Repeal and replace Obamacare with this

A market based solution to the health care problem that will reduce costs, increase the quality of care and provide coverage for all. Photo: theswash.com

WASHINGTON, October 10, 2013 — Obamacare is not the answer to America’s health care crisis.


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However, there is a market based solution to the health care problem that will reduce costs, increase the quality of care and provide coverage for all.

Polls show that the majority of Americans do not want Obamacare, and actually fear its implementation. Small businesses are afraid that the increased cost will reduce their profit significantly and may drive them out of business. Young people fear that forcing them to buy insurance that people in their twenties don’t really need will be a heavy burden on top of their school loans and the lack of opportunity that the President’s economic policies have produced. The rest of us fear the higher taxes related to funding the program.

So far, critics of the plan have failed to provide a viable alternative.

Repealing Obamacare is a good start, perhaps leaving in place those components that the majority of people want. Then we replace it with a plan to vastly increase the number of doctors and other medical professionals, while instituting tort reform which changes the billing practices of attorneys. For those still not able to purchase health care services, Medicaid or some type of government clinics, staffed by new doctors who use their employment in these clinics to satisfy the cost of medical schools, would be available.


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The current problem with health care in America is that the price of health care is too high and rapidly increasing, and there are not enough reasonably priced services available to cover the needs of the population. In other words the price is too high and the quantity too low. How do we fix this?

The basic concept for a solution is not that difficult to see. In a specific market, whenever the price is too high and the quantity too low, we fix the problem by increasing the supply. This puts downward pressure on price and increases the quantity available. 

In the market for healthcare services, this would mean vastly increasing the supply of doctors and other medical professionals. By doing this, there would be more services available to the market. This would add competition which always results in significant downward pressure on price, increases in the quantity of services available and vast improvements in the quality of services. That is, when supply increases, prices fall and the quantity rises.

There are probably up to four qualified applicants to medical school for every opening. If we built more medical schools and increased enrollments at existing medical schools, it would take four years to see the increase in supply to reach the market. Once there, the doctors would compete for business by offering lower priced and more efficiently delivered health care services.


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If the lower price was still out of reach for some Americans, we could simply expand Medicaid and/or construct clinics. Perhaps we offer a program to medical students where, instead of them having huge debts from medical school, the taxpayers would cover the medical school cost. In return the new doctors pledge to work in Medicaid type clinics for a four year period at a modest salary.

The other part of the solution would be tort reform. 

The problem here is that lawyers are encouraged to seek huge rewards in malpractice cases, primarily because they receive a percentage, often one fourth to one third, of the settlement. To cure this, we change the way attorney’s bill from a percentage of the award to a multiple of their normal rate. This recognizes the increased risk to the lawyer of taking a contingency case, even though the data indicates that lawyers win about 90% of the contingency cases they represent.  

In other words a lawyer agrees to contingency billing only when she is about 90% certain of at least some reward. 

So if their hourly rate was $500 for regular cases they could charge two or three times that for contingency cases. This would likely reduce the size of the settlements and eliminate the incentive for lawyers to build a huge case.

This is a true market based solution.

Michael Busler, Ph.D. is a public policy analyst and an Associate Professor at Richard Stockton College.


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Michael Busler

Michael Busler, Ph.D. is a public policy analyst and an Associate professor at Richard Stockton College teaching Finance, Financial Institutions, Introduction to Financial Management, Game Theory, Graduate Managerial Economics, Graduate Financial Management. 

 

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