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It’s A Gray Area: Government is meddling in health care

Since my last column about health care appeared in this space, the system has continued to gallop toward disaster.

Today, under the federal government’s “leadership,” we often pay several times more in the United States for the same prescription drugs that are sold in other countries; an average MRI here costs $1,080, while it only costs $510 in Germany; and doctors here charge twice as much for hip replacement surgery as do doctors in Australia.


In the meantime, more people in our country actually die of treatable diseases like diabetes and childhood infections than in any other Western industrialized nation. And now, under the so-called Affordable Care Act (ACA), the situation will get even worse.

How has this been allowed to happen?


Because the government continues to meddle with our health-care system, and that has driven up the prices and reduced the number of health-care professionals available to treat us.

The functional libertarian solution is to get the government out of health care for people who can take care of themselves, and then set up a health-safety net system for those who cannot.

During my youth in the 1950s and early 1960s, obtaining good health care for reasonable prices was not even a topic of conversation, and we had all of the hospital emergency rooms we needed.

But then, in 1965, Medicare was passed under President Lyndon Johnson, and that began the government’s steady intrusion into health care. As a result, the government virtually dictates what insurance companies must cover, and how much each procedure will cost — to the detriment of everyone.


Today, virtually the only variable cost in our health-care system is what the Medicare and insurance companies will reimburse to the health-care professionals, and, as we have seen, that continues to decline.

This, in turn, has reduced the number of health-care professionals willing to work for less money. Of course, since the doctors are reimbursed according to the number of tests and treatments they provide, most of the doctors still remaining in the system get around that by running — and charging for — more marginally necessary tests and procedures, which radically increases the cost of health care.

So we are losing both ways.

The ACA is scheduled to come into full effect for companies that employ 50 or more employees in January.


But as Ayn Rand once said, “You can’t fake reality,” at least not forever. So hold onto your hats, because these will be the results with the full ACA:

1). The insurance premiums in California for the 1.3 million unmarried and married people who earn more than $45,000 and $94,000 per year, respectively, and who cannot buy insurance through their work, will increase by an average of 30%.

2). Many companies that have somewhat more than 50 employees will reduce that level to 49 so that they can escape the new requirement to provide health insurance to their workers. These companies are being labeled “The 49ers.”

3). Many other companies with 50 or more employees will simply choose to pay the required fine instead of providing health insurance. That fine is estimated to be about $2,000 per employee, which is much less than the insurance would cost the companies. Of course, that will add to the number of workers who cannot buy insurance through their work.

4). Insurance companies will be required to cover a larger number of health-care services, and also to accept smaller co-pays from their insurers. This will result in either larger premiums or insurance companies going out of business, which will further reduce competition.

5). Yes, it is true that the insurance costs will come down for lower-income consumers, and insurance will also be provided to some 30 million people who now are uncovered. And, of course, these people lobbied hard for this result, once again proving the maxim that if you are going to rob Peter to pay Paul, you can always count on the support of Paul. But as a practical matter, we don’t have enough medical doctors and other health-care professionals now to take of Medicare and Medicaid patients. So these new people will probably end up having insurance that no health-care professional of any skill level will take. What good will that do?

In other words, if you want your health care to be run like the Department of Motor Vehicles, you are increasingly close to getting your wish.

But if we could get the government out of the health care for people who can take care of themselves, that would result in people being much more careful when spending their own money, just like I was growing up. And this would once again turn most doctors into entrepreneurs, which would also, in turn, bring prices down while boosting quality.

This result is graphically shown in two areas today in which anyone can get good, quality medical services for competitive prices: Lasik and cosmetic surgery. Why? Because the government and insurance companies are not involved.

But what about the poor? I was in the Peace Corps — I care about people and so do most functional libertarians and others. The answer is to implement a safety net system for people who cannot medically take care of themselves — not because we legally have to, but because we want to. Because that is who we are.

What form would this take? We could establish a network of medical clinics and hospitals on private contract with the government, similar to the Kaiser Permanente plan. Then people who could not afford to take care of themselves could, with a small co-pay to make sure that the visit was medically necessary, receive quality medical care. Yes this would be expensive, but not nearly as much as the current health-care program. So in the end, the government would be paying for doctors, nurses, hospitals and medicines instead of administration, bureaucracy and fraud.

Some people call this socialized medicine, and maybe so. But I lived under such a system for four years in that great socialistic institution called the United States Navy, and it worked pretty well. In fact, my son was born at the Naval Hospital in Guam, and the care was fine. (We named him William P. Gray after my wonderful father but always threatened to call him Guamo.) We could also join this new proposed medical system with the current one we provide for the military and our veterans.

Finally, those people who are financially “in between” could choose to go to the government clinics but make a higher co-pay.

Of course this is a complicated and often emotional subject. But the very best way to provide the people in our country with quality health care at competitive rates can only be achieved by getting the government out of the health-care oversight business.

JAMES P. GRAY is a retired Orange County Superior Court judge. He lives in Newport Beach. He can be contacted at