When we break down health care we must realize a few important details. First, we have a customer; a person whom is in need of the commodity of health care. Secondly we have the commodity itself; doctors, hospitals and health care providers. In a free market system these would be the only two parties involved in the exchange. It’s simple supply and demand, there is a need for a product (health care) and there is the person who provides the product to the customer (the health care provider.)
Now we must observe the current market system in the United States and how it operates. We still observe a costumer in need of a product and a business/commodity which provides the product. The difference comes in that the American health care system adds a third party to the mix. This third party is represented by insurance companies and now that we have the Affordable Care Act in place, the Federal Government. Both the insurance companies and Federal Government act as a bridge or “middle man” between the consumer and the provider.
Remember, in a free market system a patient would simply go to his doctor and pay them for the service provided. However, in our current system a consumer is required by law, by the US Government, to pay money to an insurance company, whom then connects to the service of the doctor, whom then performs the service and is compensated by the insurance company.
Libertarians and the free market system argue that the third party (insurance companies) are an unnecessary part of the natural business cycle and therefore, must be removed from the exchange. The free market system also points out that because there is an unnecessary third party involved in the exchange of goods and services, this naturally increases the cost of goods and services for the consumer – the citizens. It is very easy to explain how/why this occurs.
First, you must understand that insurance companies are businesses within themselves. Insurance companies do not exist because they care about you and want to be there for you in your darkest hours, insurance companies are quite literally money making “enterprises” and the only way these companies make money is by taking in more money from the premiums of their customers than they pay out in claims to those same customers.
Moreover, running a company of any type naturally incurs great expenses and the larger the company, the larger those expenses are. Consider for a moment all of the employees needed to run an insurance business, each one of them in all likelihood recieves full benefits of their own. Then think about the construction cost for their corporate buildings, their rent costs, their taxes, their utility bills – et cetera. Where do you think these companies get the money to pay for all of these people and things? The answer is quite simple, they get the money from their customers premiums.
As a someone whom pays money to an insurance company, not only do your premiums contribute to their yearly profit margins, but you are also paying for all of their expenses at the same time. This is why you will never receive equal value for health care services, compared to the money you end up paying for it through insurance companies.
Why do you think premiums are rising under the Affordable Act? Insurance companies are now required by law, by the Government, to treat people with pre-existing conditions and cancer, which each cost great amounts of money. When insurance companies are required to pay more, their expenses go up and profit margins go down. As a result of this, in order to counteract their new expenses, the insurance companies start charging more from each one of their customer. This is the real reason why everyone’s premiums are rising under the Affordable Care Act, because of more Government regulation in what should be a private and personal market.
By eliminating the third party involved in the exchange of goods and services, the cost to the consumer naturally decreases. It is as fundamentally simple as this. I believe that spending less money for a commodity (health care) is something that everyone in the United States would vote in favor of and support at this moment in time. Unfortunately though, this concept is not explained often or at all and most people seem to have no understanding of what Libertarians mean when we speak about a free market economy and why it is a fundamentally better system than the one we currently operate within. I also think that this message is something everyone in society could get behind, regardless of party affiliation, if they actually understood the mechanics involved.
Considering that this article has been another op-ed, something I usually shy away from, for the record I would just like to state that I am 31 years old and I have not had insurance or seen a doctor in over 12 years. Regardless if the Republicans repeal “Obamacare” or not, I wont have insurance either way, so in many ways I honestly don’t give a damn what “my Government” does right now. What really bothers me though is the debate surrounding health care, particularly the fallacious argument that we as a society need to pay our money to an “insurance company” just to get health care in the first place. Not only is this a completely fallacious notion, but it is asinine to boot.