Healthcare crisis solved (with vouchers)

Third, enforce a one-price rule. Health insurance providers can charge whatever price they like but they have to charge everyone the same price. This would end cost-shifting, which would eliminate most of the advantage that large insurance pools have over small pools, thereby reducing premiums associated with small pools.

It would also eliminate the so-called preferred provider lists of in-network providers, thereby eliminating an additional cost of going out of the network for care. Provider lists are the product of large insurance companies using their bargaining power to negotiate lower reimbursement rates for their in-network providers. The problem is that providers still have to cover their fixed costs, so whenever they concede a generous deal to a large insurance company program, they have to raise the price elsewhere.

Under a voucher program, there is no government takeover, no price fixing, no rationing, no centralization of medical records, and no healthcare boards. Indeed, government involvement in the healthcare industry would be substantially reduced by eliminating Medicare and Medicaid. The exploding unfunded liability problem associated with these programs would disappear.

A national sales tax would promote transparency and convey the true cost of the program. If in the future it is argued that we need to increase the size of the voucher, the answer will be, "We can do that but it will require increasing the national sales tax to X percent." Discussion about healthcare policy would no longer be clouded by the complexities of the current system, which hides costs, and costs will no longer be shifted to future generations.

What about skyrocketing healthcare costs? This is largely a scare tactic aimed at drumming up political support. The primary reason for rising healthcare expenditures per capita is that our population is aging and the elderly consume more healthcare. This jump has nothing to do with healthcare becoming more costly. Adjusted for actual procedures and inflation, healthcare costs are in many cases falling.

So to "solve" this "problem," there is really nothing one can do but reduce the higher level of healthcare consumption by the elderly. But since our later years are when we most need healthcare, that is like having water insurance that works while in the Great Lakes but not while in the Sahara. The limiting of healthcare services for seniors is happening in Western Europe and Canada today and it is unconscionable.

Special interests won't like this voucher program because it thwarts their ability to manipulate the system. Liberals won't like it because they don't trust markets. Conservatives won't like it because it is too radical. But if conservatives, libertarians, and independents are as frightened of nationalized healthcare as they claim to be, they should take advantage of this opportunity to move the system sharply in a free-market direction while dealing with the problems of cost-shifting caused by uninsured persons. If they don't, it's only a matter of time before another attempt is made to nationalize healthcare.

David C. Rose is a professor of economics at the University of Missouri-St. Louis.

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