buy the car. A sales tax is required only on the retail level, a VAT is also required on the wholesale level.

Democrats will try to tell you how the rich will pay for your free healthcare. The US debt is currently $21 trillion dollars. We could take all the money from anyone with more than a million dollars and that wouldn't pay off the debt. In 2016 the US spent $4.1 trillion. Government healthcare is expected to cost $3.2 trillion annually. Taxing the rich more wouldn't begin to pay for healthcare. Every tax and fee paid in the US would have to double. The chart below will give you an example of how much that 20% VAT might cost you.

Goods Cost 20% VAT Yearly VAT Total
Groceries per week
Car insurance
Bar Tab
Eating Out (per month)
Cable TV
Books and Music

Free healthcare would be a wonderful thing. I have had friends and family who faced death because they had no insurance or money to pay for healthcare. A friend once had her oncologist tear up a $1500 bill because he knew she didn't have the money. There are ways to make healthcare more affordable, but a state owned or strictly controlled system isn't the way. We must streamline the current system.

Employers provided insurance is a modern invention. During the depression, Roosevelt froze wages, so employers began looking for ways to give workers incentives to remain on the job because they weren't allowed to give raises. They also needed incentives to lure people to their place of employment, so in loo of pay, they started adding benefits, such as health insurance. It wasn't until the 1950's before enough people had insurance that it began to drive up healthcare costs.

The best way to lower healthcare costs is to cut regulations and allow the free market to reclaim the healthcare system. We must also take control of US borders so that the state won't be liable for the healthcare for citizens of another country. We must be sure they are tax paying US citizens.

Everyone told us the Affordable Care Act (ACA) was suppose to solve our problems. The ACA is still in effect and things are as bad as ever. This should show us that more government involvement won't solve the problem. The ACA is so bad that democrats are campaigning on fixing the healthcare system they created.

Another thing we must do is to stop brainwashing people in to believe they need a doctor for things such as the common cold. Television is full of advertisements telling people they need this pill or this device to make their lives better. Those same ads tell people over and over to visit their doctor. This is brainwashing. Frivolous doctor visits drive up healthcare costs. Insurance companies go up on rates in order to earn a profit. This is just one of many things that needs to be done to fix the US healthcare system, don't wait for government to do it for you.

There is no easy fix for the healthcare industry. But common economic principles can make it a lot better. We can also help poor people with their medical needs as we currently do, but we have to make the system more efficient unless we want to live in a country where, at some point, only the rich or extremely poor can get healthcare. It is naive to believe that the rich can pay for everything you want for free, or cannot afford. I would suggest the president gather a group of medical professionals who do the actual work and ask them what regulations restricts them from doing their job efficiently. The one thing we do know, administration costs are in the million for every large business.

Frivolous lawsuits are another thing that drives up costs, but we must also protect patients from bad doctor and and hospitals. Doctors can spend a quarter of a million dollars annually for malpractice insurance. I'm sure there is was way to cut costs in this area as well. 

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