The real problem with health care

Matt Marsden is the editorial committee head of the IU economics club.

Last Wednesday, the House Judiciary Committee voted 20-9 in favor of removing health insurers from the McCarran-Ferguson Act of 1945.

Just what is the McCarran-Ferguson Act, you ask?

It was intended to be a temporary measure after World War II that gave the health insurance industry an exemption from federal antitrust regulations.

This has made it very difficult for health insurance companies to get started, leading to a very small number of companies.

Getting rid of this anti-trust exemption is something that people from each end of the political spectrum should be able to agree on.

This bill is receiving bipartisan support, as three Republicans joined the Democrats voting in favor of repeal.

According a Washington Post article, “Insurance companies warn that repealing the 1945 law would result in fewer insurance companies, ultimately harming consumers.”
Let’s think about that sentence for just a second.

By repealing the act, it would be much easier for health companies to become part of the market. Since the health industry is so profitable, many more companies are likely to sprout up, therefore increasing supply. Anyone who is familiar with a supply and demand chart will understand that with a shift of the supply curve to the right, (increase in supply) prices will decrease.

Decreased costs are likely not the only benefit of repealing the antitrust exemption.  Wait times are likely to decrease as well. 

Health care in Canada is government run, which means a limited amount of suppliers.
Since there are so few suppliers in the market, the wait times for health procedures are astronomical.

According to a 2008 Fraser Institute study, patients awaiting neurosurgery have to wait nearly 32 weeks.

That is 26 weeks more than what is considered a reasonable wait time to receive neurosurgery (5.8 weeks).

A lot of people do not have six months to spare before getting neurosurgery, and thus many of them come to America to get their surgery. 

The U.S. already has significantly lower wait times than Canada for health procedures, but by excluding the health industry from the McCarren-Ferguson Act, these wait times could decrease even more.

By adding more suppliers to the market, more opportunities for patients to receive the care they need are created.

Excluding the health industry from the McCarran-Ferguson Act is not going to fix health care immediately, nor is it going to solve all the problems with health care down the road.

That said, it is a simple solution to what may be the biggest problem with our health system: supply.

Do not blame the big, bad insurance companies for their profit-making.

The insurance companies merely took advantage of an ideal situation our legislators handed them.

Blame every session of Congress in the last 65 years that allowed such an injustice to take place.

This antitrust exemption goes against what all congressmen claim to be opposed to, and it is nice to see they are finally looking towards solving this problem.

So, before we go spending nearly a trillion dollars on health care, let’s fix the real problem.