Across the US, hundreds of thousands of drivers have changed their minds. Rather than hold on to their older cars for a while longer, they have taken the Government’s incentive to trade up to a newer model. All this amounts to a $3 Bln study that seeks to answer the question: “Do people like free money?” The answer: – drum roll – Yes. What can that tell us about Obamacare and the alleged ‘Death Panels?” Plenty and the picture is ugly. The subsidized car program is the latest in a long line of programs that distort the free market and cause people to change their otherwise efficient decisions. Presumably, these car buyers were not in the market until the Government stepped in. A consequence of all subsidies, there is now a shortage of subsidized cars and a line has formed to buy them. An axiom of economics is that subsidies cause shortages and inflated pricing. The free money for cars program offers a glimpse into Obamacare. Pres. Obama can promise all he wants that there will not be lines or rationing (A.K.A. Death Panels), but that is a promise he cannot keep. Health care is just another of life’s necessities, and like all of life’s necessities, the supply is finite. A subsidized necessity always results in shortages and rationing; always. Does Obama want to ration health care and create ‘death panels?’ Of course he does not. Was he sincere when he promised to never do these things? Yes he was, but his well established ignorance of businesses and markets makes his promise insubstantial. Obama probably does not even realize he is making a promise on which he can never deliver. As with autos, the best way to ensure people make the economically efficient health care choice is to make them pay the full cost of their choice. The single payer health care system that Obama and Speaker Pelosi advocated until recently completely divorces cost from decision making for consumers. The public option they are now pushing is only a stealth pathway to the same end. Even if Obama and Pelosi table the unpopular public option, Obamacare still seeks to subsidize health care, and eventually ration it. Democrats push their socialist agenda with anecdotes of extremely sick people who cannot afford health care and the misleading statistic of about 40 million uninsured Americans. Extremely sick people younger than Medicare age are extremely rare, and most of the 40 million uninsured Americans know that. Most of the uninsured could afford catastrophic insurance, but they know the odds are strongly in their favor that they will never need it, so they spend their income on more certain comforts. Democrats use the duplicitous argument that because perhaps 10 million people cannot afford health care, the entire system must be socialized for nearly 400 million people. The nature of the US’s health care troubles has nothing to do with the Democrats’ arguments. Spiraling health care costs and the many uninsured are caused by a disconnect between choice and cost. The only way for the Democrats’ plan to contain costs is to contain choice. Not surprisingly, Republicans also miss the point. They sense the inherent evil in the Democrats’ plan to limit choice, but they also seem to promise choice without responsibility. The Republicans refuse to state the obvious: nobody can have everything. Everyone must make choices based on limited resources – the very definition of economics. Republicans are rightly against government panels that decide which treatments will be available to whom, but they ignore the only alternative which is empowering people to work within limits and be responsible for their own well being. Republicans did hit on a part of the health care solution in the creation of HSAs. Because HSAs require health care consumers to manage their own money for most of their health care decisions, consumers are forced to better understand their choices and seek the best value. Not surprisingly, the godfather of socialized medicine, Sen. Kennedy, has vowed to outlaw HSAs. HSAs are only partially successful because they must work in a world where choice and cost are most often divorced. Most doctors do not even know the price for their services, and will not give an upfront quote. No other business can operate like that. Shout Bits does not advocate socialized medicine and does not believe the US Constitution authorizes the Federal Government to have any such role in people’s lives. Nonetheless, the US health care economy has been partially socialized for decades, and Pres. Bush (43) immensely expanded such programs. Since it is impractical to turn back government entitlements, the only choice is to seek the best solution for the mess government health care subsidies have created. The key element for health care reform is to join choice with responsibility. The HSA model is a good start. When consumers spend their own money, they shop around, educate themselves, and make extremely economically efficient choices. Nothing contains costs better than a free and open market. The Government should encourage a HSA-like system of private insurance for the vast majority of Americans who are reasonably healthy and can afford such health care. The remaining handful of needy people can be addressed separately as a welfare issue. Combining the two issues is a Democrat foil to advance a broad socialist agenda. The essential libertarian cry is “I can take care of myself. I don’t want the Government’s help.” The essential socialist cry is “we are all in this together, and we need the Government to allocate resources.” That juxtaposition is present in every Washington speech and bill, but never so clear as the current health care debate. The Republican minority needs to sharpen its opposition to the socialized medicine movement with the principles of freedom, choice, and responsibility.
Shout Bits
A commentary on the foibles of the US's political and media elite
Put another way: When the person who writes the check is different from the person who writes the spec an untenable and unsustainable condition is created.
I used to think like you, but I want you to notice how health companies are sucking people's blood in America, and how immoral it is to have benefit from people's sickness. I'm a libertarian as well, and I oppose socialism as you do, but to me health care is an exception, like education, it's basic human rights.
I was diagnosed with diabetes, in a hospital. This diagnosis, a chronic problem that did not come upon me suddenly, somehow warranted a three day stay and well over nine thousand dollars of medical bills, fortunately paid by my insurance.
One reason I avoid doctors like the plague is that every time I have gone to one, I have been told a price up front and then had to pay some horrific bill afterwards. There is no way to budget for healthcare.
The other problem is that insurance is uninterested in helping people. There has been no easy way to quantify the quality of the insurance product, so they pretty much can charge whatever they want and pay whatever they want because nobody normal can figure out what they are due from all the legalese in their contract. I used to work for an insurance company and I still can't figure any of it out.
As a final note, insurance companies used to take in premiums, put them in high-liquidity high-reliability investments, such as bonds and so on, and thus get a return on their capital they are required to keep against future payouts. For some time now, for some complicated reasons, those high-liquidity and high-reliability investments have had a return that is less than inflation, and quite a bit less than the steady inflation in the cost of health care. This is actually a major reason for the rising cost of insurance, and harkens back to a basic problem in our society, that our monetary system is severely broken.