Any supporter of the privatization of medical
care will probably hear at some point in life
that it will inevitably cause all medical
services to be as expensive as in the United
States.
In fact, this argument is not without merit.
Americans really do pay a lot for health care.
Using the dollar value in 2009 as base, the
medical expenses per capita rose in the US
from around $1,000 in 1960
to over $8,000 in 2009.
These expenditures as a share of GDP increased
in the same period from 5% to about 17% of
GDP.
Some questions, however, remain: 
How did this happen?
Why is medical care so expensive?
Did the government hold back from action to
have a free shot later at blaming the market
for its supposed failures?
Is it only because of the fact that the American
health care system is simply more sophisticated?
Has the already famous Affordable Care Act
(commonly known as Obamacare) solved the problem?
These questions were addressed by economist
Robert P. Murphy, PhD, and Doug McGuff, MD,
in their book Primal Prescription: 
Surviving the Sick Care Sinkhole.
We need to delve a bit into history using
their work.
The first medical school in America was established
in 1765 at the College of Philadelphia.
Of course, there were already physicians in
America who learned their trade by practicing
with experienced doctors (in the tradition
of the European apprentice system), but then
there were more ambitious ones, who perfected
their skills in European medical schools in
Edinburgh, London, Paris, or Leiden.
Two such students, William Shippen and John
Morgan, after completing their studies in
Europe established the medical school in Philadelphia,
thus setting the trend for the development
of medical education in America.
Guided by Morgan s vision, soon other medical
schools started to pop up at Yale, Columbia,
Harvard and Dartmouth universities.
As these medical schools were quite popular
(and hence profitable), a lot of schools that
were not formally associated with any university
began to emerge.
Some of them offered a high level of education
and trained competent physicians, while others
were shoddy and produced substandard graduates.
In the 18th century, there were no government
licenses in America required to practice the
profession.
Any man, even without formal education, could
be a physician, as far as he earned the trust
of the patients.
Patients could also easily sort out the sheep
from goats by looking for doctors who held
diplomas of renowned universities, and rejecting
the rest.
Of some note is the fact that some physicians
without a diploma who practiced with a master
could also achieve competence and succeed
thanks to recommendations of satisfied patients.
However, as John F. Fulton writes in his article
on the history of medicine, while the number
of schools increased, the level of education
decreased.
What is interesting, the proposal to change
this state of affairs did not originate from
the concerned patients, but from physicians
who graduated from the medical schools.
They joined forces and lobbied for legal license
requirements in the medical profession.
Not to belie the noble intention of raising
the standards, one of the consequences was
the elimination of competition.
In 1821, Connecticut authorities began to
license physicians, while forcing those whose
education was deemed substandard to pass state
examinations.
Other states followed suit, and thus in 1847
the New York Medical Society was established
that set requirements for admission to medical
schools, and examinations for licensure.
All of this resulted in curtailing competition
in favor of the already-licensed doctors.
From then on, it became harder even for those
who followed the approved path both to get
into the university and to graduate.
It is not our place to judge the physicians
intentions behind this program, but there
cannot be any doubt that the declared aim
of raising the level of education served directly
their personal interests.
Licensure limits supply of medical services
and raises its prices.
Milton Friedman in his book Capitalism and
Freedom cites an illuminating analogy from
the automobile industry.
If the government suddenly banned all production
of cars not up to the Cadillac standard, then
the quality of cars on the roads would surely
increase.
However, the fact that neither inferior nor
cheaper cars would be produced means that
for many people buying any car at all would
be impossible.
Some people simply cannot afford a Cadillac,
so removing inferior cars leaves them with
nothing.
Friedman also questioned the very presumption
that licenses raise health care standards.
Concluding his discussion of medical practice
licensure, he wrote:
When these effects are taken into account,
I am myself persuaded that licensure has reduced
both the quantity and quality of medical practice;
that it has reduced the opportunities available
to people who would like to be physicians,
forcing them to pursue occupations they regard
as less attractive; that it has forced the
public to pay more for less satisfactory medical
service, and that it has retarded technological
development both in medicine itself and in
the organization of medical practice.
I conclude that licensure should be eliminated
as a requirement for the practice of medicine.
We can confirm Friedman s words by going onward
with our journey through history.
In 1910, Abraham Flexner published his Report,
in which he showed that many of the 155 medical
schools in the USA and Canada were substandard,
and that the independent institutions were
underfunded and inferior to those at universities.
Flexner recommended that medical school admission
should require at least 2 years of college
education, and the actual medical training
should take 4 years.
