Give Me A Break

America’s health care system is sick, but the cure may be worse than the problem, a consumer reporter and network news co-host said on Thursday. 

John Stossel, whose investigative reporting on consumer issues turned him from an opponent of big business to a free market aficionado, spoke before a crowd of hundreds of legislators, policy wonks and ordinary people at an event sponsored by the Texas Public Policy Foundation in Austin. Stossel has been a co-anchor of ABC News’ 20/20 program since May 2003, but will shortly be leaving to join the new Fox Business Channel. 

Stossel said that President Obama is right on one thing: the present system is not sustainable. But, he added, increasing government involvement only expands the depth of what has essentially become a “ponzi scheme.”

“We locked Bernie Madoff up for something much tinier than what the politicians are doing,” Stossel told his audience. 

“All the plans call for much more insurance – government insurance and private insurance – like that’s the answer,” Stossel said. On the contrary, he noted that the only areas of health care where the free market is a major factor is plastic surgery and Lasik eye surgery. Both of those areas, he noted, have seen dramatic cost drops.

Stossel also noted that the cost of contact lenses has dropped from several hundred dollars when they were first introduced to under $30 today. 

Stossel was introduced at the event by former State Representative and TPPF senior policy fellow Arlene Wohlgemuth, who authored the biggest health care reform bill in Texas history in 2003.

Wohlgemuth said the current health care debate centers on three goals in which she said all parties agree on: controlling cost, increasing access and improving quality. But in those three areas, she said, the current plan fails.

“Liberals, in my opinion have seemed to package every single bad idea into the bills that are moving through congress,” she said. “My request to congress is that they reform Medicare and Medicaid before they impose them on the rest of us.”

Stossel said that such a big government plan would make America’s health care system look more like those of Europe, which are only viable as long as America still has a free-market aspect to its system.

“The European systems are OK only because they freeload off American innovation,” he said. Most European nations subsidize their drug costs at low levels and force American pharmaceutical companies to sell at those prices. Those companies can only make a profit by making up the difference in America.

Stossel said that given the experiences of other countries, America’s health care system under the proposals in congress would “take time to fail.” But it would fail in the end because the proposals don’t get to the heart of the problem created by health insurance in the first place: the people using the services are not the people paying for them.

Stossel said that health insurance was originally designed to cover catastrophic costs, such as unexpected major illnesses. Once coverage was expanded – through government mandates – to cover daily and routine costs, those costs began to rise. Unless someone in the system is finding a way to cut the costs, they will continue to do so. 

Stossel, known for his television programs which break issues down into simple terms, explained the problem on a recent broadcast by comparing health care to a grocery store. Imagine, he said, if people had “food insurance” and could simply go to the store, load up on everything they wanted and not shop around because they know their insurance will cover the costs no matter what they are. That, he said, is what is happening in health care.

And if the government takes a greater role, it will have to cut costs itself in some way. In most countries that have tried this experiment, he noted, that has come in the form of rationing, and such an outcome would be inevitable in America.

Stossel also took aim at the idea of “community pricing” which would try to level the playing field on health insurance premiums by charging a standard rate across a large number of participants. 

“That’s not insurance, that’s welfare,” Stossel said. “To say that we should have one plan with everyone paying the same thing is like saying that you and Lindsey Lohan should pay the same for car insurance.”

The answer to the problem, Stossel said, is to go the exact opposite direction of the current plans in Washington: to “unleash the free market” for health care. Stossel pointed to Austin-based Whole Foods, Inc, which instituted health savings plans for their employees. As a result of the plan, employees have begun to shop around and compare costs, to question whether certain treatments are necessary and to choose generic drugs more often.

“That changes behavior,” Stossel said.