Thursday, June 11, 2009

Why So Scared of a Public Plan?

"Why so scared of a public plan?" asked the headline.
  • Economics.

  • Supply and demand and the price curve.

  • Unintended consequences.
From a consumer point of view, free health care, or artificially very low priced health care, means demand for it goes way up. People go to the doctor for every little thing. New and creative ways of justifying every little problem as a medical ailment to be covered are developed. Why?

Because there is a disconnect between the people paying for health care and the people receiving it at the service end. Disconnects lead to frivolous choices.

On the other end of the bargain, you have medical professionals who know they will be paid whatever the going rate is for a treatment. So the incentive to raise the price of that treatment is high. Health insurance has already done this to a large extent, except there is a downside to the insurance company and potentially, in the form of rate increases, to the customer. With government health care, if I get a treatment that costs a bundle, my insurance rate doesn't go up, everybody tax rate goes up. There's no downside to raising prices. When pricing is disconnected from supply and demand, when the income is guaranteed, charge as much as you want! And what will have to happen to pay for that? Tax increases. Again.

The flip side of this is that the Government will probably see prices going up and dig down just to this level and say "oh, Doctors are charging too much. We will only pay this much." Or "we won't pay for that procedure at all." Or both. Now you've got government controlling prices ... and we've seen how well that works over the past 100 years.

Now citizens would be taxed an exorbitant amount and promised health care in return, but their choices will be limited by government bureaucrats. Only the wealthy (if there are any left) will be able to pay for treatments that fall outside of what the government will allow (if they allow private plans or treatment outside of the government plan -- which have been denied in other social medicine countries in the name of "fairness"). And this is all better ... how?

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