It appears when thinking about healthcare and education our political leaders have forgotten the critical thinking of the father of modern economics, Adam Smith (1723-1790). He created the foundations of our prosperity in his 1776 publication, An Inquiry into the Nature and Causes of the Wealth of Nations. The critical importance of price signals, competition, a market economy, along with the dangers of over regulation and central planning are his key points as summarized by the Adam Smith Institute (Ref.1). Today healthcare and pre-K-12 public education ignore these principles, as they are dominated by third party control with the individual having no input into the cost of services. It is widely known that individuals are more careful spending their own money than everybody else’s.
Those with workplace health insurance, about 175 million Americans, have the insurance costs subtracted from their pre-tax compensation. Increasing over the years, at this time the average premium per family per worker is an astonishing $20,000/year (Ref.2). These insurance costs have contributed to the loss of market share of many American industries causing lost jobs.
Apologists for not putting the individual in charge of their medical expenditures claim that healthcare does not follow market forces. However, burgeoning programs such as direct primary care and the Surgery Center of Oklahoma have demonstrated that market-based medicine provides better care at far less cost (Ref.3,4). Very recently hospitals have been required to make public the previously secret prices of their services charged to different entities, exposing colossal differences that have no basis in cost (Ref.5,6). The solution is to create a real market by having the employers’ pre-tax health contribution deposited directly into the workers’ individual health account. Workers and their families, using these accounts, would pay cash for most care along with the purchase of a high deductible nationally available catastrophic insurance policy. A similar option should be made available for those being covered with Medicare/ Medicaid, which are now projected in the near future to cost amounts that this nation cannot afford (Ref.7). A significant percentage of those participating in these large government programs would choose to direct their own care, which was wildly successful in an Indiana pilot program (Ref.8). The savings would be considerable as bureaucracy costs would significantly diminish, recipients would be more careful of utilization, and price discipline would at last be instituted.
A similar third-party system has evolved with pre-K-12 public education. The state and local communities use their taxing power to fund public education that is strongly supported by unions and teacher certificate programs. Because of the extremely poor performance of public schools in many communities, alternatives such as charter schools and vouchers have begun to challenge the establishment. However, the public-school model has maintained its dominance resulting in a lack of parental choice. The evidence is uncontroversial; charter schools, even in the same buildings far outperform the adjacent public school (Ref.9). As in healthcare, the solution is for the state and community tax funds to be converted to a voucher for parents to choose the best school for their children.
It would not be difficult for government to provide universal healthcare and improved pre-K-12 education by following sound economic policies, empowering the individual to direct their own care and choose the appropriate school for their children by putting the necessary funds under the control of the individual and family.
1) Eamon Butler, The Wealth of Nations, Condensed, Adam Smith Institute, available at:
https://www.adamsmith.org/the-wealth-of-nations/ (Accessed Feb. 15, 2021)
2) eHealth, Average Cost of Employer-Sponsored Health Insurance, Small Business, available at: https://www.ehealthinsurance.com/resources/small-business/average-cost-of-employer-sponsored-health-insurance (Accessed Feb. 15, 2021)
3) Garrison Bliss, M.D., What is Direct Primary Care? Direct Primary Care Coalition, available at: https://www.dpcare.org/ (Accessed Feb. 18, 2021)
4) Keith Smith, M.D., About SCO, Surgery Center of Oklahoma, Feb. 05, 2020, Available at: https://surgerycenterok.com/about/ (Accessed Feb. 17, 2021)
5) Anna Wilde Mathews, Tom McGinty and Melanie Evans, How Much Does a C-Section Cost? At one Hospital, Anywhere From $6,241 to $60,584, Wall Street Journal – Business, Feb. 11, 2021, available at: https://www.wsj.com/articles/how-much-does-a-c-section-cost-at-one-hospital-anywhere-from-6-241-to-60-584-11613051137 (Accessed Feb. 17, 2021)
6) Melanie Evans, What Does Knee Surgery Cost? Few Know, and That’s a Problem, Wall Street Journal – Business, Aug. 21, 2018, available at: https://www.wsj.com/articles/what-does-knee-surgery-cost-few-know-and-thats-a-problem-1534865358 (Accessed Feb. 16, 2021)
7) Kenneth A.Fisher, M.D., Saving Medicare/Medicaid While Preventing Federal and State Insolvency, Orlando Medical News, April 18, 2019, available at: https://www.orlandomedicalnews.com/article/1427/saving-medicare-medicaid-while-preventing-federal-and-state-insolvency
8) Avik Roy, Obama Administration Denies Waver for Indiana’s Popular Medicaid Program, Forbes, Nov. 11, 2011, available at: https://www.forbes.com/sites/aroy/2011/11/11/obama-administration-denies-waiver-for-indianas-popular-medicaid-reform/?sh=610f74b93ff0 (Accessed Feb. 16, 2021)
9) Thomas Sowell, Charter Schools and Their Enemies, Hachette Book Group, Inc., 1290 Avenue of the Americas, New York, NY 10104, June 2020