Most Americans need not have seen the recent headline announcing that Connecticut healthcare insurers seek to raise premiums by over 20 percent to realize that America’s healthcare system is badly broken — overly expensive and insufficiently healthful. What they have yet to fully grasp is that it’s almost entirely the government’s fault.
Instead, many applaud socialized medicine, if only, as Hillary Clinton, Bernie Sanders, and others have called for, under the guise of extending Medicare. What American healthcare needs, though, is a dose of freedom and competition, not more government monopoly booster shots.
For example, one completely unnecessary and obsolete program is occupational licensing, and it should be abolished. Although the licensing of doctors dates back to America’s colonial period, its monopolization by graduates of a handful of universities in Scotland and Pennsylvania was rejected by many states in the 1830s. Most therapeutic techniques then involved bloodletting and were ineffective for most ailments. Under pressure from doctors eager to try other therapies, some states stopped licensing doctors altogether, allowing them to use their treatment records to compete for patients.
Other states continued to require doctors to be licensed but reduced legal sanctions against unlicensed practitioners, which had included fines and barring their use of courts to collect patient debts. A few states allowed parallel licensing regimes to evolve. After the Civil War, though, state licensing boards came to hold monopolies again, and they do so to this day.
The problem with licensure is that the power to regulate is the power to control. Alternative approaches to Covid, cancer, or cardiovascular disease detection and treatment can be too easily squelched by the mere threat of license revocation or application of the “quack” label, which is the medical equivalent of a “conspiracy theorist.” The best patient outcomes should prevail, but too often they yield to bureaucratic dictates.
Patients seem to want their doctors to be licensed, but that is only because they do not understand that licensing does not guarantee of competence. A system based on a private, free market in medical malpractice insurance and private medical practices, the norm until recently, would do much more to protect patients than the current licensing system does or can.
Another reform is to get the government out of healthcare insurance and provision. The Indian Health Service, for example, is a travesty, as are most of the nation’s military and veterans’ healthcare systems. Medicare and Medicaid also severely distort the entire healthcare industry, from prices to practices. By linking insurance to employment and by basing insurance and healthcare on state instead of market boundaries, government regulations have also stymied the development of private, individual healthcare policies like those enjoyed by people in other economically advanced nations with private healthcare provision.
Before the New Deal, Americans could buy health insurance from commercial insurers, fraternal organizations, doctors, and/or hospitals. Life insurers also offered health services, purely out of the profit motive. The system was imperfect but far better than the government-dominated postwar system that supplanted it.
Tellingly, Singapore adopted America’s early system and allowed it to evolve freely. As economist Sean Flynn shows in The Cure That Works (2019), the small island nation created a healthcare system with relatively little government intervention. It provides world-class service at prices so low that even the poorest of the poor receive adequate treatment. Thanks to competition, four Singaporean physicians need the support of only one administrator. In America, by contrast, each doctor, on average, relies on four administrators to deal with government and heavily regulated insurance bureaucracies.
Artificial government-mandated constraints like “certificates of need” and “scope of practice” also need to be eliminated, as do all other barriers to medical innovation, from different types of pricing schemes and payment systems to new diagnostic tests to new treatments and ways of interacting with patients and dividing healthcare duties among various specialties. Nobody can tell which of those innovations will succeed without trying them in the real world, but, as usual, Uncle Sam stands in the way, partly to appease vested interests.
America’s sick healthcare system can be cured, but not through more government involvement. The repeal of Medicare, Medicaid, and occupational licensure and the separation of healthcare and the state would bring us the highest quality healthcare at the lowest prices.
