David Gratzer is a physician proponent of free market solutions to the problem of healthcare expense. The perceived crisis in American medicine is not quality of service but rather affordability of care. This “money” problem develops from prior decisions trying to out think the market. “American health care has been shaped by two days: October 26, 1943 and December 1, 1942.”
What's Wrong With American Health Care? On October 26, 1943, the IRS ruled that employers could continue to pay health insurance premiums in pre-tax dollars. As a response to wage and price controls, employers had begun to offer health benefits to attract better employees. The IRS ruling legitimized and encouraged the practice, giving rise to the dominance of employer-sponsored health insurance.
On December 1, 1942, Lord Beveridge issued his report on health care and pensions to the British Parliament, envisioning zero-dollar public health insurance. Lord Beveridge had enormous influence here, particular among Democrats; his thinking (and persuasiveness) helped lay the intellectual foundation for Medicare and Medicaid.
Fast forward 60 years, and the end result of these two days is that Americans - whether privately insured or publicly covered - tend to be over-insured, and thus less sensitive to prices. And so we come to a paradox: American health care is so expensive because it's so cheap.
Social Insurance and Allied Services was published in December 1942 and outlined a vision of society’s battle against the five giants, idleness, ignorance, disease, squalor and want. The report proposed a system of cash benefits, financed by equal contributions from the worker, the employer and the state, together with a public assistance safety-net. Underlying this system were three assumptions, all necessary, Beveridge argued, for the abolition of want: a national health service available to all, tax-financed family allowances and a commitment to state action to reduce unemployment.
