Yesterday, Marc Kilmer wrote a short, sweet, and to-the-point blog post for us about how removing the connection between service and cost from an exchange creates a situation where overconsumption is not only common but encouraged.  Or, in plain English: how people spend more on healthcare when it’s not their own money that they’re spending.  Since healthcare is an issue of some personal interest to me, I figured I’d take the opportunity to do a little piggybacking on Marc’s momentum.

In his piece, Marc points out that the problem is not only limited to the patient, who demands the most expensive care even when it may be unnecessary because someone else is footing the bill.  Doctors also have an incentive to call for extra tests because their reimbursements are often based not on whether the patient heals but on how much they did for him.  The incentives are all wrong, thus forcing the cost of care (and, consequently, the cost of insurance) through the roof.

Of course, I must point out that the litigious nature of our society also plays a part in the seemingly endless numbers of tests to which doctors subject their patients before diagnosis.  We live in the age of entitlements, where people feel so confident in mankind’s abilities that it is inconceivable that anything bad should ever happen to them, and this makes doctors cautious.  Malpractice insurance is already expensive enough.

But let’s not forget how silly we tend to act when things are “free.”  We eat more at buffets, drink too much at open bars, and walk away from giveaways will bags of stuff we don’t need.  True, it may not be as much fun to “overindulge” in healthcare, but when we take away the basic foundations upon which normal exchanges are built (in this case, prices and paychecks) we create a situation that can destabilize itself rather quickly.  Indeed, we are already seeing it happen, as Marc points out.

Unfortunately, we have reacted by forcing the pendulum to swing even further in the wrong direction.  In an effort to make healthcare more “fair and equitable,” we have expanded a system that encourages the very situation that we detest: one of expensive and unsustainable entitlements.  We have, once again, looked to the government to solve a problem that it had a hand in creating through its excessive regulation and destabilization of the healthcare industry.

If we continue down this road, perhaps the healthcare of the future will resemble that of my friend, who is covered under her husband’s military plan.  When she is sick, she must call the base first thing in the morning to make an appointment, as they don’t book more than a day in advance.  If she gets through and schedules an approximate time, she gets to show up and take a number.  The long wait to see a random doctor is good because it gives her ample time to fill out her paperwork.  Once her appointment begins she must explain the situation to the doctor, who she may have never seen before in her life.  Once a diagnosis can be reached, she then gets to take another number and wait again for her meds before she can begin the drive home.

The whole process is like a visit to the MVA except everyone is swarming with (more) germs.  If you’re a history buff, this might actually be a plus, as it may be the closest thing you’ll ever get to experiencing what it was like to live in the Soviet Union.[1]  For those of us who want the freedom to make appointments with a doctor that knows our medical history in detail and then swing by a pharmacy on the way home to pick up our meds in a timely fashion, it seems less than ideal.

There is an alternative.  Remove as many regulations as possible from the health insurance industry so that the increased competition in the marketplace will allow more people to buy policies that meet their individual wants and needs.  Incentivize the purchase of healthcare.  Provide assistance to those who cannot afford insurance so that we aren’t footing the bill for their care with tax dollars.

Yes, everyone should have healthcare, but we need to stop deluding ourselves that it can be free.  Nothing is free.  Someone has to foot the bill.  It would be nice if we didn’t have to spend so much to stay healthy, but it certainly beats the alternative.  And if you ask me, forcing people to pay their own way and helping the few who can’t is a lot more “fair and equitable” than taxing everyone in exchange for MVA-caliber care that many don’t need and most don’t want.