He deemed as well that substandard schools
should be either closed or incorporated into
existing universities.
His recommendations soon became law, resulting
in yet another reduction of the supply of
practitioners.
In 1900, there were 175 doctors per 100,000
citizens, while in 1930 there were only 125.
During the period over 30 schools were closed.
This shortage of doctors persisted for a long
time.
It is not surprising that already in 1932
the Committee on the Costs of American medical
care issued a report on how to reorganize
the sector in order to curtail these constantly
swelling costs.
One of the proposals was to partition medical
care payments through insurance, taxation,
or both.
Let us now consider how patients were charged
by doctors over decades.
Up to a certain point the relationship was
the most obvious one, i.e. patients paid their
physicians directly for the services rendered.
Insurance policies were bought as an auxiliary
measure to pay for hospitalization in cases
of serious injuries or illnesses.
We need to emphasize here that early insurance
covered only serious incidents instead of
minor checkups, just as car insurance covers
accidents and such, and not every oil or bulb
change.
We have already shown in our The Great Depression:
what caused it? video that in the 1930s it
was hard to be an American.
The doctors were being paid in eggs, chicken
and home baked goods.
Physicians working in hospitals came up with
the idea of organizing their own insurance
companies that would cover the fees for their
services.
Unfortunately, during this period of hardship
some people could not afford even routine
visits.
This created an incentive for hospital insurers
to extend their coverage beyond serious incidents
to these ordinary visits.
The government was asked for help to ensure
that the premiums would not immediately skyrocket.
Two large insurance companies were established
Blue Cross and Blue Shield and thus began
the era of the new insurance model.
The companies were able to obtain tax exemption
status, making the costs acceptable to the
public.
The idea was that after paying the insurance
premium one would not have to worry about
health care anymore, because the insurance
would cover all of it, even the costs of small,
routine visits.
Physicians would also be able to stop worrying
about their salaries.
Unfortunately, the government wanted something
in return.
The government forced the insurers to adopt
the so-called community rating in place of
traditional risk rating.
This meant, at least originally, that the
insurers had to calculate a single premium
for every medical plan within a given geographical
region, regardless of their clients individual
age, sex or medical history.
Such socialization of risk meant that the
customers with low individual risk had to
pay more under the new system, and the clients
with higher individual risk were rewarded
with cheaper premiums.
This created a moral hazard, i.e. a situation
in which clients could act to increase their
individual risk without exposing themselves
to any practical consequence.
Under an individual risk rating if you are
slim, free of addictions, and exercise every
day, you pay a much lower insurance premium
than if you are an obese smoker who drinks
a lot of alcohol.
This lower premium may create a financial
incentive to take better care of yourself
in order to reduce your insurance costs.
However, when costs of treatment for people
with unhealthy lifestyle are shared among
all insured clients, an opportunity to abuse
the system appears.
The financial incentive to take care of yourself
disappears.
Some people will take higher risks because
they will be freed from having to bear the
consequences of their actions.
This scheme of paying all costs of medical
care through the third party, i.e. the insurer,
was the root of problems that persist to this
day.
A vicious circle that involved moral hazard
was created: the insurance removed individual
incentive to reduce cost, so insurance premiums
had to increase, and that prompted the healthiest
of clients to terminate their insurance, as
for them its costs surpassed its benefits.
When clients with smallest individual risk
left, insurance costs had to rise further.
Making this model standard after World War
II meant that the client could not negotiate
prices with their physician anymore.
It was no longer possible to compare prices
offered by different doctors, which previously
favored lower prices.
Milton Friedman proposed four ways in which
we spend money:
The first way is to spend your own money on
yourself.
When doing that, you try to get the most value
for your money.
The goal here is to get the best quality at
the lowest price.
The second way is to spend someone else s
money on yourself.
When you do that, you still care about the
quality, but you do not care about the costs,
as you will not bear them.
The third way is to spend your own money on
someone else.
When doing that, you are careful about the
costs, but you do not care too much about
the quality.
The fourth way is to spend other people s
money on somebody else.
When you do that, you do not care about neither
quality nor costs.
When you pay your physician directly, you
act in the first way.
You care about both costs and quality.
However, in the present system this has changed,
as the costs are being paid by the third party,
i.e. the insurance company, with the premiums
based on the community rating . This caused
the patient to act in the second way (caring
about quality, but not costs), while the insurance
company acts in the third way (caring about
costs , but not quality).
As you can see, this makes the interests of
patients and insurers contradictory.
