Skip to main content

Health Care Reform: Address the Overhead

U.S. companies cannot continue paying nearly $1 trillion more in higher health care premiums and taxes to finance an inefficient, bloated and broken system.

Government is broken. Nothing demonstrates this better than health care.

Federal, state and local governments are broke, because spending on Medicare, Medicaid and other health programs is rising faster than the economy is growing, and politicians can raise taxes.

Health care is too expensive.

In the United States, health care swallows 18% of the $15 trillion GDP, and the government foots nearly half the bill. In nations with comparable per capita incomes -- France, Germany and Canada -- health care eats 12%.

The American system, emphasizing a regulated private market, does some things better -- quicker access to specialists. But other systems, with more state participation, have strengths such as better access to general practitioners and citizens who don't fear losing their homes to illness.

The even bigger, hidden costs are the high-quality jobs businesses can't create.

U.S. companies cannot continue paying nearly $1 trillion more in higher health care premiums and taxes to finance an inefficient, bloated and broken system.

Simply, Americans pay more for drugs, administrative costs to highly paid executives and bureaucracy, and malpractice suits than do the Europeans and Canadians.

No reforms offered by President Obama, congressional Democrats or Republicans are real reforms if those problems are not solved.

Health care payment and regulation are terribly complex, and the litmus test of any reform package should be whether it truly lowers costs and makes the system more affordable.

President Obama and the Democrats have rolled out proposals that would add bureaucrats and raise spending by at least $1 trillion. Their proposals hike costs, not lower them.

All the additional taxes are resources private citizens and government could better use to invest in businesses, cut debt and shore up infrastructure.

Voters in Massachusetts, New Jersey and Virginia have made clear that Americans don't want what the Democrats are offering, yet Obama persists, plunger in hand.

The Republicans offer no viable alternative. Tax breaks, medical savings accounts and relying even more on markets are not going to curb drug, insurance company and malpractice costs.

Why not leave the present system alone but offer a public or non-profit alternative patterned after European and Canadian systems? Require drug companies to charge those entities no more than they do foreign systems, those insurers to spend, as many in Nebraska do, 92% of premiums on medical services, and require subscribers to forgo the right to sue health providers.

Private insurers would scurry to match the low premiums such an entity could provide.

Then let Americans choose which system they prefer -- require all employers to offer this public option on their menu of choices.

But don't hold your breath. President Obama is not about to genuinely challenge generous contributors to Democratic campaigns in the pharmaceutical and health care industries, or the most reliable of Democratic allies --tort lawyers.

Republicans will continue the polemics about markets.

Taxes will continue rising, premiums skyrocketing and businesses failing.

At least the Romans could boast they did not elect Nero.

Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.