Monday, August 03, 2009

6 Simple Ways to Dramatically Cut Costs of Medical Care - at Zero Expense to Taxpayers

From our good friend over at The Center For Small Government:

"6 Simple Ways to Dramatically Cut Costs of Medical Care - at Zero Expense to Taxpayers"

by Michael Cloud

Imagine that the federal and state governments imposed laws, regulations, restrictions, and mandates on medical care that drastically increased the cost - without improving medical care.

What if it were possible to cut your medical care costs by 20% or 30% or even 50% now - while keeping current levels of quality and service - by repealing and removing these government-created burdens and barriers?

If this were possible, would you want it?

Would you want the U.S. Congress to repeal and remove these laws, regulations, restrictions, and mandates?

Would you want your state legislature to do the same?

Yes? Well, these government-imposed burdens and barriers DO exist - and your federal and state legislators CAN repeal and remove them.

Would you like to see a small sample?

1. Allow price advertising. Let pharmacies, doctors, hospitals, and laboratories to publish their prices for goods and services. Eliminate all laws, regulations, and government provisions that hinder or prevent medical providers from posting their prices.

Charges for the same medical procedure can vary 30% to 300% within a 100-mile radius. But without price information, patients can't shop for the best value.

In the 1970's, U.C.L.A. Economist Sam Peltzman compared the costs of eyeglasses in states that allowed price advertising and states that outlawed it. Results? Much lower prices in states that allowed price advertising.

2. Let all Americans buy prescription drugs outside the United States. Do NOT force them to travel abroad. Allow them to have the prescription drugs shipped to their homes.

I've seen the 30% to 60% savings in prices of prescription drugs purchased in Mexico.

International competition for prescription drugs will drive down domestic prescription prices.

3. Let all people buy medical insurance across state lines. In New Jersey, a single man would pay $4,000 for medical insurance. If he lived in Pennsylvania, he'd pay $1,500. If the New Jersey man could buy medical insurance from a Pennsylvania provider, he'd save $2,500 a year.

Imagine this all across America.

This would cut medical insurance costs for millions who already have needlessly overpriced premiums.

AND, if the American Enterprise Institute study is correct, this would make medical insurance affordable for 12 million uninsured Americans.

4. Let doctors and patients negotiate discounts for paying cash. If a patient saves a doctor the time, trouble, delay and cost of dealing with insurance companies, Medicare, or Medicaid - let the doctor and patient share the savings.

5. Let patients, doctors, and hospitals enter into into legally binding, limited-liability contracts. This would reduce the cost of medical treatment by reducing the cost of malpractice insurance.

Just as Prenuptial Agreements limit marital risk, limited-liability contracts will limit medical risk.

6. End all government mandates that require businesses or individuals to buy medical insurance. End all government mandates that punish and tax those who do NOT buy medical insurance. Make insurance companies earn our business with lower prices and better quality - rather than lobby government to compel us to buy medical insurance by force of law. (See Carla Howell's excellent essay below.)

This is just a sketch of small government proposals to UN-do the government-caused high prices of medical care.

A glimpse of small government proposals to come.


Clark Echols said...

I wonder about #3. Don't NJ insurers charge more because of greater health risks over living in PA? A PA insurer would likely assess the risks similarly. Better point: the NJ cost would decline because of increased competition. But it would never achieve savings like those mentioned in #3.

Kim said...

Works for me! So simple.

Anonymous said...

If the health risks of living in NJ were over twice what they are in PA, do you think anyone would live in Jersey? ;)
The main reason it's so different from state to state is what state laws say insurers must cover. I don't know what those laws are in NJ or PA, but in NY all policies must provide all sorts of maternity coverage and stop smoking programs. As a single, male non-smoker, I think this is a waste of my money, as per state law.


Rob said...

Jim, you should read about NJ first before comparing it with PA. The population density in NJ is the highest of any state in the country, do you honestly think that an insurance company who wants to remain profitable would charge someone in NJ the same as PA? Having lived in both states, there is a much higher risk in NJ vs PA. Let's be logical here: comments like "Do you think anyone would live in NJ if the health risks were doubled" is appealing to people at the lowest denominator. Comparing the insurance rates of the #1 pop density state vs #10 is apples to oranges.

Anonymous said...

1.I don't see anything wrong with this point. It seems odd that I can't know the price of services from local doctors, or the price of procedures at hospitals.

2. buying drugs from other countries runs the risk of poorer quality drugs and greater mistakes being made. i like seeing my pharmacist face to face and having any questions answered directly. would people really want their drugs delivered by mail? would insurance companies be required to allow such conditions?

3. Competition over state lines is not going to save that much money. though it could if everything stayed the same. everything would not stay the same though. the math is not as simple as the article indicates.

4. I believe this already happens in some cases but it should be allowed for everyone.

5. limited liability contracts sound like a pipe dream, but they should be given some consideration. I know I don't expect my doctor to always perform miracles.

6. I don't think insurance should be required for everyone. but i do believe medical care should be available for everyone, without breaking the bank. should the rich be allowed better health care than the non-rich? Yes. but the cut off for basic care should distinct and acceptable to most people. not everyone would be happy with the cut off level.