The Seattle Times published an excellent article today outlining the crisis in rural health care delivery. All areas of the nation, but especially the smaller communities, face a real shortage in primary care providers.
Unfortunately, our health care system does not function like a free market where resources are constantly adjusted and balanced so that supply consistently equals demand. As demand fluctuates, supply will increase or contract to meet the market’s needs. In health care, demand is set by the patients and supply is a function of the number of doctors and their availability. The government has imposed central planning on both the demand and the supply side of our health care system. (Policy Note, Washington Policy Center)
Starting in 1943, the federal government allowed employers to take a business income tax deduction for the costs of employee health benefits. Individuals, however, were not allowed to take this same tax deduction. This was the beginning of the U.S. employer-financed health insurance model. In 1965, Congress passed Medicare and Medicaid entitlements into law, which placed millions of people into government-financed health insurance. This year additional millions of Americans were placed into the government-financed system through Obamacare. The U.S. now has a health care system in which 90% of the costs are paid by a disinterested third-party; either the employer or the government. It has become very rare for patients to take responsibility for the total cost of their own medical care.
This government-planned, third-party payment system has created ingrained market distortion and has caused an excessive demand in health care. After all, when someone else pays, there is no incentive for patients to question the price or quantity of services that are consumed in their care. Economic law says that in this situation, prices will soar and goods and services will be heavily over utilized.
For years the government has also controlled the number of medical schools, the number of graduates from these schools and their licensure. This has created a further distortion in the supply of health care. Government central planners are now even attempting to legislate not only the total number of doctors, but also the number of primary care physicians and the number of specialists in the country. This is as futile and absurd as the government telling people how many laptop versus desktop computers we need. No amount of information or analysis will enable central planners to know how many doctors, and of what type, the country needs.
Only through balanced market forces, ones that allow patients to control their own health care dollars, can the demand be correctly determined. The necessary and sufficient number of doctors each community needs can only be known through millions of routine, voluntary actions made in the free market.
The following recommendations can guide policymakers in making sure the nation produces a sufficient number of doctors to serve the needs of patients in the years ahead.
- Allow the health care market, not central planners, to determine the number of doctors needed.
- Remove employers and government (except for safety-net programs for the most needy) from health care financing and allow patients to control their own health care dollars:
- Change the tax code
- Encourage the use of high-deductable health insurance
- Encourage the use of health savings accounts
- Allow the interstate purchase of health insurance to increase competition
- Means test Medicare
- Allow seniors to opt out of Medicare without penalty and encourage a private insurance market for seniors
- Use Medicaid for the truly poor
- Implement voucher programs for Medicare and Medicaid enrollees so these patients can direct their own health care dollars and benefits
- Allow state block grants for Medicaid
- Allow independent medical schools without the mandatory high overhead of accompanying medical research.
- Allow medical schools to determine their own enrollment and graduation numbers.
- Encourage the use of long-term, low interest rate loans for medical students.
- Encourage the use of physician extenders — physician assistants and nurse practitioners — to make the delivery of quality health care more efficient.
- Increase the use of well-trained foreign medical graduates and reduce their visa/immigration requirements.
- Encourage the use of community scholarships for medical students with guaranteed commitments to service in the community after graduation.
- Foster innovative health care delivery methods such as convenient walk-in clinics and personalized concierge practices.
- Remove government from the licensing process and use private rating agencies or professional specialty organizations for competency determinations and to maintain physician quality.