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State of the Union Address: How Free Are Americans
When It Comes to Health Care?

February 26, 2003

In his [January 2003] State of the Union address, President Bush stressed that "Americans are a free people, who know that freedom is the right of every person and the future of every nation." Among the most personal of freedoms is the right to choose one's health care and to decide which practitioners one will share intimate medical details with.

Unfortunately, the President appears not to have a clear understanding of the serious lack of freedom in the U.S. health care system--a system that is heavily dominated by federal government payment for services. For example, in his speech he noted that "Our second goal is high-quality, affordable health care for all Americans..[F]or many people, medical care costs too much--and many have no coverage at all. These problems will not be solved with a nationalized health care system that dictates coverage and rations care."

He doesn't seem aware that Medicare is a nationalized health care program that dictates coverage and rations care. It dictates coverage in its more than 100,000 pages of federal rules and regulations, and it rations care through price controls.

How the Current Medicare Program Rations Medical Care

One surgeon explains how medical care is rationed under Medicare. He says that when a surgeon is underpaid under the Medicare program for performing a hip surgery, he has an incentive to treat healthier patients. For example, if there is a choice between operating on a 66-year-old healthy man or a 96-year-old sickly woman, guess who gets the surgery? The surgeon has an incentive to treat the patient for which he will be fully reimbursed for the procedure. Yet, in a free-market health-care system, doctors would be able to charge patients according to the market price. Those who claim it is compassionate to regulate doctors' fees for seniors don't understand the perverse economics under Medicare and may not realize that their good intentions are leading to rationing and denial of care for some fragile seniors.

Moreover, seniors are denied the freedom to pay privately for treatments covered under the program by penalizing doctors who accept private payment for Medicare-covered services. Thus if Medicare begins to cover prescription drugs, all seniors in the program might be denied the freedom to pay privately for the medicines of their choice. Pushing all seniors into government-funded prescription-drug plans would undoubtedly increase Medicare costs for future generations. That, in turn, would do the exact opposite of what President Bush wants to prevent when he says, "We will not.pass along our problems to other Congresses, to other presidents, and other generations."

Free-Market, Consumer-Driven Health Care

If President Bush wants to address the lack of drug coverage with courage and clarity, he should take a good, hard look at Medicare's history to make sure he doesn't repeat the dysfunctional financing cycles. The first steps he should take toward free-market, consumer-driven Medicare reform are as follows:

(1) Repeal Section 4507 of the Balanced Budget Act of 1997. This provision prevents seniors from paying privately for treatment. Instead, allow all seniors to spend their own money rather than forcing them to use taxpayer dollars.

(2) Allow seniors to maintain their private health insurance when they apply for Social Security benefits. People now are forced into Medicare Part A when they apply for Social Security (after being taxed their entire working lives). The only way they can forgo joining Medicare Part A is to give up their Social Security benefits.

U.S. retirees who want and who can afford to carry private health insurance should be free to do so. Even countries with nationalized health care, such as the United Kingdom and the Netherlands, permit this.

Surely the land of the free can do better for its senior citizens.

This article was originally published in the January/February 2003 issue of Health Freedom Watch.