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Tags: cap | kaiser | prices
OPINION

Market-based Principles Bring Us Quality Healthcare

Market-based Principles Bring Us Quality Healthcare
(Rosemarie Mosteller | Dreamstime.com)

Sally Pipes By Monday, 17 October 2022 03:06 PM EDT Current | Bio | Archive

A new poll from West Health and Gallup paints a grim picture of health care in the United States. Among the survey's most striking findings is that three-quarters of the country grades the cost of care at either a D or an F.

Critics of our nation's market-based health system are sure to see these survey findings as evidence that the status quo is broken. But what person wouldn't want to pay less for health care  or any other good or service they desire?

By and large, the American system does a fairly good job of making timely, high-quality care available to those who need it  which is more than can be said for single-payer systems abroad that progressives champion as models of cost control.

Complaining about the cost of health care is a national pastime. People in the highest income bracket had the same negative feelings about the price of health care as America's least well-off, according to the poll.

More telling is that nearly one-fourth of people making between $120,000 and $180,000 a year are concerned about their ability to afford care.

Of those making more than $180,000 a year, 16% say they're concerned.

But healthcare just isn't overwhelming Americans' finances.

According to the Bureau of Labor Statistics (BLS), healthcare accounts for just 8.1% of household expenditures. That's less than half what people spend on transportation. And it's less than what people collectively spend on entertainment, personal care, and apparel.

Further, U.S. out-of-pocket costs are relatively low by global standards.

About 11% of U.S. healthcare spending is out of pocket. The share of national healthcare spending that comes out of pocket is higher in Canada, the United Kingdom, and Germany -- all of which have systems of universal coverage.

Perhaps most important, the quality of care available in the United States is the best in the world. In other words, we largely get what we pay for.

And in some cases, we get much more than that. Take prescription drugs.

According to survey research from the Kaiser Family Foundation, 83% of Americans believe drug prices are unreasonable.

But the value that prescription drugs deliver is many times greater than their price.

Research by Columbia University's Frank Lichtenberg finds that drugs released since 1982 have added 150 million years to the lives of patients around the world, at an average price of less than $3,000 a year. That's an extraordinary value by almost any standard.

There are certainly Americans who struggle to afford health care. Thirteen percent told West Health/Gallup that there was a time in the recent past when they couldn't pay for a medicine they needed.

But the proper response to this situation isn't to forcibly cap healthcare prices, as government-run systems throughout the world do  and as the Democrats' Inflation Reduction Act will soon do for certain drugs.

What's needed are policies that inject more competition into the healthcare market  and thereby increase quality and reduce costs.

More price transparency in the healthcare market will give people the information they need to shop around for the highest-value care.

Expanded use of tax-advantaged health savings accounts will empower people to spend their healthcare dollars as they see fit.

And cracking down on the anticompetitive behavior that insurers and pharmacy benefits managers use to inflate out-of-pocket drug spending will lead to lower costs for consumers.

America's healthcare system is not perfect.

But it's also not an irredeemable catastrophe. We must not scrap but build on the market-based principles that have brought about high-quality healthcare in this country.

Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.

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SallyPipes
Cracking down on the behavior that insurers and pharmacy benefits managers use to inflate out-of-pocket drug spending will lead to lower costs. We must not scrap but build on the market-based principles that have brought about high-quality healthcare.
cap, kaiser, prices
642
2022-06-17
Monday, 17 October 2022 03:06 PM
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