State-Made Crisis in Health Insurance
Ten years ago the media were full of alarming stories about the number of Americans who did not have health care insurance. That "crisis" was used to whip up support for the Clinton administration's comprehensive health care plan, which would have essentially nationalized the $1 trillion health-care industry. The plan was defeated in Congress. A decade later, however, it seems that nothing was learned. The federal government, along with the states, has continued to expand the regulations and subsidies that created the problems in the first place. And once again the number of people without insurance is on the public agenda. On November 19, the National Academy of Sciences released a report claiming: "The American health care system is confronting a crisis. The cost of private health insurance is increasing at an annual rate of 12 percent. Individuals are paying more out of pocket and receiving fewer benefits. One in seven Americans is uninsured, and the number of uninsured is on the rise." Many newspapers followed up with stories of individuals losing benefits. The health insurance "crisis," like other problems of the health care industry, is the product of government interventions in the market. Tax policies still push most people into employer-based health plans, so that losing a job means losing coverage—a matter of renewed anxiety with the economic downturn. Price controls on insurers—and doctors, hospitals, and drug companies—are lowering the quality of service available to consumers. The cost of malpractice insurance, driven up by courts that have allowed outlandish awards to plaintiffs, are driving doctors out of business. States continue to increase the number of conditions that insurers must cover, driving up the cost of insurance. Over the last half century, layer upon layer of government interventions have so distorted the health-care industry that it can hardly be called a marketplace any longer.
Nov 1, 2002
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