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Let’s be honest

Methinks1776, a valued commenter here at the Cafe points out the 2/3 of the American people opposed the health care legislation. That’s not surprising. Part of this bill will make health care cheaper for the other 1/3 (or maybe 1/6th, paid for by the rest of us.

I like my health care a lot. I get to choose my doctor and my out of pocket is low. My health care is subsidized by other people–much of my insurance is paid for by George Mason, compensation I receive tax free. This is a bad idea, but the results turn out pretty well for me. I in turn am subsidizing others which is not good for me. But that is hard to notice. Being an economist, I’m aware of it but I don’t feel it very viscerally. What I do know and what all of us in the top 2/3 or so, know, is that our health care is pretty good and sometimes great. When my buddy had his prostate removed through robotic surgery, I’m very happy. Yes, it cost a lot more than it should have. Yes, I helped pay for it. But he’s alive.

What is really hard to notice is that the price of that surgery and the wages of the doctors who did the surgery aided by the robot, and the rewards earned by the people who designed the robot and the software that makes the whole thing possible,  are artificially increased by the subsidies that reduce the out of pocket cost to my friend. These subsidies (and Medicare) push up the demand for health care enormously and raise the prices. There are worse things in the world but that’s not the best way to run a health care system. One of the costs of that system is that people without insurance who aren’t poor enough to be on Medicaid, pay an artificially high price for their health care services. That creates the demand for ObamaCare.

I don’t really know what the legislation that passed is really going to do but it purports to help those people. Well obviously they’re going to like that. The rest of us are going to pay higher taxes and ultimately we’ll get lower quality care. We’re going to get lower quality care because down the road, all of us are not going to be able to get the robots or the next generaion of robots isn’t going to get inventeted. It’s just too expensive everybody is on the free health care gravy train. So our first thought is naturally that this is a bad idea. But the current system is a bad idea, too.

The new world of health care is going to redistribute wealth from rich to poor. The existing system has all kinds of redistribution in it, too. It’s just harder to see.