Thursday, April 01, 2010

More on the Healthcare Fiasco

I read this article by Ann Coulter, which will be a great help to cut through Democrat deceit on this healthcare issue, especially when you hear that they are saying that they are being misrepresented. But almost more interesting were some of the comments to her column. I've chosen a few of the best ones I scanned:

#1 was the NY Times columnist, "economist," Paul Krugman's slip-out on the death panels. Now that the bill is passed, he easily admits that the death panels are reality. Here's the comment:

Death Panel? YES! Death Panels.
N.Y. Times columnist: Death panels will save 'a lot of money'.

"Paul Krugman tells 'Roundtable' economists agree it's 'going to be major.''

"Left-leaning New York Times economic columnist Paul Krugman says the so-called 'death panels' established by President Obama's trillion-dollar nationalized health-care plan will end up saving 'a lot of money' for the government.

"The comments from Krugman, who also writes on the New York Times blogs, came during a discussion of "Obamacare" on the ABC News Sunday program 'This Week.'

"People on the right, they're simultaneously screaming, 'They're going to send all the old people to death panels,' and 'It's not going to save any money,'" he said.

"Another panelist interjected, 'Death panels would save money,' to which Krugman responded:

"The advisory panel which has the ability to make more or less binding judgments on saying this particular expensive treatment actually doesn't do any good medically and so we are not going to pay for it. That is actually going to save quite a lot of money. We don't know how much yet. The CBO gives it very little credit but, but most, most of the health care economists I talk to think that's going be a really, uh a really major cost saving."

#2 is actually several comments by someone named John, who broke down the issues of this healthcare bill in an excellent way.

Economic Reality #1
The fact is that all scarce commodities (a commodity for which the demand outstrips the supply) are rationed in one way or another. A pricing mechanism is the only rational way to ration any scarce commodity as it is the only rationing system which is self-correcting in that not only does a pricing system determine where resources are directed but it also, unlike any other rationing system I'm aware of, encourages the development of substitutes for the commodity being rationed and the creation of additional supplies of the commodity being rationed in response to the price, leading to a reduction in the price of the commodity over time.

A quick review of the (unrepealable) laws of supply and demand. The law of supply states that at higher prices, producers are willing to offer more of a commodity for sale than at lower prices, that the supply increases as prices increase and decreases as prices decrease and that those already in business will try to increase productions as a way of increasing profits. The law of demand states that people will buy more of a commodity at a lower price than at a higher price, if nothing changes; that at a lower price, more people can afford to buy more goods and more of an item more frequently than they can at a higher price; and that at lower prices, people tend to buy some goods as a substitute for others that are more expensive.

Economic Reality #2
In the real world where we live, there are many commodities that are rare. But rarity does not necessarily equal scarcity and a high price. I haven't seen an 8 track player in years and I would bet they are pretty scarce. But if I had 1,000 of them I think I would have a hard time even giving them away. There's no demand. For the finite commodity of health care, however, there is an almost unlimited demand. If you apply the laws above to health care and make it essentially "free" (ie, the individual receiving the health care is not required to directly exchange any resources of their own for it) demand will skyrocket. We've already seen this with Medicare and Medicaid. These are the programs that are driving health care costs up because the government does not reimburse doctors and other provides for the full costs of the care they provide so those of us not on the government programs pay extra to cover the "free" care received by those in these programs.

Extend that phenomenon to the entire health care system by eliminating all private health insurance and forcing everyone onto a government run, monopoly (why is a monopoly good when the government has it but bad when a private company has it? Are government bureaucrats really so much more worthy of trust?) single payer "public option", the stated goal of Barak Obama.

Economic Reality #3
Once health care becomes "free" for everyone, there is no incentive for any individual to limit their consumption of the resource. On the contrary, there is every incentive to use as much of the resource as possible before it runs out. And since the government sets the price it pays for the commodity it is providing "free", government reimbursement rates will be set artificially low as they already are in the Medicaid/Medicare system. Thus there will be no incentive for anyone to provide more of the scarce commodity, health care, nor to search for substitutes for any of the components of health care (ie, new drugs, new surgical procedures etc.). There certainly will be no incentive for anyone to undergo the long education and preparation to become a doctor when all that means is being an overworked, underpaid flunky in a government bureacracy leading to a shortage of doctors. This will probably at least be partially rectified by an influx of non-native doctors (Indians and Pakistanis as has happened in both Britain and Canada) who will still be willing to work for the lower wages because at least they are in the US. But for everyone of them that comes here we leave a hole in the health care system of their home country. How moral is that?

What the plan does is eliminate any incentive at all for anyone to participate in the health care system as a producer of any of the components.

Economic reality #4
I see people with signs saying "Get the profit out of healthcare". OK, fine. But why stop with health care? Isn't food an even more basic need than health care? We all need food every day. Why should farmers be making a buck off of my need? That's just plain immoral! We need to have a government run food supply system that will reduce cost and make sure everyone gets all the food they need, even if they can't pay. You know, create some competition with the big agribusinesses to "keep them honest". Maybe we can merge all the farms into big collectives and have the government manage them.....just like the USSR used to do. After all, it was fair wasn't it?

So government rationing, unlike rationing by price, will not lead to the introduction of more resources into the system but will actually lead to the removal of resources from the system leading to even greater shortages and more rationing, rationing that would be conducted not by merit but by how well you know or can manipulate the health care bureacrats who will control access to care. To paraphrase Cicero, when the government bureaucrats control health care, the first ones to get health care will be the bureaucrats.


1 comment:

Claymore said...

Something the Obamanation's advisors advocate is a drastic cut in earth's population (about 95% of the people on earth have to die so that the population is sustainable at 500 million persons). Perhaps those who advocate such should consider two things: 1. In the Great Tribulation, the population of earth will be drastically cut already. 2. If they believe that "lifeboat earth" is becoming overcrowded, so that we must dump passengers overboard, lest the whole planet sink (see the video above), why do not they volunteer to lead by example?