Rethinking Healthcare in the Era of Ageing Populations

     As a self-proclaimed libertarian what I might advocate for in this post might come as a surprise, but try to leave that aside. This post mainly focuses on Healthcare and why rather than a truly free market healthcare system we need more public participation. More public involvement in healthcare is an opinion that has shocked many for whom a Friedman fanboy like me could never agree on public intervention as a good thing, after all, it was Friedman who said that “A government’s solution to a problem is usually as bad as the problem.” (Friedman) That opinion though quickly runs into trouble when you notice that there’s no country in this world that has a truly free market healthcare system, none, ZERO! In terms of mere pragmatism it simply isn’t possible, but if/when it does, I’ll be sure to delete this post.

The healthcare system in the US is currently facing a two-pronged problem. The healthcare system has to deal with a broad demographic over 60 that for the first time is causing more money to flow out, instead of in. I’m not advocating for a full government intervention, but rather a partnership where the private sector and public sector chip in substantially to create a market system where the ratio is subject to change and not fixed. For example, the ratio between public and private participation can fluctuate on a state-by-state basis depending on the age demographic of that state. So, if California has a large urban youth population, then we could have greater private participation based on how their needs would be less volatile, and vice versa. A state like Florida with an older demographic could have more public involvement based on their income and need levels. When market failure and government failure are both present, the choice is often between the lesser of two evils, and such a system could provide for more equity instead of equality. The market would come in and reduce inequity by reducing scarcity, and the government would help out by ensuring widespread availability of information. In a privatized system, the insurance company gets to make a lot of choices, and in a public system the government makes your decisions for you, but in a market system based on the widespread availability of information, such inequities could be tackled more efficiently.

The aim is to make insurance companies and patients more accountable and responsible while giving patients the flexibility to choose. The insurance company would pay the largest bills, but the patient would be liable for most of the medical expenses, and there would be a dedicated savings account where the government would contribute to help the poor and chronically ill, just like Singapore. The US’ superior banking system would also have a multiplier effect in regards to a savings account. The savings would automatically go into a high-interest (low high-interest given the current central banking climate) bank account and would build up gradually over the years thus keeping up with the person’s age and inflation at the time while ensuring that the patient stays away from reckless spending. When the person reaches retirement age, any extra savings could then be transferred into his/her pension account thus balancing the budget effectively. The US spends more money on its bureaucracy than it costs to provide health care to a person, say in Singapore, which spends $4000 per person.

Chart from

A market system by focusing on information and accountability would reduce the costs associated with the system and ensure that the outflows match the inflows and the system is self-sustaining. Friedman once said, “A society that puts greater emphasis on equality rather than freedom will get neither, but a society that places freedom above equality will get a higher degree of both.” (Friedman) Such irregularities relating to which health benefit plan works better are removed by giving the consumer greater access and freedom to choose which plan suits a person’s needs and instead of constraining him/her/they

So far, a private system has failed because while everyone wants the reassurance they can afford high medical expenses, very few can do so thus driving low-risk customers away. A market system works best because it encourages low-risk customers by giving them the right incentives and the right information to pay the amount they can afford to spend on insurance, based on their needs, and tailor a plan for such. A market system also rectifies a major issue for many who consider it to be a right of every citizen, especially the poor and vulnerable sections of society by allowing the government to help those in need, while also better balancing the perils of blanket coverage.

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