Recent debate about the constitutionality of the Patient Protection and Affordable Care Act — better known as Obamacare — spins along an interesting but ultimately incoherent central axis: Namely, that access to insurance marks the most significant problem requiring federal intervention within the health care sector.

You hear the lament from President Obama himself. In comments delivered last week in the Rose Garden, he said: “People’s lives are affected by the lack of availability of health care, the unaffordability of health care, or their inability to get health care because of pre-existing conditions.”

Read that again. Now pay attention to several rhetorical sleights-of-hand that too often pass unremarked:

• “…the lack of availability of health care…” — except, what Obama really means is the lack of affordability of health insurance.  Health care is generally plentiful; in fact, access to it through emergency rooms is enshrined under EMTALA, and communities across the country sponsor government- or church-run free or low-cost clinics. The only places with a lack of specific services result from local problems — e.g., communities with runaway tort awards that makes malpractice insurance for specialties like OB/GYN cost prohibitive for practitioners.
• “…their inability to get health care because of pre-existing conditions.” Well, no. Again, it’s insurance and not access that’s really under discussion. In any case, people forget that insurance is a financial hedge against a potential future problem. When that problem materializes, ongoing insurance no longer makes sense, as the risk you’re insuring against isn’t theoretical any more. (Hint: That’s why some insurance companies didn’t “insure” against pre-existing conditions, which is much like trying to buy collision insurance the day after you wreck your car.)

In fact, the major problem with the whole debate is the focus on insurance coverage instead of cost reduction. It’s not entirely clear why employer-provided health insurance should be the primary mechanism by which individual citizens gain entry into the high-cost health services market. Nor is it clear why it’s constitutional for the government to require insurance companies to engage in specific behaviors that creates a regulatory regime that later justifies massive market intervention. Justice Kennedy had it right when he asked whether it makes any sense to create commerce just to regulate it. Treating “health reform” as simply expanding the insurance pool fundamentally misunderstands the real problem with health care costs today.

Which is this: As a distressingly large number of patients remain almost entirely disconnected from the actual costs of the services they consume and because they services are covered by third-party payers, the tendency is for prices to increase well above the rate of inflation. This trend makes a degree of sense; if you are sick and directly pay for little or nothing for the care you receive, then of course you want every test, every procedure, every intervention. And why not? Not your dime, after all. Rhetorical emanations from the Progressive Left elevate medical care to the level of a civil right that shouldn’t require anyone to pay out-of-pocket for anything. In a climate where the average person pays little and some activists demand that they pay nothing, it’s not a surprise that most people don’t put a lot of thought into the real cost of the services they consume. And as any marketer will tell you, people want more when they’re not thinking about price — which is basically the same economic model as the iTunes app store and Redbox kiosks.

Funny thing about health care. Contra Obama, you don’t need insurance to access health services. You can pay out of pocket. Doctors and hospitals don’t require insurance before delivering care — you can simply write a check, swipe a credit card or even negotiate a payment plan. Indeed, routine care isn’t really that expensive. An annual physical for someone in good health may cost less than $250 with labs in many markets. And before the wage-and-price controls of World War II, employer-provided health insurance was unheard of. We survived before benefits packages; we can survive when those packages are de-emphasized.

To really get health spending under control, we need to get consumers actively engaged in what health services they receive. The first step involves tort reform — physicians need to be free to recommend the various tests and procedures that are medically indicated without worrying about the lawsuits that lead to expensive “defensive medicine.” A regime that pre-screens medical malpractice claims against a board of physician advisers may well cut off the spigot of dollars flowing from the largess of a medically unskilled jury.

The second step requires patients to have financial skin in the game. Instead of taking refuge in free-lunch insurance programs, health insurance should more accurately reflect the original concept of risk mitigation that undergirds insurance programs as a whole. The best solution — and one that seems to work in hospitals across the country — lets consumers elect high-deductible plans that cover catastrophic illnesses but require patients to front the money for most low-dollar costs up to a specific threshold. These plans generally cost less and make patients think twice about demanding unnecessary care when the funds come directly from their own pockets.

Put differently: If get a nasty head cold, do you tough it out or do you make a trip to the doctor and demand antibiotics (even though antibiotics don’t work on viruses)? With free-lunch insurance, you’ll visit the doctor, get your scrip, maybe offer a token amount as a co-pay, and move on. If you knew you had to pay for the office visit and the drugs, would you bother? Probably not. You would only seek medical services when you believed you really needed them. The Washington Post recently addressed the trend of higher-deductible plans. Although the story may be faulted for assuming that it’s an outrage that people should actually pay for what they use, otherwise the account presents a fairly well-balanced summary of the trend away from gold-plated coverage and more toward consumer-driven health care.

The researchers at RAND Corporation’s health unit have complied extensive and diverse statistics about the long-term trends in health services; the publication is well worth perusing. The reasons for today’s exploding cost model are many, but some of the major contributors include:

• Increased regulatory burden by governments that drives up costs by as much as 25 percent of the entire sector
• Increased cost of ancillary services unrelated to the provision of care (e.g., marketing departments, education teams, etc.) — a 2003 New England Journal of Medicine study suggested that administration alone costs more than $700 for every inpatient visit
• Increased utilization of expensive services like MRIs that may not be clinically warranted but protect the ordering physician from malpractice claims if the patient isn’t happy with his treatment, may raise costs by 5 to 9 percent
• Cost-shifting from protected patients to non-protected patients — case in point: because Medicare or Medicaid reimburse at less than actual costs, the “gap” is made up in higher prices for everyone else, to the tune of more than $6 billion per year
• Fixed infrastructure costs — primarily IT — drive up institutional expenses, which are then passed along to patients
• HMOs and other insurers negotiate separate contracts with providers, and if one insurer gets a sweeter deal patients covered by a different provider may make up for it with higher prices

Health reimbursement theorists look at medical care as a three-legged stool of costs, quality and access. There’s a relationship among these variables: As costs increase, access declines. As quality increases, costs increase. Radically increasing access will make costs skyrocket.

That’s the fundamental problem with Obamacare — it emphasizes increasing access to free- or low-cost medical care, but as costs increase, there’s no obvious payer. Hence the “individual mandate.” If everyone pays into the system, then free-lunch coverage for everyone becomes a more viable option. Without a mandate, there just isn’t enough money to fund all the services that will be demanded at free-lunch prices by the U.S. population. And a single-payer solution won’t fix the problem. The dollars have to come from somewhere, and if individual consumers of health services have zero personal incentive to responsibly align their utilization against their genuine medical need, the system as a whole will suffer from significant and costly inefficiencies that make the entire infrastructure unworkable in the long run.

To really fix the problems with today’s health care market, we should focus on cost reduction. If costs go down, premiums will go down and access will naturally increase. And while we’re at it, we should scrap the antiquated WWII-era model of financing health services through “insurance” and instead open the market to actual costs borne by actual people.

Disclaimer: The writer is an experienced revenue-cycle analyst for a large Midwestern health system. The opinions expressed in this blog post reflect only the writer’s opinions and do not speak for, imply or endorse any position on behalf of the health system.