We now have a new health care bill passed along party lines and unfavored by the majority of Americans. This health care bill is predicted to raise health care costs and taxes. It mandates coverage for those who have already determined that their money is better spent elsewhere.
What solutions do we have to the increasing costs of health care? First we must ask, why are health care costs rising? There are some reasonable causes of increasing health care costs: increasing reliance on newer technologies, newer treatment techniques that require more highly trained, and therefore more costly, providers, etc. But there are reasons for the higher costs that we can control.
The burden of health care costs has shifted. The majority of health care costs were once primarily paid by the individual. Thanks to government tax policy and government price controls during World War II, much of the cost has been passed on to insurance. The incentives of the tax policy lead to the creation of more comprehensive insurance coverage. While comprehensive coverage benefits the sick and the poor the most, the majority of Americans do not benefits significantly.
We need to move away from a third party system where due to the reduced individual out of pocket costs, people have the incentive to over consume. Over consumption raises prices and therefore insurance costs. The current plan to add more people to the insurance rolls will cause prices to rise even higher as those who now must sacrifice things that gave them utility in order to purchase insurance. To make up for lost utility and due to reduces out of pocket cost for use of medical services, we will see and increase in health care consumption and even higher costs.