World War II left its mark on health care
as well.
Due to the fact that a large part of the population
fought in Europe, the supply of labor fell
sharply.
Generally, when supply falls, the price goes
up; it was no different with wage rates.
To counteract this, in 1942 the US government
froze wage rates with the Stabilization Act.
Employers were unable to raise wages to compete
for employees, so they started to offer additional
benefits such as paying for health insurance,
because the government did not treat this
as raising wages.
What is more, according to the law the employee
benefits could be deducted from profits when
calculating taxes, thus making them lower
for the employer.
On the other hand, when the employee wanted
to buy insurance for themselves, they had
to pay with money after tax.
This was another step towards the collectivization
of health care, since only employers who bought
group insurance were entitled to tax deductions;
this resulted in a relatively small number
of companies being insurers for huge groups
of people.
An additional problem that lingered since
Obamacare started was that it was harder to
transfer insurance policy conditions when
changing jobs.
If you became chronically ill at one job,
then you had to pay higher premiums at your
next job.
If you already had a binding insurance contract
before you have lost your health, then as
long as you kept your old job, you paid the
same premiums.
Years have passed, and in the US there were
more and more elderly people who, as you know,
need medical care more often.
Insurers operating under the community rating
system began to suffer financial problems,
allowing entry to private insurers that had
more freedom in determining premiums.
It was not profitable for physicians and hospitals
to offer medical care to indigent older people
even before this increase of costs, let alone
after.
As a result of rising costs of medical care
and, consequently, of snowballing premiums,
some older people started to have trouble
accessing treatment.
In 1965, President Lyndon Johnson signed amendments
to the Social Security Act, which among others
established Medicare and Medicaid.
Medicare is a social health insurance that
covers people over 65, as well as some disabled
or chronically ill people below this age.
As for Medicaid, it is a health care program
for specific people and families with limited
income and resources.
The establishment of Medicare pulled all people
over 65 out of the private insurance market.
The costs of medical care for older people
that constitute the segment of the population
with the highest risk of illness and the largest
costs of treatment fell on the taxpayers.
The costs of Medicare rose from 1965 to 1980
because of changing behavior of both medical
service providers and patients.
The managers of medical institutions knew
that they will be reimbursed, so they expanded
their services to meet the rising demand for
medical care.
Without having to pay directly, patients exploited
the system as much as they could.
Politicians were eager to control the costs,
but preferred not to introduce unpopular limits
on treatment; instead, they limited payments
for medical care.
Before that physicians simply billed Medicare.
But now another system based on the so-called
DRGs (diagnosis-related groups) was introduced
to solve the problem.
In short, its aim was to determine in advance
how much hospitals should be paid for the
treatment of a given disease.
In economic terms it was a system of price
controls, and as economists know, setting
maximum prices leads to shortages.
The same goes for medical services.
Private insurers also had to adopt the DRGs,
and as it concerned hospital treatment, the
result was a reduction in the supply of hospital
care services and an increase in the supply
of outpatient treatment services.
The physicians had more freedom when setting
payment rates in case of outpatient treatment.
We mentioned earlier how reduction in the
supply of medical services led to a reduction
in the ratio of doctors per a number of citizens,
i.e. to shortages.
Some changes in the Social Security Act that
established Medicare included subsidies to
Graduate Medical Education (GME).
Both the students and the hospitals that trained
them were subsidized.
From 1965 to 1980, teaching hospitals used
part of these funds to finance the treatment
of their indigent patients.
As other hospitals became aware of these subsidies,
they started to divert their indigent patients
toward teaching hospitals.
In the 1980s, the workload in the teaching
hospitals related to indigent patients had
reached critical levels, even though the resident
doctors worked over 100 hours a week.
To add insult to injury, there emerged a practice
of dumping indigent patients: now and again
even an unstable patient was transferred by
a private hospital to a teaching hospital,
which was both costly and disturbing to the
public.
In 1986, President Reagan proved that both
political parties in the US were willing to
intervene in the medical market when he signed
into law the Emergency Medical Treatment and
Active Labor Act (EMTALA), which was part
of an even larger Congressional Omnibus Reconciliation
Act (COBRA).
EMTALA has imposed the following duties on
hospitals.
The first duty was that their emergency rooms
had to provide a medical screening exam on
anyone who requested it and determine whether
they are suitable for immediate treatment.
This had to be done regardless of such person
s ability or intention to pay for the exam.
