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Tuesday, March 28, 2006

Economics and Healthcare

In my previous post, Economic Ignorance (http://livefreeormove.blogspot.com/2006/03/
economic-ignorance.html
), I quoted Congressman Ron Paul (R-TX) as follows:

We cannot suspend the laws of economics or the principles of human action any more than we can suspend the laws of physics.

Physics cannot tell us whether or not we should jump out of the top floor of a 10-story building. Physics can only tell us what the consequences of that choice would be. Similarly, economics cannot tell us whether we should adopt a government-financed, government-controlled healthcare system. Economics can only tell us what the consequences of that choice would be.

For instance, under a government-financed, government-controlled healthcare system, the prices paid by the consumer for healthcare products and services would be zero; accordingly, demand would skyrocket. To bring demand back in line with supply, government would be forced to ration healthcare. Government would have to refuse to provide certain products and services to some citizens. Other citizens would be forced to wait in long queues before receiving the products and services they need.

Perhaps this is why P. J. O'Rourke says, "If you think health care is expensive now, wait until you see what it costs when it's free"?

To reiterate: economics does not tell us what kind of healthcare system we should choose. All economics tells us is that by choosing a government-financed, government-controlled healthcare system, we are also choosing to ration healthcare. (As Stephen Covey says, when we pick up one end of the stick, we pick up the other end, too.) Americans of all political persuasions should think carefully about this. Do we want a government run by George W. Bush or Hillary Clinton making healthcare decisions for us? Do we want a government run by Dick Cheney or Ted Kennedy deciding who will be refused certain healthcare products and services and who will have to wait in long lines for them?

Before we jump on the bandwagon of government-financed, government-controlled healthcare, we should take Henry Hazlitt's words to heart:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Government-financed, government-controlled healthcare means universal access only in theory--only in an ideal world in which the laws of economics don't apply. Back here in the real world, government-financed, government-controlled healthcare means rationing--refusing to provide certain products and services to some citizens and/or forcing some citizens to wait (often in excruciating pain) in long queues while their diseases progress and their prognoses worsen.

If you don't like our current healthcare system, don't blame it on the free market, because we don't have a free market in healthcare. Instead, the current system is the result of a large number of past government interventions. If we want a better healthcare system, we ought to undo these interventions, thereby eliminating their unintended, undesirable effects.

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