published Monday, April 15th, 2013

Smith: Health care reform Competition makes us all winners

By Robin Smith
  • photo
    Robin Smith, former Chairman of the Tennessee Republican Party and congressional candidate.
    File Photo/Chattanooga Times Free Press

As college basketball's March Madness has ended, I've already heard and seen remarks posted online about "next year." The anticipation, the rivalry and the love of competition never ceases.

This weekend we've had the Masters golf tournament, pitting golf's best in competition for the coveted green jacket.

For many, dates on the calendar revolve around sports season competition deemed "good" by our society.

America's economy is consumer-driven. On the whole, our televisions, radios, mobile devices and social media sites churn with commercials advertising the features, advantages and benefits of one product or service in contrast to another. The consumer chooses that which best meets their personal needs and desires.

So there's an open competition for your dollars. This competition creates the supply and demand of free-market economics and produces costs that allow this balance.

There are walled-off areas of our lives, however, where open market forces are actually rejected. Education and health care are two that immediately come to mind. Our topic today is health care.

According to the California Health Care Foundation's interactive data gleaned from the Centers for Medicare and Medicaid Services, as the burden of payment from the consumer has shifted to a faceless "third-party payer," there have been dramatic increases in costs of services and products. In 1960, almost 100 percent of the cost of prescription drugs was paid for by the consumer. That number shrank to only 20 percent out of a patient's pocket in 2010.

A patient no longer is the actual consumer driving the market of health care. You are simply the recipient at the end of a supply chain.

As the government has become the No. 1 purchaser of health care with patients and employers paying for less than 40 percent of the total spent for "health," the natural competitive forces disappear.

Why? Simply, someone else is responsible for paying for the majority of that cost, so the incentive is to over-utilize the service or product with a diminished focus on quality or outcomes. There is no need to create or innovate in such a closed system.

Switch markets. Personal electronics options now include mobile devices, hand-held tablets or laptops, and less-frequently desktop computers. The innovation and demand for these electronics has exploded, yet competition has kept prices within reach for personal purchase and consumption.

The first iPhone just released in 2007 and the first iPad in 2010. Both have spawned several generations of improvements with costs reflective of these changes in technology and prospects for future innovations.

As of July 2012, seventy-five percent of the world's population owned a cell phone. Individual consumers, making individual decisions, spending their own money for personal purchases expressing their likes and dislikes created an environment of accessibility and affordability based on supply and demand.

Gov. Bill Haslam remarked a few weeks ago that "the scandal of the Affordable Care Act is that it doesn't significantly address cost or alignment reform" in keeping "broken" parts of a system in place without addressing the true market forces.

As we cheer the winners in March Madness and regale the Masters champion, how odd that we reject those same forces of competition in regard to such an important commodity such as our health care system that would create natural reforms.

Robin Smith served as charwoman of the Tennessee Republican Party from 2007 to 2009. She is a partner at the Smith Waterhouse Strategies business development and strategic planning firm.

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acerigger said...

Robin,just how long have these "true market forces" been in effect? Shouldn't we be seeing a reduction in health care costs? Since there has been no "competition",ever,they collude to set prices, don't you know? When have insurors ever reduced premiums in order to lure consumers to change policies based on price?

I think you're living in the tea-party,republican bubble,wake up!

April 15, 2013 at 1:15 a.m.
lkeithlu said...

Somehow, I can't see the similarity between iphones and health care. Health care companies have an interest in making money-they do so by reducing risk (not accepting clients that may cost much more than the premiums they pay). That means, at least to my uneducated eye, that it is good business to price high risk patients out of the market or drop them if you can (or exempt certain benefits) Why are insurance companies uninterested in covering the elderly? Health insurance is not like other insurances either. Homeowners and car owners can go without a claim ever, but health costs are almost guaranteed to increase throughout a person's life, even if they never have an accident or a serious illness early on.

I will agree that if your health care is purchased by you, and is not through your employer, and carries a high deductible so that you are paying for your routine preventative care, you can be a good consumer. I "shop" around for deals; you can get a better price if you pay cash up front for things like mammograms and yearly blood screening. But other than finding a company that will provide competitive premiums for me, a healthy adult with no history of serious illness, I don't see how the free market model applies. The fact is that many people in this country cannot afford the coverage because it is priced out of their range or no company will accept them.

April 15, 2013 at 9:01 a.m.
rumrunr said...

the republican idea of supply and demand health insurance is simple. they demand your money and supply you little in return.

April 15, 2013 at 10:06 a.m.
Leaf said...

Simplistic article comparing apples and oranges. Only serving to pound the drum of "Our side, Our side."

April 15, 2013 at 10:26 a.m.
Rickaroo said...

Making a comparison between basketball and the free market, or even trying to compare the business of selling iPhones and iPads to health insurance is downright naïve and nonsensical. But such is the thinking of you free market purists. You think the simple answer to everything is to just turn it over to private enterprise and put a price on it, and, presto, it's "win-win" for everybody. And if not, well, so what - somebody's making a profit from it and that's mostly what God intended, right? People actually getting decent health coverage would just be a by-product. If they can afford it, then obviously they're playing the game right and God is blessing them, and if they can't afford it, well, they must be doing something wrong and they deserve to suffer the consequences, I guess.

Keeping health insurance in the free market as we've always done has certainly worked to enrich those in the higher echelons of the insurance industry but it has proven to be the most expensive and at the same time most inefficient, most unfair system of providing health coverage that any nation in the world has devised. You people who are lucky enough to have it sing the praises of how medically advanced America is and what a great health care system we have, and you practically scoff at those who don't have it, making them out to be lazy or stupid. But there's nothing great about it if over 40 million people can't afford it or are excluded from access to it. You don't realize how LUCKY you are to be able to afford it or to work at one of the FEW companies that still provide comprehensive health care for its employees.

You free market idolaters and social Darwinians think that everything in life is supposed to be a cut-throat competition and that it's a sign of weakness to just play nice and decent with your fellowman....you know, like we were supposed to learn how to play in grammar school. And you refuse to accept the fact that not everything belongs on the free market. Medicare has worked well for decades. So has Social Security. Just because they need tweaking now does not mean that they are broken and inadequate programs or failed policies. But you refuse to acknowledge that government can actually get it right at least some of the time and handle some things better than profit oriented businesses.

As for the affordability of iPads and iPhones and practically every other electronic gadget sold in America, you have failed to mention, Mrs. Smith, that the sole reason for their affordability is that practically all of them are made in China, with the laborers who make them being paid sweat-shop wages. Maybe we should outsource our health insurance overseas, too? Maybe then more people could afford it, eh?

Cheer for your team in the sports arena and sell widgets on the free market, that's fine. But not health insurance. Where people's health and lives are at stake, private profits and shareholders have no business being part of the equation.

April 15, 2013 at 12:45 p.m.
dfreezy said...

My health is not a commodity.

April 15, 2013 at 6:11 p.m.
nucanuck said...

I dare say that Ms Smith will not respond to Rickeroo's excellent take-down of her article.

April 16, 2013 at 1:26 a.m.
inquiringmind said...

Public health care works quite nicely for the good of all in many countries of the world. When greed enters the picture those without always suffer the most. Private health care costs in the US have increased faster than inflation as long as I've been around, it is time to try something different. Insurers fear Obamacare because it will unmask all this greed and bring equity to the market.

Ms. Smith's politics is just bloviating stale, ancient Republican ideas (sic) that protect the rich and have become irrelevant to most members of our society. She and her cronies have been "left behind."

April 18, 2013 at 8:23 a.m.
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