There are two big reasons why health care is so much more expensive in the US than it is in other countries. One is that drugs cost more. The other is the medical professionals earn more.

Most countries have a law saying that drug manufacturers and wholesalers cannot charge more in their country than is charged in other countries. We need such a law, so that we don't subsidize drugs for the rest of the world, while our own population suffers.

The cost of medical services are set by supply and demand. If we extend health care to everyone, we can't do it for free. The health care market isn't a free economy; it's a shared monopoly. Nevertheless, the rules of supply and demand still apply somewhat.

We Need More Medical Professionals

We need a lot more doctors and nurses. And one of the things that nobody wants to talk about is the fact that it isn't just health care that's growing more expensive faster than the rest of the economy, it's education as well.

And we have a lousy educational system. A study in the 1980s pointed out that if our educational system was imposed on us by another nation, we would rightfully decide that it was an act of war. We need to expand the educational system at the same time that we cut costs, if we are to get a handle on health care costs.

So here's what I propose.

Reforming Education

1. Establish a standardized test for every class every student takes. If a student can pass the test in 3 weeks instead of 18 weeks, the school can stop wasting resources trying to teach that kid what he already knows. If he needs 36 weeks to complete the semester's worth of work, at least he knows what he needs to know when it's done.

2. Encourage free enterprise. Anyone, regardless of credentials, can establish a school. He establishes his capacity, and the courses he's willing to teach, and as long as he has room in the school, he has to accept anyone who wants to enroll. If two students walk in at the same time, a student with a sibling has preference, but otherwise, it's decided by a coin flip. And, of course, a student can stay at the same school as long as there are courses he wants to take.

3. Use computer-aided instruction. Most students learn most of the matter from sitting in front of a computer programmed as a teaching machine. The teacher wanders the room and assists the students who are having difficulty with the courses, typically on a one-on-one basis. Some teachers will want to have 100 students, while some will teach 5 or 10 at a time, figuring to get those students through in a hurry, and get new students to replace them.

Turning Our Teachers Into Money-Grubbing Capitalists

4. The teacher gets paid for every students who passes a class. Some classes, such as math and science, would need be paid at a higher rate because teachers don't want to teach those classes. Classes for the developmentally-disabled would probably be paid at a higher rate, too. The rates would be set annually on a supply-and-demand basis.

5. There's no reason why public schools should cease to exist, but they should get paid the same way that independent teachers get paid. In some cases, the school board will want to lease empty classrooms to independent teachers. In other cases, independent teachers will teach classes in their homes, in church basements, or whatever.

6. Instead of funding schools through real estate taxes, establish a state VAT to pay for the schools, so that all children in the state have the same opportunity. A VAT is a sales tax of sorts, except that it's imposed at every level. If an auto dealer buys a car for $6000 and sells it for $8000, he pays a VAT on the $6000 to the one he buys the car from, his customer pays him the VAT on the $8000, and he remits the VAT on the $2000 of "value added" to the state. If the car dealer sells the car to someone in Maryland, the state refunds the VAT to him for the $6000 he paid. If the dealer buys a car from someone in Delaware for $6000, he pays the VAT on that $6000 to the state instead of the out-of-state seller.

Paying Less For More

Why VAT? Because it helps with balance of trade. It makes it easier to sell goods to those out of state, since there is no Pennsylvania tax burden on them, and it make it easier to compete with goods from out of state, since the "imported" goods carry both a tax burden from the originating state plus the VAT for Pennsylvania, while goods from Pennsylvania carry only the VAT.

Eventually, we will have a federal VAT replacing the federal income tax, because it makes so much sense. Right now, we can have a state VAT replacing other school taxes, It would not be an added burden on the Pennsylvania taxpayer, since it would be revenue neutral, but because it would boost the Pennsylvania economy, we'd all be a little better off.

We're at an impasse on the state budget. This proposal is a little late - but it's exactly what we need to solve the problem. It gives the Democrats what they want: better schools. It gives the Republicans what they want: lower costs through free enterprise. Let's do it.

Other Bloggers On Related Topics:
balance of trade - computer-aided instruction - free enterprise - more doctors and nurses - Pennsylvania budget - reforming education - standardized tests - subsidizing foreign health care - VAT