The Root of the Health Care Crisis

Why is the health care “crisis” like the mortgage “crisis”? Both the medical industry and the mortgage industry were thrown so much money that they did not know what to do with it. This has resulted in bad loans and wasteful medical care.

In many ways, we have too much medical care, not too little. The large capacity to provide medical care has come about because of consumer demand for medical care. Why is there so much demand? Because we don’t have to pay for it. Government agencies or insurance companies pick up the bill. In actuality, we all foot the bill through higher taxes and higher insurance premiums, but we do not pay directly based on the level of services received. This large demand has resulted in growth in the medical industry to supply the care that people want. The point is that we would not want a significant portion of this care if we had to pay for it ourselves.

This is the problem that creates the so-called health care crisis. Often insurance companies are required to offer certain minimum levels of coverage. If they could offer less coverage, many people would prefer that and pay a lower premium. They would of course use less health care. A partial solution would be to let insurance companies offer and consumers have the coverage they prefer. This would limit the number of expensive procedures because consumers would have to pay for a larger portion of the bill themselves. That means less regulation, not more.

In the final analysis, there will be near unlimited demand for any free service. As the amount paid to providers by government and insurance companies shrinks, the supply of medical services will shrink. As the president says, this status quo is unsustainable. The problem with his proposal is that it makes the problem worse by offering more coverage to more people with less direct cost to consumers for the health care they receive.

The Democrats and Obama tell us that we can afford their plan. But why would we be more able to afford health care collectively when we can not afford it individually? Their plan is full of illogic and inconsistencies. For instance, why would anyone buy insurance for thousands of dollars a year if instead they can pay the government fine of a few hundred dollars instead? Since insurance companies could not refuse coverage, even for diagnosed illnesses, we could wait until we wanted an expensive procedure and then purchase insurance. I am sure a black market for basic primary care would develop. Trouble with that plan is that only the seriously ill would get insurance and the insurance companies would fold or have to be bailed out. That would eventually result in a total government take-over.

We have seen that government can not keep the costs of Medicare down. There are fundamental economic reasons why the government can not do what the free market does: it balances supply and demand and provides just the level of care that people want. This blog attempts to explain and references others who attempt to explain why socialism does not work.

Tell your representative that you do not want the government take over of health care. Along with the government take overs of banking, automobiles, etc., with hhealth care, it would control about 50% of the economy. Mark Levin and others list the representatives who have not announced the way they will vote.

Apparently the number to call the House of Representatives is: 1-877-SOB-U-SOB. That says it all.