Economist Sheldon Richman dissects the abundant economic fallacies of the proposed healthcare “reform” coming from DC in this outstanding article.
A few highlights:
Obama promises overall “cost containment.” But government has only two ways to accomplish this: rationing or price controls. The drawback to the first is obvious. People are forbidden to buy the services they want, even when they are willing to pay for them themselves. Bureaucrats — rather than individuals and their doctors — decide what tests and procedures are necessary. The drawback to the second is that services will disappear from the marketplace. Price ceilings create shortages
The New York Times points out that the reformers have two conflicting ostensible goals: “to expand health coverage to nearly all Americans while reducing the growth of health spending.” How can they do both? Obama goes back and forth between stressing universal coverage and cost containment, but he doesn’t discuss one in relation to the other. Newly subsidized coverage will bring new demand for medical services and put more upward pressure on prices. As noted, higher prices can be counteracted only by denying service (say, hip replacements for octogenarians) or by imposing price controls, overtly or covertly.
Why is it government’s business how much we spend on medical services anyway? Government’s only concern should be to eliminate the ways it interferes with and influences our choices. The aggregate cost of our freely chosen actions is our concern alone, not the government’s.