Thursday, March 18, 2010

Excellent analysis of the health care situation

I agree with both of the main points in this analysis posted on the Power Line blog by Paul Mirengoff.

First, the rationing of health care services. Resources are always finite, and therefore need to be rationed among consumers. Products and services are, for the most part, rationed by price. That system works so well that we don't tend to think about it very often. In cases where government prevents rationing by price, then one or more of those mechanisms that we usually think of as rationing, must come into play.

In some cases, rationing is achieved by government mandating a certain allocation of resources. For example, in the U.S. during World War II, it was decided that each person would get a certain number of rationing points, documented by government-printed coupons. A purchase of gasoline, or certain types of foods, required a combination of cash and ration coupons. Another example of this type of rationing was the system in the Soviet Union, where the political elite were allowed to shop in well-stocked stores that were off-limits to the proletariat.

A more common method is rationing by standing in line. Those Soviet consumers who were kept out of the elite stores, were limited to stores where shortages were common (unless they traded in "black markets", i.e., those things that are known to the rest of us as "markets"). When they found out through word-of-mouth (nothing so bourgeois as advertising, of course) that a scarce product was available at a certain place, a long line quickly formed. Because prices were set by bureaucratic mandate, rather than supply and demand, the products could not be rationed by price, and were therefore rationed by waiting in line. A similar situation occurred in the U.S. at certain points during the 1970s, when federal price controls prevented the price of gasoline from rising to the market level. Shortages ensued, and we waited in line at the gas pumps.

Something similar has already happened with health care and, as Mirengoff explains, it's likely to get worse if some variation on the Obama-Pelosi-Reid plans is enacted. Various types of managed-care plans that have come into use over the last several years have imposed price controls on health care providers. Have you noticed how the waiting times at the doctor's office have lengthened, and the amount of time the doctor is willing to spend with each of us has shortened? I have, and I can identify with Mirengoff's opening paragraph, because my nonagenarian mother has noticed it too. It stands to reason that, if a physician is being paid less for each performance of a service, he or she must squeeze more work into each day.

Here in America, that type of rationing has not reached the level that's prevalent in the U.K., where the National Health Service puts patients on long waiting lists for procedures that we can have done pretty much immediately in the U.S. Those of us who oppose further American government involvement in health care do not want our country to emulate that practice.

The use of rationing-by-price raises the issue of what to do when people can't afford the price. The twofold answer is to maintain programs to provide services to those who can't afford them, and to improve the earning-power of low-income people. That first goal can be achieved through Medicaid-type programs (but not Medicare-type programs that pay for health care, regardless of whether recipients can afford it on their own). As to the second goal, efforts toward making people more productive, such as reform of the educational system, will bring them higher incomes. I don't see how poor people's situation is improved by restricting the right of those of us who can afford it, to buy whatever medical care we choose to obtain.

I also agree with his analogy to George W. Bush's persistence with his Iraq war strategy, which he pursued long after public support had fallen away. He clearly believed he was doing the right thing. Events of the last three years seem to indicate that, at the very least, he should have increased American troop levels sooner. Aside from that, many of us believe that he never should have invaded Iraq in the first place. Be that as it may, his actions brought about large losses for his party in the 2006 and 2008 elections.

Similarly, it seems clear that Democratic leaders such as President Obama and Speaker Nancy Pelosi must believe that they are doing the right thing on the health care issue. All indications are that their efforts to push a bill through Congress despite a lack of strong public support for the measure, will adversely affect the Democrats in the elections of 2010 and 2012. I don't think they can be accused of seeking tactical political advantage through these actions. They must really believe in what they're doing.

1 comment:

Michael Ejercito said...

A law that only places price controls on all medical services would be far less harmful than the currently proposed bill.