Is Government-Sponsored Free Medical Care the Solution to Current Medical Insurance Problems?

The expansion of free medical care beyond the current boundaries of Medicaid and Medicare has been a matter of hot political and social debate ever since the government-sponsored medical coverage was passed into law. The proponents of such expansion claim that the current situation leaves a large percentage of the population without the means to pay for medical care, and as the medical technology continues to improve, the situation will only get worse. Those against the expansion counter that nationalizing medical insurance not only would cripple the economy, but also reduce the quality of medical care provided by hospitals and private practitioners. Both sides agree, however, that the system of insuring medical care is inefficient in its present state. What they might not realize is that, despite these inefficiencies, it is the most optimal system compared to complete privatization or complete nationalization of the medical insurance industry.

The supporters of the expansion of government-sponsored free medical care argue that it is the best way to combat the current medical insurance crisis that sees middle-class rather than poor families, especially those purchasing their own insurance, losing medical coverage because of the rising costs of medical care. Unlike the poor families, the middle-class families are not eligible for government-provided medical benefits such as Medicaid, which leaves them in a situation where they are left with no coverage at all, unless their employer provides it. As medical insurance premiums continue to rise, however, employers are looking to cut costs, especially in an uncertain market, by opting to buy the cheapest possible coverage for their employees. This in turn means that even if working members of the middle-class families have medical insurance, they often do not receive the highest level of medical care and have to pay significant amounts in out-of-pocket expenses.

The supporters of such expansion claim that offering government-sponsored free medical care to everyone will stabilize the healthcare industry by establishing a clear system of payment rates and schedule for payments for services provided, which would replace hundreds of existing rate systems and payment schedules used by private medical insurance providers. This would cut costs for medical care practitioners-mainly in accounting-and ensure a stable revenue stream for them, which in turn would allow them to plan more efficiently. The cost of providing medical coverage for everyone would be offset by contributions, in a form of taxes, from individuals and employers. Individuals would benefit from this system because they would be assured of their insurance provider paying accurately and promptly for medical care they receive, without spending any more money on medical care aside from taxes. Employers would benefit because knowing exactly how much they must pay in medical care taxes would allow them to do financial planning more effectively, as well as to cut costs within their human resources departments that would be no longer required to research and negotiate contracts with private medical insurance providers.

For the opponents of such expansion, the idea of nationwide, government-sponsored free medical care coverage is the ultimate socialist nightmare. They argue that shutting out private companies from the medical insurance industry goes against the most important aspect of successful capitalist economy-free market competition. The loss of revenue by the private insurance providers and the subsequent stock market panic would have a good chance of crippling the economy all by itself. If that is not enough, the opponents of the expansion claim that government-sponsored medical care would hinder scientific research in the field of healthcare and diminish the quality of medical services offered by hospitals and private practitioners. As proof of legitimacy of this forecast, they cite the existing per-diagnosis system of reimbursement used by Medicaid and Medicare. According to it, the amount that a practitioner receives as reimbursement for services rendered is determined by using a rigid pay scale based on the type of illness of the covered patient, and never exceeds the highest figure allowed for such diagnosis. This means that no money is received if patients are experiencing complications or relapses in their illnesses and must be further treated or provided with an extended hospital stay.

One way to compensate for revenues lost in such manner today is for practitioners to transfer these costs to private insurance providers, which results in the growing medical insurance premiums for individuals. Since many private insurance providers are also implementing the per-diagnosis payment system, another way to offset revenue loss is for practitioners to cut costs. This usually means cutting staff and holding back on technological improvements, which in turn reduces the quality of medical services available to the population. This, the opponents of the expansion predict, is what is going to happen if the government completely takes over medical insurance.

While both groups appear to have valid arguments supporting their respective points of view, they fail to mention that neither the complete privatization nor complete nationalization of medical insurance industry is a better alternative to the existing system. While nationalizing medical insurance may indeed lead to the reduction in quality of medical care services offered and possibly to general economic trouble, privatizing the industry would cut off a large portion, if not the majority, of the population from medical benefits, thus severely limiting their ability to receive medical care of any kind. While imagining the economic turmoil caused by nationalization is hard enough, trying to predict the level of political and social upheaval privatization would cause is a truly scary proposition.