The term “big government” stimulates plenty of images and emotions, and they’re generally negative. Words like “bureaucratic,” “inefficient,” “intrusive,” and even “corrupt” are often associated with the term. If you’ve ever dealt with the DMV, post office or TSA you understand how bureaucracies provide services. The size of government envisioned by the country’s founders sought to cast off tyranny and empower small business and entrepreneurs. Thomas Jefferson said it clearly: “That government is best which governs least, because its people discipline themselves.” Government spending (local, state, and federal) has grown from $111 billion in 1954 to $1.71 trillion in 2019. That is a six fold increase. Total government employment grew from 6,500,000 to 22,000,000 in the same period. The current unfunded liabilities for public pension plans is $5.4 trillion. The Republican and Democrat parties have significantly different public positions on the growth of government but in practice both parties have expanded government spending.
There are functions that can only be performed by the government like the military and law enforcement but it would be easy to argue that many of the functions of government agencies could be eliminated, privatized or at a minimum be performed on a local level. Wasteful spending is a fundamental problem with the way the government works. There are several reasons for this wastefulness: (1) People tend not to spend other people’s money as carefully as their own; (2) There is no significant penalty for poor performance; (3) There are rewards for policymakers to add new programs and no penalties for weeding out waste; (4) Little incentive to innovate;(5) Pay is tied to longevity, not performance; (6) Disciplining workers is difficult and they are rarely fired. The private sector can be equally as inefficient but there is a built in mechanism to punish poor performance, since roughly 10% of all US companies go out of business each year and corporate executives get ousted all the time. The difference is that there are real consequences for not serving the public with the best product and services.
Public debate has begun about how healthcare and insurance in the US should be structured. Some presidential candidates are proposing a system called National Health Insurance (Medicare-for-all) where the government pays private practice doctors and hospitals. Administrative costs are lower because there is only one insurance company, the government, which has the leverage to force medical costs down. This system is currently in place in Canada, where the hospitals are kept on a fixed budget to control costs, but reimburses doctors on a fee-for-service rate. When the government makes health care “free”, consumer demand for medical care surges. Patients have no incentive to limit doctor visits or choose more cost efficient providers. To prevent expenses from ballooning, the government sets strict budget caps that limit staff hiring and purchasing new equipment. Demand inevitably outstrips supply and wait times soar. In 2016, Canadians waited 3.7 weeks for a CT scan, 11.1 weeks for an MRI, and 4 weeks for an ultrasound. As a result, 63,459 Canadians received non-emergency treatment in the United States. If you value the principles of supply and demand and believe in free markets then National Health Care is not a system you would choose voluntarily.
Reforming American health care should focus on our strengths. To insure healthcare insurance is available to all, we should open enrollment, without preconditions to private insurance plans across the country which can be purchased with pretax dollars. Currently, 243 million people are covered by private funded plans. Employers would offer a voucher to employees that at a minimum would cover the cost of a catastrophic plan all the way up to the most comprehensive plan available.. This will insure that plans do not have a preponderance of sick people in them but will appeal to all based on price and benefits. The insurance companies would negotiate with the pharmaceutical companies for the price of drugs offered under their plan. Doctors and hospitals would be required to publish prices for their services. Consumers could pick suppliers of services based on price and performance outcomes. Patient/doctor disputes with insurance companies would be arbitrated by government mediators. Medicare, Medicaid and the Veterans Administration would offer vouchers to current and future recipients to purchase private plans. This preserves the free market system and insures that all Americans have healthcare insurance.
