Monday, January 5, 2015

Repeal and Replace

As dustbury points out, the only reason there is Obamacare is because the government had already caused chaos in health care pricing

At Mises, Matt Battaglioli writes "What True Health Care Reform Would Look Like".  In this piece, Battaglioli makes a point I like right off the bat.  People talk about how much better socialized medicine is and how low the U.S. rates in terms of health care "quality".  But the quality rating by the UN's World Health Organization includes criteria for "fairness".  Even the commies at the UN have to admit one fact:

[T]he WHO ranked the US as no. 1 worldwide in “responsiveness to patients’ needs in choice of provider, dignity, autonomy, timely care, and confidentiality.”

Of course we have to pay for that, because you get what you pay for.  I had a lot of personal experience with the health care system in 2014.  It was very positive, but it did cost a lot of money.  I had quite a bit out of pocket expense in addition to the very large sums my insurance covered.  I consider myself blessed to be able to afford the high-quality care given to my family.  That is the way it is always going to work.  One can ask veterans about the highly variable quality of "free" care experienced in VA hospitals. 

I put free in quotes because there is no such thing as free care.  Somebody is either donating time, materials, and money, paying voluntarily through insurance premiums, or being forced to pay through taxes.  The basic issue is that the person receiving the care is sometimes insulated to the point of being unaware of the cost of care.  This affects the fundamental interaction of supply and demand. 

Here's how Battaglioli explains it:

What Americans actually need to do to reduce costs and even improve the quality of their healthcare system is very counterintuitive. It would involve dismantling their Medicare and Medicaid programs, as well as eliminating occupational licensing requirements for the medical field. It is true that the prices of US healthcare really took off after the enactment of the programs in 1965, and it is not difficult to see why that is. When the price of a commodity like healthcare becomes too high, healthcare providers actually lose money due to there being so few people who can afford their service. They then have an incentive to lower prices to a more consumer-friendly rate. However, Medicare and Medicaid eliminate that feature of the market as it pertains to healthcare because they make it so that people will have money for healthcare regardless of the price, via subsidy. Providers realize this and then raise their prices knowing they’ll be able to get whatever price they charge.

Shut down Medicare and Medicaid today, and, for that matter, as a thought-experiment, eliminate all third-party insurance so that everyone has to pay for medical care out-of-pocket.  Will the hospitals all close?  Will doctors, nurses, and technicians go find other jobs?  No.  They will, however, start to make their pricing decisions based on real-world demand.  In that alternate universe, care would likely be scaled to match the person's ability to pay.  There would be Mercedes E-Class hospitals, and there would be Nissan Versa hospitals.  A Versa is actually a pretty good car that will safely get you where you want to go. 

Simply repealing Obamacare, as positive as that would be, ignores the underlying issues that drove the passage of such a monumentally stupid piece of legislation in the first place.  Sadly, I am not hopeful.  The economic ignorance of most of the American voting public along with the big-government bias of the media and most politicians has created an environment such that any replacement is unlikely to be able resolve the more basic problems that have corrupted the system since the imposition of Medicare and Medicaid. 

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