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TM Speech 10 – Abolish Universal Health Care

August 5, 2013

The objective of this speech is to “Persuade with Power”

“Abolish universal health care if you want universal health care…”.  Almost 20% of America’s GDP is consumed by health care. To give you an idea, that is 2.4 Trillion dollars. What about in Belgium? It is about ~11% of GDP or 55 billion dollars. What does this number mean? It means that you and I pay approximately 5000 US dollars per year on health care whether we know it or not. Day in and day out we see reports of how the costs are rising and how policy makers struggle to manage this money guzzling maniacal ghost also known as “universal health care”. The bad news is that health care expenditures are only expected to rise. But the good news is that we can do something about it!

Toastmaster of the day, fellow toastmasters, dear guests…provision of universal health care is well-intentioned but is it well implemented? Remember the old saying?, “The road to hell is always paved with good intentions”.  Why are the health care costs always on the up?

As we examine this in some depth, there are two sides to this.

The cost side and the payment side.  The approach seems to be to make it affordable by giving money to those who can’t afford it. Affordability and lower costs are two different things. Somebody has to pay this right? Where does the govt get the money from? By taxing more and possibly reducing funds for other social programs. This doesn’t actually solve the cost issue and furthermore makes it more costly for everyone (specially the one’s who are actually paying for it in the form of taxes or increased insurance costs).

Human ingenuity has solved the cost issues of many commodities that we use today. The costs of a memory chip, a cell phone, personal computer, food, electricity, – everything has come down significantly. To put it in perspective, cost of a personal computer in 1970 was about 140000 dollars in today’s prices. On the contrary health care costs have always been on the up. And by this I don’t mean costs related to illnesses from cancer or diabetes.  Why is it that a simple health check for a poor man without insurance should cost a fortune? Does it have to be this way?

The basic issue with health care spending is that, the providers are not very clear what to charge for a certain service as they don’t charge the consumer market but the insurance companies or the government. The insurance companies and the government transfer those to the consumers in terms of taxes or increased insurance payments. In addition the consumer is not conscientious about the prices as he or she is under the illusion that insurance is paying for them.  In some countries the prices are capped. This whole set up skews the information signal that can motivate people to innovate methods for reducing costs. Neither the insurance companies nor the governments have any incentive to reduce the health care costs. Because there is no motivation, information, reference or competition, it is not clear how to price a certain treatment.

There is another aspect to this. Imagine what would the situation be if auto insurance was also modeled like health insurance. What if your auto insurance company has to pay for the regular maintenance of your car? It doesn’t take a rocket scientist to understand that the costs will sky-rocket immediately. The idea is that insurance is for accidents and not regular maintenance. Is the rising cost in health care any surprising then?

So, as long as someone else is paying, there is no incentive for reducing the costs. This is where the actual problem lies. Unfortunately the solution is being focused on subsidies and this leads to more costs than savings. The main purpose of universal health care is being lost in paying for affordability without reducing costs. So, in order to reduce costs why not we try replicating the free market and competitive model that has been successful elsewhere?

My questions to you:

Is the existing health care spending model sustainable in the long run? Are our assumptions correct? Should we call for a paradigm shift if we really want meaningful solutions? I want you to think about it. Should we abolish universal health care to actually have universal health care in its truest sense of the word? My answer would be yes. What would be yours?

Thank you.

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