Excellent question.
Medical care is expensive because the supply of health care professionals is insufficient to meet the demand. The supply of doctors is kept artificially low by the AMA's monopoly on accreditation of med schools and the restrictiveness of state licensing boards. In addition to this comes the high cost of medical education, which forces doctors into debt early, and the overhead costs of record keeping, admin, and malpractice insurance.
The fact is that most people do not need the services of a licensed M.D. for everyday sneeze & sniffle care. For everyday care of healthy adults and children the expertise of an RN and a PA are more than sufficient. Therefore, the federal government should take steps to force state licensure boards to allow RNs, PAs, and EMTs greater latitude in practice. Allowing these providers to prescribe drugs, perform basic exams, treat common illnesses, and provide general care on a strict cash-and-carry basis in a clinical setting would dramatically lower costs. Why pay $200/hour for the services of an M.D. when you really only need the $50/hour services of an RN? In my scenario, these health care service providers would be based in neighborhood clinics which would be the ordinary person's most frequent point of contact with the medical profession. There, the RNs and PAs would provide outpatient care for everyday ailments, with a team of EMTs on call for ER support and a licensed M.D. supervisor on call at the local hospital to handle more serious cases (broken bones, infectious disease, surgery, etc.) Such clinics would replace the local ER as the primary health care provider for the average person. The state government could fund and administer a malpractice insurance pool to protect the providers. Since the overhead would be low and the treatment limited to routine care, costs would be far lower than those of a huge hospital or a multi-doctor practice. With no insurance papers to file, these clinics would furthermore have no need for admin staff, thus further lower costs.
The high cost of medical education is another barrier to inexpensive health care. The solution is to increase the number of medical schools by breaking the AMA's grip on accreditation. Another is to create a national health care education system at the federal level to allow those unable to pay for med school to become doctors. My idea would work like this: Congress would create and fund the United States Medical Service Corps as a division of the Public Health Service. This Corps would operate a United States Medical Academy -- a uniformed service academy similar to Annapolis or West Point -- to which talented high school students could apply. If accepted, the students would become cadets at the academy for four years, at which time they would receive a Bachelor of Science degree and a commission as Health Service Officers in the Public Health Service. From there, the Health Service Officers would proceed to a four-year term of service with the PHS, either as students (in medical school), as RNs, PAs, or EMTs in residency at various federal health care facilities. These officers would train and serve internships wherever needed for those four years while earning the same pay as their military grade counterparts. At the end of four years of service, the officers (now fully-licensed MDs, RNs, or PAs, or EMTs) would be free to reenlist and continue to serve in the PHS or leave the service and begin private practice free of debt. In other words, the government would train and educate hundreds of doctors, nurses, and other health care professionals free of charge in exchange for at least four years of public service. This, I think, would be an effective use of taxpayer dollars.
Indigent care is our most serious health care problem. Friedman does not address how MSAs would solve the problem created by the vast numbers of illegal immigrants with no insurance and no money in this country who have turned our county hospital ERs into basic healthcre providers. My solution to this problem would be a voucher system funded by the state; any legal resident or citizen below the poverty line would be issued a Health Service Card. This swipe card would be "charged" with a certain amount of money every year and would be honored by any health care provider. This would allow indigent patients to use their neighborhood clinics for routine care instead of swamping the ER at County General as they do now. By using a swipe card, the need for admin staff would be near nil; the transaction would be 100% digital. For this system to work, we would of course need to institute a system of national citizen/legal resident ID -- which is one more reason to have such a system. Those persons with no legal right to be here would not receive a state health card; instead, they would be detained by Immigration police, transported to a Federal facility for treatment, and eventually deported.
Health care cannot be treated on a strict commodity basis; the risk of infectious disease is too great to allow people with no money to go without medical care. Besides, people with no cash or insurance are not simply going to squat on a toadstool and quietly watch their children suffer and die when a big, shiny hospital is sitting down the block. By allowing more people (RNs, PAs, and perhaps pharmacists) to provide everyday health care and advice, we can increase supply relative to demand and slash health care costs. By creating a Federal medical service, we can offer poor but talented youths an opportunity to gain a medical education in exchange for their service to the nation. And by establishing state-run risk pools for malpractice insurance and by instituting a digital voucher system for indigent care, we can further control the cost of providing basic health care, and free our public hospitals of the burden of providing basic care for indigents and/or illegal aliens, while making sure that health care services are available to all regardless of ability to pay.