While I agree with the majority of Terry Major's letter to the editor regarding the atrocities seen under universal healthcare, I take issue with some of the solutions proposed. Specifically, Majors mentions government negotiation of prices for medicines and capping insurance premiums. Both of these proposals will create more distortions in our healthcare system and exacerbate, rather than ameliorate the problems. Price negotiation for medicines by government is not true negotiation but is really price fixing/capping/dictation. It is the antithesis of the free market approach. Drug prices have soared chiefly because of the hundreds of millions of dollars it costs to bring a drug to market due to onerous FDA regulations (not to mention the product liability lawsuits). Many drugs are not even developed because companies can not hope to recoup their investment costs. Many countries, including Canada, impose price restrictions on pharmaceutical companies and the relatively free US market is a pharmaceutical company's last chance to offset their investment costs. To bring down the price of drugs, reforming the FDA (as well as liability laws) is the first step to be taken. Capping insurance premiums is similarly the wrong approach. If the government arbitrarily dictates the maximum premium price two events will occur: insurance companies will decrease the offering of policies to high utilization patients (who would merit a higher premium) and the average price of a premium will increase as a cost-shifting strategy will occur putting the burden on lower utilization policy members to balance the decreased revenue from price caps. Insurance premiums will decrease only if government ceases to interfere in this market. Steps include allowing full tax deductibility for premiums placing insurance in the reach of many more people and driving costs down, allowing businesses to pool their resources to avail themselves of the benefits of bulk purchasing, and expansion of healthcare savings accounts (which encourage people to purchase high-deductible/low premium health insurance). The solutions to our healthcare crisis will not be found in government, but by applying economic principles that recognize autonomy, independence, and do not recycle items from--as President Reagan identified--the "dustbin of history".

I would also like to say thanks to Ron from Prospect regarding his post supporting my position on this issue.