For four decades, the federal government has attempted to stem healthcare inflation with price-fixing, rule-making, and hyper-regulation. The net effect: We now pay about 20 percent of GDP — twice as much as other developed nations — for similar quality of care.

Sadly, our healthcare system is a walled garden of long-discredited economic theory in the midst of an otherwise efficient and thriving economy. Unless that is changed, healthcare will remain unaffordable and costs will continue to escalate. Astoundingly, Congress continues to turn a blind eye to this elephant in the room, the inefficiency that is consuming as much as one tenth of our nation's annual production.

Even Obamacare's authors are finding it difficult to deny its failures today. Yes, more people were insured, but at what cost, and to what good? Insurers are fleeing the exchanges, and both the price and the cost of healthcare continues to rise. On average, premiums have doubled for Americans who can, or once could, afford to buy insurance on their own. Current reform efforts will fail just as dismally unless Congress fixes three core drivers of healthcare inefficiency and inflation.

The first is price-fixing of medical goods and services. The Federal Trade Commission long ago halted the American Medical Association's practice of setting fees. But it has been oddly negligent in ignoring the comprehensive and collusive price-fixing by the Center for Medicare and Medicaid Services and all major insurers. There is no price competition in our healthcare marketplace, because all prices are fixed by CMS bureaucrats and the major insurance companies . Yet such price-fixing is illegal in other markets and clearly should be illegal in healthcare. We cannot have affordable healthcare until price-fixing is ended so that free-market price competition can exist.

The second driver of healthcare inflation is the central planning of products and services. Currently, no healthcare product or service can be paid by Medicare, Medicaid, or the major insurers unless and until it has been approved by the CMS or the responsible insurer. All decisions regarding cost-benefit ratio and doctor or patient preferences have been usurped by bureaucrats. Economically speaking, this is no different than Congress mandating that no new consumer electronics products can be marketed until reviewed and priced by federal bureaucrats. Certainly, new products should be required to meet safety standards. But as in other economic sectors, healthcare goods and services should be determined by the competition among innovators and providers to satisfy patient needs and preferences, at prices they are willing to pay. No other method has been shown to lead to efficiency and prosperity.

The third driver of inefficiency and inflation in healthcare is insurance-rigging. The only economically valid and useful purpose of insurance is to value risk. By taking on a small fixed cost today, the consumer avoids an unlikely but catastrophic loss in the future. But Congress has utterly destroyed that function of insurance by legislatively transforming the product into a prepaid healthcare plan, which is guaranteed regardless of pre-existing conditions. That is just as absurd as forcing auto insurance companies to sell a product that pays for new tires and oil changes. We cannot have an efficient healthcare system unless insurance is allowed to fulfill its valid economic function. Essential care for the poor should be addressed by subsidizing purchases in a free market — as with SNAP or “food stamps” — not by delusional attempts to transform the very idea of what insurance is.

Until and unless these three economically disastrous practices are abandoned, American healthcare will continue to be the dead hand that weighs down the nation's prosperity and growth. Everything else amounts to merely rearranging chairs on the Titanic.

Dan Jones has over 35 years’ experience as a physician, businessman, and technologist.

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