As a senior thinking about surviving in the real world, I’ve been researching health insurance a lot recently. What I’ve found has been somewhat disturbing.
The first problem is all the laws that exist for the sole purpose of preventing competition in the medical care industry. Large hospitals are legally protected from smaller, start-up medical facilities and regularly engage in hostile takeovers by purchasing all the small practitioners around small hospitals. In turn, the practitioners are forced to write recommendations to the large hospitals, and the smaller ones eventually go out of business. On the subject of legal protection, there are Certificate of Need laws which require startup hospitals to go before a board to demonstrate that the community needs a hospital and that it can be funded.
Unfortunately, the members of the board are typically representatives of the large hospitals who hate competing. These types of laws were successfully lobbied by the American Hospital Association in the late ‘60s.
In another successful lobbying venture of large hospitals, the Affordable Care Act also made it illegal for the construction of new, physician-owned hospitals or the expansion of existing facilities unless they get explicit backing from the Center for Medicare and Medicaid Services which then, by acceptance of federal funding, subjects them to all the regulations which would make starting a hospital extremely noncompetitive. Additionally, the famous Oregon Health Insurance Experiment concluded Medicaid produced no statistically significant effects on physical health or labor market outcomes.
Dr. Keith Smith, founder of the Free Market Medical Association and a doctor at the Surgery Center of Oklahoma, has found legal ways to avoid federal funding and remain open. As a result, the OSC was able to post its prices online for its different services, proving to the market that competitive medical care with fewer regulations is much more affordable than the same care one could receive from a larger hospital. Smith said, “What we’ve discovered is healthcare really doesn’t cost that much.” I encourage everyone to go see how his or her prices compare, especially if you are in need of surgery.
Dr. Jeffrey Singer, in an interview with Freedomain Radio’s Stefan Molyneux, recounted the story of a man who was going to cancel his hernia surgery because the hospital was going to charge him approximately $20,000 for the procedure. Singer told the man to go to a different hospital and tell them he was going to pay in cash. By doing this, the next hospital treated him like he was uninsured, and he ultimately paid just a little more than $3,000. For more information, read “Jeffrey Singer: The Man Who Was Treated for $17,000 Less” in the Wall Street Journal.
Singer recounted a similar story in the same interview. This time, two women, one insured and the other uninsured, came in to receive the same procedure. The uninsured woman received the procedure that day and paid $300 out of pocket. The insured woman was treated a few days later after being processed and paid $800 out of pocket.
I personally checked the Affordable Care Act marketplace to find out how much a plan would cost. The cheapest plan for a 21-year-old male expecting to earn $30,000 was $1,957 per year, plus a $5,825 deductible. The yearly fee for not having insurance is 2.5 percent of yearly income in my case. This means the fee for not having insurance would be $750 per year, earning $30,000 before taxes. This makes not having insurance as a healthy 21-year-old, which some people would argue is reasonably safe, $1,207 cheaper per year than purchasing insurance. Given the stories above, a healthy uninsured person could still have access to hospital services and pay much less for it per year, especially once the nearly $6,000 deductible is considered.
Procedures like surgery shouldn’t cost more for someone who pays for insurance coverage than it does for someone who is uninsured, but this is the state of the American healthcare system created by government intervention and our slow journey to socializing the industry. As this trend continues, remember: If you think it’s expensive now, just wait until it’s free.