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Healthcare Reform and Unintended Consequences

Before the nation’s legislators and the executive branch attempt to restructure our healthcare system perhaps they should explore and learn from past government restructuring efforts.

Two examples come quickly to mind:

First: When Congress thought executive pay too high they passed a law limiting the amount of executive compensation a corporation could deduct from their taxes. The unintended consequence was that corporations started using stock options as part of executive pay which not only resulted in ballooning CEO pay but also started the doomed policies of looking for short-term gain versus long term growth.

Second: When Congress decided home loans were not being equally distributed they set goals for the government enterprises Fannie Mae and Freddie Mac which in-turn dictated to banks to lend to less-credit-worthy borrowers. The unintended consequence was the housing bubble, subsequent crash due to toxic sub prime mortgages and the current financial crisis.

Now the Democrat controlled Congress and the executive branch want to restructure our health care to “cut costs” with little regard for unintended consequences.

If cutting medical costs is the goal, then let’s focus on cutting costs. Here are a few ideas:

  • Use technology to reduce administrative costs
  • Allow individuals to choose medical insurance policies across state lines to increase competition
  • Eliminate government mandates on insurance policies giving individuals more choices
  • Start Tort Reform to reduce frivolous law suits
  • Give individuals greater choice with medical savings accounts

Let’s all look before we leap. Institute some of these ideas or others, see how they perform, keep the ones that work, and reject those that do not address the goal of “reducing costs.”

It’s time to keep focus on “cutting costs” which can reduce our deficits, reduce government spending and keep us free from disastrous unintended consequences.