Have you ever noticed that our federal government is always venturing out of its jurisdiction in trying to make things more affordable for all of us? Our paternal/maternal leaders in D.C. never pass up a chance to try to do something to make our lives easier. Their examples of benevolence are many and always end up in disaster.
Take education for instance. Uncle Sam has lavished grants and loans on us in an effort to make a college education affordable for most Americans. However, has the price of college decreased? Ever? The answer is no and in fact it can be argued that government grants and loans have actually contributed to the perennial increase in college tuitions. When students qualify for federal largess it makes them less likely to comparison shop based on cost. By eliminating cost competition in the college market institutions of higher learning have less incentive to lower costs. Perhaps this is why the rate of defaults on student loans is so high. Like subprime mortgages, instead of shopping around for economy, people commit to loans that they ultimately can’t afford to pay.
Then, there is Washington’s attempt to make retirement years more affordable. Social Security checks are mailed to millions of Americans every month to provide supplemental income to seniors. Because the program has been played up as the greatest thing since sliced bread by the Establishment many Americans have been deluded into believing that they can retire on Social Security alone. They forego saving for retirement and find when they retire that the monthly payment hardly makes ends meet. Perhaps this is the reason why many elderly folks sell their homes because they just don’t have the funds to pay the ever increasing costs of property taxes. Taking into account that the Social Security Trust Fund is empty and estimates for future obligations are about $45 trillion imagine the inflation that will eat further into Social Security income when the Federal Reserve must print dollars to monetize government checks.
By now, we should all be familiar with Uncle Sam’s attempt to make home ownership more affordable for all of us. This has been primarily attempted through cheap money from the Federal Reserve and loan guarantees from Fannie Mae and Freddie Mac. But, believe it or not, low rates and easy guarantees increased the demand for housing thereby raising prices and shutting out millions of home seekers. Of course, in the end, artificially low interest rates and the benevolence of government caused the bubble which popped and placed millions more Americans into foreclosure.
Lastly, and more germane to the topic of this article, is the attempt of Washington to make medical care more affordable for many Americans. The two major programs to deliver this service since 1966 have been Medicare and Medicaid. Coincidently, since 1966, healthcare costs have skyrocketed by an incredible 1800 percent!. Naturally, all the costs cannot be blamed on these government programs – our population has aged and new technologies are expensive. But, certainly, since healthcare is the biggest expenditure as a percentage of GDP of the federal government, Washington’s payments through Medicare and Medicaid have required the printing of new dollars which in turn have bid up the price of medicines and medical care.
Now Obama and his fellow statists in Congress want to implement a total takeover by Uncle Sam of our healthcare system in order to make healthcare affordable for every person in the U.S. The plan would cover everyone including the slothful and those in the country illegally. It would cost at least $2 trillion over the next decade and probably more given demographics and the inefficiencies inherent in all government programs. As usual, the politicians are talking compassionately while totally ignoring the real causes of the problem.
The fact is that there are tens of thousands of regulations and mandates that health providers and insurance companies must follow. The costs of adhering to these regulations are staggering. For instance, all states mandate coverage of certain diseases and disabilities in insurance plans. This raises the costs of coverage and limits choice for consumers. Regulations should be reduced and coverage mandates repealed to help contain healthcare costs.
The Food and Drug Administration (FDA) is a major culprit contributing to the healthcare crisis. To get a drug approved for consumption takes on average twelve years and over $350 million. This cost and time commitment squelches competition because many small drug firms do not have the long term funding to survive the process. The FDA should be abolished and replaced with a private Underwriters Laboratories type rating organization. A private system would encourage efficiency, increase competition, and lower costs.
The third party payer system has not served us well. Because either the government or insurance companies pay most of the costs of our healthcare there is no incentive for us to shop around for the most efficient health services. Medical savings accounts (MSA) would allow taxpayers to save money tax free and be able to withdraw it to pay for medical bills. These plans could allow individuals to save up to $7500 (the per capita amount government spends on healthcare) a year tax free. Individuals would be responsible for their own medical expenses up to that amount and could opt for a catastrophic plan beyond that. This would ensure comparison shopping, thereby lowing costs. Additionally, consumers could save premium dollars by only needing to purchase insurance that covers hospitalization and long-term care.
Lastly, it is no surprise that an article by this writer would not be complete without a call for sound money. A commodity backed currency would restrain costs in healthcare because the government would be forced to live within its means. The Federal Reserve would not be able to monetize infinite amounts of debt and this would contain price inflation especially in high demand sectors like healthcare.
Yes, Washington has failed miserably at making anything affordable for Americans. From education to retirement to housing, everything the politicians touch increases in cost. You would think Obama, Conrad, Reid, and Pelosi would realize this and scrape their grandiose plan to make healthcare more affordable.