Healing our health-care system

The focus of the national agenda the last several months has clearly become reforming America’s health-care system. Bring it on!

There is no question that our health-care system needs to be reformed to squeeze out the much-inflated expenses and to assure high-quality care. The American health-care system is the most expensive in the world. And it is clear that, by any statistical measure, we are not getting value for money. At the same time, these inflated costs are making our products uncompetitive in the world economy, adding to our other economic problems.

Unfortunately, however, in the proposals that have emerged, we seem to have missed out on the cost-vs.-quality issue. The true challenge has thus become sidetracked. The debate has become about health insurance, though this is only a part of the problem. Important as it is, insurance is merely the way to pay for medical care.

The focus should really be on the actual medical care delivery system, where the costs versus quality problems are to be found. To date, we have not touched those issues. And if the acrimony over insurance is any guide, the storm from that debate will be even more ferocious than today’s.

Since the discussion is now centered on insurance, it is worthwhile considering the merit of the existing proposal otherwise knows as HR 3200.

Two questions in particular seem to be the most contentious: Will such a system lower patients’ medical costs? How would the public option impact the existing medical insurance system?

We would, of course, all like to see the 47 million currently uninsured people have access to quality health-care, especially in catastrophic situations. But the stark reality is that suddenly adding such a large block of people in a total spectrum plan will cause a sharp spike in medical costs. It is a simple supply-and-demand calculation. Add to this the $1 trillion price tag, and you get a big new shock to the system — at a time when the system can least absorb it.

But the bigger issue is whether the government can and should be in the business of creating and operating an insurance company. To date, the case has not been made that a government-owned and -run entity can do a better job of providing medical insurance. This is largely because the public sector is inherently not very efficient in providing goods and services. President Obama himself inadvertently made this point in Portsmouth when he referred to the low level of efficiency in the Postal Service relative to private carriers.

As such, whenever government attempts to provide societal goods and services, it must layer in either subsidies or special powers to remain competitive. This is clearly the case with Medicare where there are severe punitive consequences for people aged 65 or greater who wish to opt out.

The case is also being made that people who are happy with their existing public sector insurance entity will not be forced to shift over to the public entity. The fact of the matter is that the current proposals run the risk of creating conditions under which the government entity will “crowd out” the private sector.

The existence of a public sector option will invariably create conditions in the country whereby private sector companies can cease to offer health care as a part of their benefit packages — just as (supposedly supplemental) 401(k)s inadvertently crowded out defined benefit pension plans.

With such high stakes at issue, Congress should not be trying to steamroll this issue through and into law. We should take a comprehensive approach to the issue and work towards a well thought out approach.

Above all, we need to get the government out of the business of providing goods and services and leave it to the private sector, which is much better at this task.

Bob Bestani, a visiting scholar at Stanford University, is a candidate for the Republican nomination in New Hampshire’s 1st Congressional District.