A few thoughts on the health care legislation

by Russ Roberts on March 22, 2010

in Health

I’m surprised it passed. I presume some of the people who were crucial for passage will not be re-elected. It will be interesting to see. Either way, this was costly for some of them and I’d like to understand how their arms were twisted. Maybe I need to reassess my view of politicians.

I’m sorry it passed, but there are many consolations. The current system of health care—a mish-mash of top-down regulation and private attempts to respond to it—is bankrupt, both intellectually and financially. It is a nominally “private” system but the hand of government is the dog, not even the tail that wags the dog. Given the role of medicare reimbursment, and the tax-advantaging of generous private plans, there is very little room left for the invisible hand. The simple way to say it is that too little health care is currently paid for out of pocket. The patient is not the customer. And the current system is broke. The generosity of the system cannot be maintained int he face of the aging of the population. So it’s not like the status quo is so great.

While I favor a world of patient as customer, there is little public taste for that world. People like having other people pay for their health care. They don’t see that that drives up the price and makes it harder for poor people without insurance to pay for health care. So it’s not like the world is heading in my direction anyway. This step away from my world may make the costs easier to see and encourage people to favor alternatives. Unlikely. But again, public opinion while wary of this particular legislation, certainly isn’t interesting in moving toward my ideal.

The status quo is great in that in encourages a lot of innovation that the rest of the world free rides on. There will be less innovation in the future. But the truth is that we probably have too much innovation because so much of it is paid for by others. That’s nice. But it’s really expensive and it’s part of the reason the system is unsustainable.

The existing legislative promises of Medicare and Social Security are a train wreck that cannot be avoided without radical change. Expanding coverage just brings the train wreck closer. It’s a nice idea but it is unaffordable. We have taken a step closer to Greece. We have taken a step closer to national bankruptcy. I don’t know whether to laugh or to cry about that part.


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