If the patient was suitable for immediate
treatment, then the second duty was to stabilize
their condition or arrange transport to a
hospital that could.
The third duty was to accept transfer of such
patient if the hospital had specialized equipment
required by a given treatment.
Refusal was not an option.
This duty also disregarded whether patient
would pay or not.
At the same time, the patient had to request
such transfer after being informed about its
risks and hospital s duty to stabilize; when
such request was impossible e.g. due to loss
of consciousness, the doctor was required
to sign a certification that the medical benefits
of transport outweigh the risks.
The new law has been criticized for its vague
definitions.
For example, stabilization was defined as
no medical deterioration should occur from
or during the transfer.
The first legal cases proved that the courts
treated these terms so strictly that almost
every patient could be considered unstable.
The plaintiff did not even need to prove that
their medical condition has deteriorated.
It was enough that it COULD happen for a physician
or hospital to be found guilty.
The penalties for violating this law were
extreme: $50,000 of monetary penalty for each
violation (with many violations per patient
possible), compensations paid to the hospital
to which the patient was transferred, or two-year
termination of Medicare/Medicaid program,
which often meant grave financial problems
for the physician or hospital.
EMTALA increased the demand for hospital care
just as the DRGs reduced its supply.
From then on, when a doctor faced a situation
that was too complex, they sent the patient
to the ER with the certainty that someone
would take care of them.
When you had a small car accident, the police
advised you to go to the ER.
EMTALA resulted in ERs being treated like
free clinics.
Murphy and McGuff compared it to an overflowing
bathtub.
While the DRGs acted as the drain plug that
prevented patients (water) from exiting, EMTALA
turned the faucet on full blast.
In result of the financial costs imposed by
EMTALA, the ERs and hospitals around the country
were being shut down.
The survivors suffered from a shortage of
subspecialty on-call backup.
EMTALA also resulted in costs being shifted
around.
When many people started to use ERs like free
clinics, hospitals and doctors tried to recoup
their losses by charging higher fees to the
clients that paid.
Here we will not delve deeper into the issue,
but it should be said that the regulations
made the profession increasingly burdensome
for the doctors because of all the red tape.
The physicians had to fill an ever-increasing
pile of documents to receive refunds for the
services rendered.
Even hopes of solving the issue with computers
were for naught, as their introduction was
coercive instead of voluntary.
According to Doug McGuff, MD, while such functions
as prescription-writing and discharge were
an improvement, the charting took much more
time.
Using the old approach , he wrote, I could
see patients at almost double the pace.
In case of a computer malfunction, the entire
department could cease to function, which
posed a great threat in the dynamic environment
of the ER.
When talking about rising costs, one cannot
just omit the topic of the pharmaceutical
market.
The Food and Drug Administration (FDA) is
tasked with controlling the pharmaceutical
market (among other things).
While this is an interesting topic, we do
not have enough time to discuss it thoroughly.
But let us hear what the authors of the Primal
Prescription have to say about the FDA:
On the one hand, it prolongs the development
of potentially useful drugs, leading to delayed
treatment and artificially inflated prices.
On the other hand, the FDA also fails to protect
Americans from unacceptably dangerous drugs,
even when experts in the private sector have
raised alarm bells.
Please refer to the book for a detailed explanation.
As you can see, the price increase that we
mentioned at the beginning was caused by a
series of interventions in the market, some
increasing the demand for medical services,
some reducing their supply.
People that claim that all was right in the
world of US healthcare before Obamacare (i.e.
the Affordable Care Act) are simply mistaken.
There cannot be any doubt that the problem
of rising costs existed before.
The claim that the free market failed to provide
affordable medical care is wrong as well,
because historical evidence clearly shows
that people were not allowed to act freely.
But maybe further interventions solved these
problems?
It should be noted that in the period discussed
so far, the government has never tried to
abolish the failed regulations, instead it
attempted to fix them with other regulations
that proved equally ineffective.
First of all, it is worth noting that in March
2010, when President Barack Obama signed into
law Obamacare, it was not meant as a health
care reform.
It was all about health insurance.
Also of some note is that American health
insurance is in fact not an insurance per
se, as it covers all events instead of only
sudden, unexpected and expensive ones.
You can imagine how expensive home insurance
would be if it covered light bulb replacement,
repairs to sinks, and all other small costs.
Such insurance ceases to be insurance, and
it becomes a different way of paying for all
costs associated with maintaining a home,
with an additional premium for serious, unforeseen
events.
A casual visit to the doctor due to cold can
be well compared to such bulb replacement.
