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Jewish World Review
August 5, 2009 / 15 Menachem-Av 5769
I keep reading about health-care "reform," but I have yet to see
anyone explain how the government can make it easier for more people to
obtain medical services, control the already exploding cost of those
services and not interfere with people's most intimate decisions.
You don't need to be a Ph.D. in economics to understand that
government cannot do all three things. (Judging by what Paul Krugman writes, a Ph.D. may be an obstacle.)
The New York Times describes a key part of the House bill:
"Lawmakers of both parties agree on the need to rein in private insurance
companies by banning underwriting practices that have prevented millions of
Americans from obtaining affordable insurance. Insurers would, for example,
have to accept all applicants and could not charge higher premiums because
of a person's medical history or current illness".
No more evil "cherry-picking." No more "discrimination against
the sick. But that's not insurance. Insurance is the pooling of resources to
cover the cost of a possible but by no means certain misfortune befalling a
given individual. Government-subsidized coverage for people already sick is
welfare. We can debate whether this is good, but let's discuss it honestly.
Calling welfare "insurance" muddies thinking.
Such "reform" must increase the demand for medical services.
That will lead to higher prices. Obama tells us that reform will lower
costs. But how do you control costs while boosting demand?
The reformers make vague promises about covering the increased
demand by cutting other costs. We should know by now that such promises
aren't worth a wooden nickel. The savings never materialize.
Some of the savings are supposed to come from Medicare. The
Times reports "Lawmakers also agree on proposals to squeeze hundreds of
billions of dollars out of Medicare by reducing the growth of payments to
hospitals and many other health care providers."
With the collapse of the socialist countries, we ought to
understand that bureaucrats cannot competently set prices. When they pay too
little, costs are covertly shifted to others, or services dry up. When they
pay too much, scarce resources are diverted from other important uses and
people must go without needed goods. Only markets can assure that people
have reasonable access to resources according to each individual's
Assume Medicare reimbursements are cut. When retirees begin to
feel the effects, AARP will scream bloody murder. The elderly vote in large
numbers, and their powerful lobbyists will be listened to.
The government will then give up that strategy and turn to what
the Reagan administration called "revenue enhancement": higher taxes on the
"rich." When that fails, because there aren't enough rich to soak, the
politicians will soak the middle class. When that fails, they will turn to
more borrowing. The Fed will print more money, and we'll have more
inflation. Everyone will be poorer.
The Times story adds: "They are committed to rewarding
high-quality care, by paying for the value, rather than the volume, of
Value to whom? When someone buys a service in the market, that
indicates he values it more than what he gives up for it. But when the
taxpayers subsidize the buyer, the link between benefit and cost is broken.
Market discipline disappears.
Listening to the health-care debate, I hear Republicans and
Democrats saying it's wrong to deny anyone anything. That head-in-the-sand
attitude is why Medicare has a $36-trillion unfunded liability. It's not sustainable and they know it.
They've given us a system that now can be saved only if
bureaucrats limit coverage by second-guessing retirees' decisions.
Government will decide which Medicare services have value and which do not.
Retirees may have a different opinion.
One may be willing to give up the last year of life if he's in
pain and has little hope for recovery. Another may want to fight to the end.
But when taxpayers pay, the state will make one choice for all retirees.
Now, to reduce the financial burden of the medical system, Obama
proposes a plan that inevitably will extend the second-guessing to the rest
of us. So much for his promise not to interfere with our medical decisions.
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