April 3, 2012

What to do after the Mandate

By What to do after the Mandate

The Wall Street Journal’s John Cochrane makes a crucial point: if the Supreme Court does strike down the Individual Mandate, something will have to be done to address the nation’s health care problems. That something must be market-based; it must promote consumer choice and it must ensure that the person who receives the services pays for those services. If I want a Taco Bell burrito, I can get one at a cheap price within five minutes pretty much anywhere in the United States. If I want a car, I can pretty easily find a way to get one tailored to my specific needs, on a payment plan that’s designed for my personal income. But when it comes to medicine, we’re confronted with a labyrinth of government mandates, bewildering restrictions, and one-size-fits-all programs. The reason is that the principle that ensures that the consumer gets what he or she wants when it comes to burritos or Toyotas isn’t used when it comes to medicine. That is what needs to be fixed, once and for all:

There are hundreds of government impediments to competition. New hospitals? In my home state of Illinois, every new hospital, expansion of an existing facility or major equipment purchase must obtain a “certificate of need” from the Illinois Health Facilities Planning Board. The board does a great job of insulating existing hospitals from competition if they are well connected politically. Imagine the joy United Airlines would feel if Southwest had to get a “certificate of need” before moving in to a new city—or the pleasure Sears would have if Wal-Mart had to do so—and all it took was a small contribution to a well-connected official.

The result is a monstrous system in which insurance patients are gouged to subsidize Medicare, and cash patients are gouged most of all. Here’s Mr. Verrilli again: “Insurance has become the predominant means of paying for health care in this country.” Yes, the cash market has been badly damaged. Whose fault is that? Shouldn’t we bring it back?

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