Competition Solves Health Care
Despite Senators Clinton and Obama's attempts to frame this presidential election as one of "change," their marquee domestic proposal to create a new government-run health care system will make this election a contest between two very old, and very important, competing visions of government.
Mrs. Clinton and Mr. Obama have spelled out, in very clear terms, their desire to see government takeover of our health care system. Senator McCain, on the other hand, wants to use market forces to empower individuals with freedom and choice. The outcome of this debate will impact not only the health of millions of Americans but the long-term viability of our republic.
Free-market thinkers have to make a clear and compelling case that the problems in our health care system do not represent a failure of markets, but a failure of government. While government's role in health care has expanded — one out of two health care dollars is now spent by the government — health care has become more expensive, less efficient, and less accessible. Health insurance premiums have nearly doubled since 2000 while inflation grew at 18% and wages grew by 20%. Meanwhile, the percentage of employers offering coverage has dropped 8% during the same period.
Convincing consumers that government is the problem obviously will require more than statistics or sound policy, but an appeal to their gut level expectations. The fact is Americans expect choice, freedom, and security in every area of their lives except for two: health care and education. This dynamic represents both a challenge and an opportunity.
The challenge is that low expectations and widespread frustration has made consumers vulnerable to the seduction of socialized medicine. The opportunity is in helping consumers see that if the government-imposed barriers in the health care market were erected anywhere else in our economy they would revolt.
For instance, imagine if when consumers wanted to design their own car or computer they were told what they could only design their machine based on arbitrary government mandates that varied state-by-state. Imagine if when consumer wanted to shop for any product they couldn't find basic pricing information or reviews because the government set up a system that made those choices for them. The American people know that innovation, choice, and competition work because they see these forces work every day. Consumers expect that the market will produce better, safer, and more efficient cars at a reasonable price. Consumers expect the market will make electronics faster and cheaper, and so on. History has confirmed this fact time and time again. In 1908, Henry Ford made a car for $850. Eight years later he produced the same car for $360. Today, we see that prices for plasma and LCD TVs have dropped by about 50% in the past two years.
A market-based system that would unleash the power of innovation and competition in health care is within reach. A key reform would involve transferring health care tax benefits to individuals rather than employers. Mr. McCain's plan would do that by providing every American with a tax credit of $2,500 per individual ($5,000 per family) to buy their own insurance plan. Switzerland, hardly a bastion of conservatism, has used a similar individual-based model where costs are 50% less than in America with better outcomes.
The Clinton and Obama plans, far from being harbingers of change, would institutionalize the worst aspects of today's antiquated health care system, such as the World War II era employer-based, third party payer model. Both plans rely on old-fashioned government coercion and regulation in order to forcibly assimilate Americans into a government health care collective. And, ultimately, both plans would rely on rationing — letting patients die before their time — to control costs. As the Canadian Supreme Court said in 2005, "Access to a waiting list is not access to healthcare."
Finally, both plans justify themselves with Enron-style accounting about our nation's economic future. Economists on the left and right agree on the numbers, which show that we are on an unsustainable fiscal course. The demographic tsunami of retiring Baby Boomers already is darkening our shores and triggering formal budgetary alarms in programs like Medicare, which has a long-term shortfall seven times greater than that of Social Security. In short, the Clinton and Obama plans would transfer millions of Americans off of lifeboats and onto a sinking ship.
Free-market health care isn't merely a good idea that ought to be attempted; it is the only idea that will work, and it is the only approach that will move us away from the edge of an economic abyss we dare not approach.
Mr. Coburn, a senator of Oklahoma, is a medical doctor.
