Saturday, April 18, 2009

Government Healthcare

Mickey Kaus notes that government run health care is a rationing scheme.

The only way for the government to 'control' health care costs in the long run is to deny treatments.

One can argue that insurers do this all the time, so what would be different if the government does it? Mickey attempts to argue that political pressure groups would form to pressure the government into not denying certain kinds of treatments, and this might be better than insurance driven rationing.

However, to the extent that such groups are successful, costs would not be contained. After all, once you make health care “free”, or at least distribute the cost over the entire country, the demand will skyrocket. The state will either be faced with an unsustainable budget crisis, or care will have to be rationed.

At least under the market, individuals would have some input into the process. Indeed, assuming that rich people will spend the money to buy exotic treatments, everyone is better off, since the system creates incentives to provide more care, generate more innovation, and lower costs.

Sooner or later, this will be done on the basis of political connections. Just as many of those connected with Obama didn't see fit to pay their taxes until they were appointed, they will be at the front of the line for all the treatment that they and their families need. (this applies to both parties – if the Republicans are in power, and the Tom Delay of the Congress has a sister needing a kidney, she's getting the kidney).

Joe the plumber types, not so much.

This is inevitable. Creating a universal health insurance scheme is logically different from actually providing universal health care. Providing health care requires that the economy actually produce doctors, nurses, medicines, machinery, buildings, electricity, etc. That means providing incentives for people to go into those fields, and compensating them according to their contribution.

Remove the incentives to provide care, and less care will be provided.