Fixing Healthcare in a Free Market

The Problems With Healthcare

The diagnosis is clear: the healthcare system in the United States is in terrible shape. Of the 301 million people living in the country, 47 million, or 16 percent of the population, do not have health insurance. Out of those 47 million 8.7 million are children ("Health Insurance Coverage"). At the same time, health insurance premiums and the cost of prescription drugs are increasing while the quality of care seems to be declining.

Some people will point to these rising costs and say that greedy drug companies cause them. This, however, is far from the truth. The real reason for the rising costs is government intervention into the healthcare market.

The rising cost of pharmaceuticals, for instance, can be traced to the Food and Drug Administration (FDA). The FDA forces companies to put their drugs through multiple years worth of research and testing. They also charge the companies huge fees to allow the drugs into the marketplace. These fees do not allow for smaller startup companies to compete with the larger, established companies.

The government also makes the healthcare situation worse by passing laws that have good intentions, but fail miserably. One specific example of this can be seen in the 1974 ERISA law. This law grants tax benefits to employers who provide healthcare to their employees. On the surface, this seems like a good idea. Give the employers an incentive and they will cover their employees, but it has had adverse consequences. Since that law was passed, less and less individuals have decided to cover themselves. So now, instead of catering to the individual, health insurance companies cater to the needs of big businesses. Thus, as wealthy corporations have pumped more money into the healthcare system the prices have artificially risen out of the range of most individuals (Paul).