Lowering healthcare costs: government action--and inaction--in diverse areas of public policy is having a predictable negative effect on the costs (and quality) of American healthcare.(HEALTHCARE)(Cover Story)

Healthcare costs are skyrocketing. Most people are frustrated and angry about the state of affairs, and they want something done to rectify the problem. Added to the cacophony of complaints are claims by medical "experts" that the United States' healthcare is sub-par and controlled by greedy doctors and pharmaceutical companies and that Americans definitely don't get the healthcare that they pay for. If one asks most people what should be done about the problem, the answer usually involves government intervention as a solution--something along the lines of "the government ought to put a stop to runaway costs."

Even many people who are knowledgeable about government's disastrous interventions into healthcare nonetheless still push for more government control. They defend their viewpoint by saying that the past failures of government-controlled healthcare happened merely because the government programs were not implemented properly, but that they could be if "partisan politics" were set aside--not true.

In countries with strict government controls such as Cuba and Russia, medicine is not only substandard; it is horrifically dangerous. When Russia's economy collapsed in the early 1990s and foreign observers gained access to Russian hospitals, they learned that most Soviet medical personnel and scientists followed the teachings of a man named Trofim Lysenko, who taught that chromosomes and DNA were unimportant and that bacteria and viruses spontaneously formed out of organic matter--meaning that doctors and nurses were usually at a loss to explain concepts such as molecular biology, cell function, antibiotic resistance of bacteria, and hormone interaction with cells. One day-to-day result of this lack of knowledge was that massive numbers of diseases were transmitted from sick to healthy people through the reuse of unsterilized syringes. The axiom holds true that says, "The more government exerts control over something, the less efficient it is."

Americans need to come to grips with the fact that government intervention into healthcare is not the answer and is, in fact, responsible for causing much of the sharp rise in healthcare costs in the United States, which has the highest healthcare costs per capita in the world. Because many of the mechanisms causing healthcare costs to rise are fairly straightforward and within the abilities of Congress to remedy, this revelation could actually be considered good news.

The following three sections of this article show the cause and effect relationship between government and healthcare costs.

Federal Government's Toothsome Bite Into Healthcare

Past federal involvement in healthcare has resulted in increased numbers of uninsured citizens, national debt, and poorer care.

Many of the problems with today's healthcare system, including high costs and large numbers of uninsured Americans, stem from government involvement in healthcare, dating from World War II to the present. In his book What Has Government Done to Our Healthcare?, Terree P. Wasley notes that during WWII, the federal government instituted price and wage fixing, while raising income taxes to pay for the war. At the same time, the IRS "ruled that the purchase of health insurance for workers was a legitimate cost of doing business and could be deducted from taxable business income. The IRS also ruled that workers did not have to include the value of health insurance benefits in calculating their taxable income. These IRS rulings were a giant tax incentive for both employers and taxpayers, and they did much to institutionalize employer-provided healthcare as part of the system." After the war, price and wage freezes were removed, but employers kept the tax deductions. These tax breaks for the purchase of insurance were not applied to individuals who bought their own health insurance, thereby solidifying employer-provided insurance.

This system gives tax breaks to companies that offer healthcare coverage, while not giving similar breaks to people who buy individual health insurance. This has resulted in a system wherein when someone is unemployed, they often lose health insurance coverage until they get another job that offers insurance. It also contributes to making healthcare for individuals very expensive because insurance companies cater to large groups, and the insurance companies have largely not sought to devise ways to pass group savings onto individuals, meaning that many people who aren't employed by large companies and who must buy their own insurance find coverage to be prohibitively expensive.

Many Americans face the problem of high-cost insurance for individuals, especially those who work in small businesses (small businesses are among the largest drivers of economic growth in our country). The Century Foundation report America's Achilles' Heel: Job-Based Health Coverage and the Uninsured states: "More than a quarter of all working-age Americans in companies with fewer than twenty-five employees are uninsured. These workers account for almost half the total number of uninsured Americans who are employed." To make health insurance equitably affordable to everyone, the federal government should end tax breaks for companies that offer healthcare. Pending the abolition of the income tax as it is currently structured, the money saved by this measure should be used to lower taxes for individuals and corporations. By ending federal incentives for employer-based healthcare, employer-based insurance would end, and insurance companies would be forced to devise ways to offer inexpensive insurance to individuals to be able to compete in the marketplace.

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