Sunday, September 5, 2004

Understanding health care...

Bloomberg News discusses Kerry’s health plan.

I claim very little understanding of health care issues. I’ve been doing extra reading on the subject lately in an effort to sort some of it out. I begin with a strong bias against government operation or control of just about everything. Government is notoriously inefficient, consistently yielding poor results at high costs. I see no reason to believe it would be any better at heath care than it is at, say, education. That’s why the most disturbing thing I learn from the article is this:

About 78 percent of Americans want to place limits on drug prices, according to a survey of 810 adults June 5-27 by Stony Brook University in New York. The same poll found health care ranks as the third most important issue in deciding how to vote Nov. 2, behind jobs and Iraq, and slightly ahead of terrorism.
What this tells me is that nationalized/socialized health care is inevitable. With such support for price controls, it’s a just a matter of time before we elect candidates who will deliver them (Hillary in 2008?), undoubtedly as part of a comprehensive national health care system.

The problem is that price controls never work. As economist Thomas Sowell so often points out, you can change the price of things, but you cannot change their costs. The costs may be hidden; the costs may shift elsewhere; but costs do not change simply because we slap on an artificial price tag. Throw government into the mix, and we exacerbate the problem—adding layers of inefficiency and mismanagement, i.e. more cost.

According to the Bloomberg article, Kerry’s plan would both increase government involvement and force price controls on drug companies. Our health care system is very complex, and I’m sure there are many problems with it. I’m a long way from understanding the dynamics of it, let alone proposing any solutions. But the Kerry/Clinton approach strikes me as bad policy. Worse, once implemented, it will be policy that will be very difficult to reverse.

I'll revisit this as I gain understanding.

Update: McQ of QandO takes a look at the consequences of price controls on Canadian health care.

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