It is not an unexpected event that the patient
is unable to bear financially.
At the same time, health insurance in the
US does not fully cover the costs of really
serious incidents, and requires from the insured
partial coverage of costs, which can be impossible.
Typical insurance works the other way round:
it covers serious events completely, and omits
small ones.
To sum up, Obamacare introduced:
- A mechanism to provide health insurance
to (most) Americans ( universal coverage )
- Non-discriminatory pricing in health insurance
premiums ( community rating )
- Minimum standards for health plans ( essential
health benefits )
- A requirement that (almost) everyone obtains
health insurance ( individual mandate )
- Government subsidies for the poor
- Various new taxes on the rich to pay for
the new spending commitments
- Government guarantees for the health insurance
companies
and
- A requirement that (some) employers provide
health insurance for (some of) their employees
( employer mandate )
What were the consequences of these regulations?
There were several, besides the obvious replacement
of free choice of citizens with more state
power and more interference in the market
by the government.
Universal coverage
Universal coverage was motivated by the fact
that insurance became so expensive in result
of the interventions described earlier that
many Americans were unable to afford even
basic coverage.
By 2009, almost 50 million Americans had no
health insurance.
the Private sector still provides health insurance,
and Obamacare does not mean the utter nationalization
of medical care.
Please note that under Obamacare the government
is not tasked with providing health care to
every citizen.
In theory, the government intervenes only
to ensure that everyone will be covered.
That was the main goal; the succession of
regulations was a domino effect.
After the introduction of universal coverage
insurance companies could try to find a way
to do their job at the expense of quality,
so it was necessary to introduce regulations
such as community rating and minimum standards
for health plans.
Obviously, someone had to pay for the patients
that were covered by insurance below cost,
and this someone was young and healthy people.
Thus, it was necessary to introduce insurance
obligation to prevent their flight from the
system.
But what could be done as burdens levied on
these young people became too excessive?
The solution was to tax the rich to subsidize
others.
As you can see, after every regulation came
the need to introduce another.
In effect, Obamacare was 906 pages long, and
the expenses related to this bill in the decade
since its introduction amounted to 1 trillion
dollars.
Community rating
Community rating, i.e. pretending that people
are the same in terms of health, ends up hurting
those who take care of their health.
The only features that are still allowed to
affect insurance rates are age, place of residence,
and smoking.
The size of the family also counts, as you
can get family coverage.
Despite the fact that the insurers are allowed
only such a small degree of freedom when separating
risk groups, they are still banned from setting
their premiums freely; for example, insurers
are allowed to charge elders only up to 3
times more than in the case of their younger
clients (the previous ratio was 5 to 1).
The result is redistribution of property from
those who are healthier to less healthy and
from younger to older.
Obamacare has only expanded the scope of this
redistribution.
Another effect of community rating is the
moral hazard that was discussed earlier.
Preventing insurers from requesting higher
premiums for risk factors associated with
unhealthy lifestyle discourages their clients
from caring about their health, which in turn
increases the future costs of treating them.
Minimum standards for health plans
The introduction of minimum standards for
health plans imposed dollar limits on essential
benefits, thus making insurance policies from
catastrophic events unavailable to people
who wanted them.
These minimum standards were also not small
at all.
There were many absurdities like requiring
women after menopause to buy insurance that
covered maternity leave.
This also constituted redistribution, where
women that would not go on maternity leave
subsidized women who would.
At the same time, if people were allowed to
buy insurance only from catastrophic events
and to pay or co-finance routine visits to
the doctor up to a given amount, they would
have a strong incentive to avoid such visits
by being more careful.
Imposing higher and more expensive plans on
them took away this incentive.
Once again, the moral hazard increased.
Individual mandate
Requiring everyone to obtain health insurance
( individual mandate ) was a serious blow
against the freedom of citizens.
The aim was, as it were, to imprison in the
system those who would be financially better
off without it.
Well, as they say about statism: ideas so
good they have to be mandatory.
Even according to the official estimates of
the Congressional Budget Office, there still
will be 3.9 million Americans in 2016 who
will actually prefer to pay the average fine
of $1,000 rather than to buy insurance.
This shows quite clearly that insurance was
expected at the time not to become affordable
at all.
Among these 3.9 million citizens one million
were supposed to be indigent people who probably
would not be able to afford the insurance,
and on top of that they would be charged with
a penalty of at least $695.
Therefore, according to the government s own
projections, Obamacare would have the exact
opposite effect to what was intended, hurting
the poor instead of helping them.
