Posted tagged ‘insurance’

Why are medical costs in America so high?

July 30, 2009

There are several reasons for the high medical costs in our country. First and most important, physicians are joined in one of the most powerful trade unions, the American Medical Association. This union campaigns for quality healthcare and regulations in the health industry. Why is this bad? Of course, because of the nature of big, powerful, and influential unions, labour costs increase. This effect is magnified when one’s ability to practice medicine is strongly limited by a lengthy educational requirement. So, in America, medical labor costs are especially costly. These costs are passed onto the consumer. Hence, we have high medical costs. There is also a lengthy argument about the AMA’s power in Capitalism and Freedom, Chapter 9, if one has the interest in further exploring this topic.

Second, the insurance system encourages irresponsibility. The collective nature of insurance is comparable to Hawaii’s old Universal Healthcare system, in which people bought all they want medically because it was “free”. Of course, the result is an increase in insurance costs and a faction within the insurance company that rations medical expenditures. So, the collective insurance system is responsible for some of the aggregate healthcare costs in America.

Finally, America is one of the few remaining developed countries with no public healthcare system. The result is that almost all healthcare innovation must come through American companies. This investment in new cures, vaccines, and medicines comes out of the pocket of the consumer indirectly, and the result is more expensive medicine.

There are plenty of other reasons that don’t need explanation. Americans pay for top notch healthcare treatment not available in other countries. More people are vaccinated in America than anywhere else. Regulations exist that limit medical competition. All of these are also reasons why our costs are so high.

How can we battle this? What is the true answer to limiting healthcare costs? Disappointingly, conservative talk show hosts don’t even have real answers.┬áMost propose subsidies. However, here is how we can cut these costs:

  • Cut regulations that strengthen the American Medical Association
  • End government mandates requiring the purchase of insurance
  • Encourage other countries to privatize their healthcare systems
  • End regulations that limit interstate competition between insurance companies
  • Cut licensing requirements for doctors and nurses

Yes, we can cut healthcare costs without creating an oppressive universal healthcare system. All we have to do is get our voices heard.

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