Let’s say you have pneumonia, and you know it.

You’re coughing.  Your chest aches.  You have a fever.  You’re generally miserable.  You’re also pretty sure that you won’t get better without doing something to fix your illness.  The problem is that the “something” depends on what you think your real problem is.

There are two basic possibilities:

  1. Your real problem is your coughing, aching chest, and fever.
  2. Your real problem is a bacterial infection in your lungs.

If you believe possibility #1 is correct, then you will probably take cough syrup, lozenges, or cold medicine.  In this case, you understand that there is no underlying problem.  The problems you see (your symptoms) are the only problems you have. If you believe possibility #2 is correct, then you will probably take antibiotics. In this case you understand that, while the coughing and aching chest are problems, they’re only the symptoms of the real problem you want to remedy (namely, the pneumococcus in your lungs).

The idea of a person taking cough medicine when he knows he has pneumonia would no doubt strike most people as crazy. When it comes to reforming the health care system, however, Congress appears poised to do just that.

To Congress, the problem with America’s health care system is simple: it’s the millions of uninsured people in America (anywhere from 10 million to 47 million, depending on your definition of “uninsured”). The remedy for this problem is equally simple: make sure everyone has health insurance.

There’s a more basic problem in the health care crisis, though: exploding prices. Expanding health insurance coverage does nothing to address the rampant inflation of health care costs.

The only real provisions addressing cost containment in these bills are an Independent Payment Advisory Board (that monitors compensation for health care providers) and cuts in the reimbursement rates Medicare pays doctors. Neither of these provisions is likely to contain costs.

  • The Payment Advisory Board’s recommendations aren’t binding and have neither legal nor political force. As a result, politically powerful interest groups will likely ensure that the Board’s recommendations either don’t apply to their favored constituency, or are ignored altogether.
  • Medicare reimbursement rates have been included in each federal budget over the past decade, and each year Congress has voted at the last minute to suspend the cuts. There is no reason to expect this pattern to end. In the words of the respected health care policy analyst Brian Keppler, офис обзавеждане“It’s probably not wise to bet on our political system’s ability to say ‘no.’”

Moreover, the Senate and House bills both aim to increase coverage by radically expanding two major health care programs: Medicare (subsidized health insurance for the elderly, paid by the federal government) and Medicaid (subsidized health insurance for the poor, paid by both state and federal governments). Yet these programs both face deficits in the trillions of dollars. Without an overhaul of the health care system’s cost structure, expanding them is simply not a viable means of expanding coverage.

Simply put, the health care reform bills in Congress are fatally flawed because they’ve misdiagnosed the problem — focusing almost exclusively on expanding insurance coverage and ignoring the rising tidal wave of health care cost increases.

Yet, as large a problem as rapidly rising health care costs are, they are merely another symptom (albeit a more basic one than the number of uninsured Americans).

There have been massive technological innovations in the health care sector, of course, and those innovations are expensive — at first. Every sector of the economy has seen massive technological innovation, however, and the trend in every sector but health care has been the same: prices and costs decrease, while quality increases. Only in health care is this trend not a rule. Clearly, the technology isn’t driving the huge cost increases.

The real problem at the heart of America’s health care crisis, the one that drives the cost of health care every higher, is massive government intervention in health care markets.

50 years ago, health care in America was affordable and accessible.  People could see doctors easily, at their home or the doctor’s office. Medical procedures, even major ones, could generally be paid for without accumulating crushing debt. The biggest change that happened between now and then was the government’s massive involvement in the health care sector.

  • The federal government distorted the nature of insurance through the tax code — tying coverage to employers instead of to individuals, and ensuring that health insurance pay for all kinds of routine care (instead of huge, unforeseen costs, like all other insurance).
  • The federal government largely crowded out private care for the elderly and the poor through Medicare and Medicaid, leading providers who lost money on the elderly and the poor (because of Medicare and Medicaid’s much lower payment rates) to raise their prices they charge other patients.
  • The state and federal governments encouraged excessive litigation through their failure to pass meaningful tort reform, driving up the cost of all forms of health care: from doctor’s fees (raised to cover their high malpractice insurance fees) to the costs of medical products (increased to cover producers’ liability and patent infringement lawsuit legal fees).

Undoing this involvement would solve nearly all of America’s health care crisis.

Sadly, the health care reform bills in Congress would hugely exacerbate this problem in the name of solving it. Americans will pay dearly for this misdiagnosis.