In discussing the failures of federal programs like Medicare and Medicaid, Dr. Gary Wolfram of Hillsdale College suggests applying principles of economics to public healthcare. If federal regulations were rescinded, and the private citizen were responsible for purchasing their own care, healthcare providers would be incentivized to innovate, competing for the consumers’ dollar by streamlining and competitively pricing their offerings. This could lead to cheaper and more effective healthcare all over the country.
The following video is a clip from Hillsdale’s Online Course: “Public Policy from a Constitutional Viewpoint,” featuring Gary Wolfram, the William E. Simon Professor in Economics and Public Policy.
Transcript:
Gary Wolfram:
Suppose that you took the trillion dollars that the federal government is spending on Medicare and Medicaid and put it into a health savings program. Let's say then, you're a Medicare recipient; you might have a high deductible policy, let's say $6,000, which would pay for some unexpected emergency care, and you'd receive, let's say, $2,000 towards a health savings account. Now what would happen is your child, let's say, has some minor health problem. Rather than going out and looking to see if there's a doctor that takes Medicaid, and about a third of doctors don't take Medicaid because of the low reimbursement rates from the government program, you'd go around and you'd try to find a healthcare provider that would provide you with good care at a low cost.
Well, now, what would happen is that there'd be incentives for producers of healthcare services to innovate. So you might see that the pharmacy, such as a Walgreens, would have, for example, a healthcare practitioner that you could have your child looked at, and then they would say, "Oh, well your child's got pink eye and here's the prescription drug that you'd need to treat it." So what would happen is you'd have a whole different movement towards innovation for low-cost, quality care because the person buying the product is also the person paying for it.