Government subsidies for the poor
Benefits and subsidies for the indigent have
substantial effects in every situation.
According to the general rule that when you
subsidize something, you get more of it , subsidizing
indigent people is an important incentive
for people on the margin to give up their
low-paid jobs and live on the subsidies.
In this case, you get more people that fully
depend on the state regarding their medical
care.
Because these subsidies are targeted at people
with low income, the incentive for them is
to avoid generating higher income by doing
harder or more efficient work; in some cases
it may encourage them to limit the number
of their working hours.
The government s own projections of hours
worked indicated that Obamacare would cause
a decline in the number of full-time-equivalent
workers of about 2.0 million in 2017, rising
to about 2.5 million in 2024 . It is important
to note that according to the projections
the largest decline in labor supply would
occur among those with low income.
Tax increase
Obamacare was estimated to carry with it some
trillion dollars in net tax revenue increases
over the first decade to cover its costs.
The burden of the taxes did not fall solely
on the affluent elite.
About 5.2 million people who made more than
$200,000 a year now had to pay increased payroll
tax and investment income tax.
Add to that the fines for the lack of insurance
paid by 3.9 million Americans (including a
million indigent people who earn less than
twice the federal poverty line).
Another cunning way to get money is to levy
40% surtax on the so-called Cadillac plans
. These Cadillac plans are the best among
healthcare plans provided by the employer.
It is a win for the government whether the
employer pays the surtax or not.
If the employer decides to lower the standard
of the insurance and to compensate the employee
by raising their salary, the government will
just collect more income tax.
It is true: the government has actually calculated
these consequences in its estimates.
Another thing that was calculated was that
some smaller employers will give up employee
insurance altogether and compensate employees
by raising wages.
However, these wages will be taxed, unlike
the tax-deductible insurance.
This is the end result of believing in the
myth of taxing the affluent.
A large part of society, including the indigent
and the middle class, must pay for Obamacare.
Government guarantees for the health insurance
companies
These guarantees were politically necessary
to suppress the resistance of insurance companies
that were uncertain about the effects of the
new regulations.
The government has decided to shift a part
of the risk associated with new legislation
on the taxpayers.
Otherwise the premiums would probably go up
a lot faster and some insurers would withdraw
from the market.
By easing the burden of the insurance companies
and their clients, the government could look
better in the eyes of the unaware public that
in fact took the brunt of Obamacare s costs.
According to government estimates, in 2014
government subsidies made insurance premiums
10% lower than they would have been otherwise.
The result was that the costs associated with
Obamacare were concealed from the voters.
Employer mandate
Companies employing 50 or more full time equivalent
employees, (where full time is defined as
working 30 or more hours in a week) were forced
to insure them under penalty of either $2,000
or $3,000 for each such employee.
It is obvious that it distorted the labor
market and prevented companies from developing.
If you employ 49 people, you want to avoid
either the necessity of insuring all of them
or paying the fines, so you will not hire
another employee.
If you employ 54 people, it may be profitable
to fire five of them.
This creates a clear incentive for small businesses
to remain small.
On the other hand, large companies are encouraged
to hire as many part-time employees as possible,
because the fines are paid only for each full-time
employee.
There is another astounding proof of how expensive
health insurance has become because of government
regulations.
Let us look at the government estimates of
the number of employers that are expected
to decide that it is rather more profitable
to pay the fines than to offer health insurance
to their employees.
The government expects that from 2015 through
2024 employers will pay $139 billion in these
penalties.
These are the effects of Obamacare.
The previous regulations that led to huge
increases in costs were expanded upon and
strengthened by Obamacare.
Have medical expenditures decreased over time?
In 2009, the average cost of medical care
per head was about $8,000, as compared to
$9,400 by 2014.
In the same period, the cumulative inflation
amounted to 10.3%, so in result of inflation
alone the expenditures should increase only
to about 8,827 dollars per person.
Thus, the answer to the question is that the
costs increased instead of decreasing.
Expenditures on medical care in relation to
GDP remain above 17%.
Nothing has been done towards a real deep
reform of the health care system that would
eliminate the causes of these huge costs.
Instead, the government decided to force more
people into this cost-ineffective system,
and the burden of paying for it has been levied
on society.
As is usually the case with redistribution,
some people have certainly gained from it
at the equally certain expense of others.
In one of the next videos we will discuss
how an effective, free market solution for
medical care might work not only in case of
the United States, but in other countries
as well.
I welcome you to visit econclips.com, where
you will find more videos.
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