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Old June 26th, 2009 #18
Alex Linder
Join Date: Nov 2003
Posts: 45,434
Blog Entries: 34
Alex Linder

Government Medicine

by Bob Murphy

To listen to the mainstream media explain things, now that the feds have dealt with the recession, reformed the banking sector, and come up with a plan to fight global warming, it’s time for the politicians in D.C. to fix the health care system. In reality, the Obama administration so far has given us "solutions" that will only make the original problems worse. Their plans to expand government involvement in health care will likewise fail.

Two of the main complaints over health care are the rising costs and the hassles of obtaining service. Insurance premiums continue rising, placing insurance out of reach for many households. On the other hand, those with insurance must grapple with doctors and treatments that are "in plan" or "out of network," and they have to keep track of a bewildering set of rules governing health savings accounts, co-pays, and deductibles.

In light of the above realities, it is understandable that many citizens are furious over the state of the U.S. health care system. But how can any adult possibly think that the federal government will help with any of these shortcomings?

Let’s take the issue of rising costs. Is there a single government program in U.S. history that achieved falling costs? Look at higher education, for example. Has college tuition become more affordable over the years, given the huge sums poured in by the politicians? The Pentagon is a "single payer" when it comes to military hardware. Is that why fighter jets are so cheap?

We’ve seen that the government doesn’t have a stellar history when it comes to cutting costs. Yet it has a miserable record when it comes to reducing paperwork, too. When filling out tax forms every April, nobody says, "Wow, that was refreshingly easy! If only the rest of the world worked like the I.R.S.!"

The government ruins everything it touches. Many high school graduates are functionally illiterate, even though per pupil funding is much higher now than in previous generations. Despite billions in subsidies over the years, Amtrak continues to lose money. The Post Office, though not an official arm of the government, enjoys a monopoly on first-class mail and is not renowned for its efficiency. And when a comedian wants to illustrate poor customer service, his reference case is the Department of Motor Vehicles.

Why in the world do so many people want to entrust this same government with our health care?

Things get worse. It’s not merely that bigger government will exacerbate the problems in the health care industry. More than that, the problems themselves are largely the fault of earlier government intervention.

For example, government restrictions allow the American Medical Association to act as a cartel, limiting the supply of new health care providers. Many tasks (such as checking blood pressure, administering shots, and otherwise prepping a patient) could be safely administered by employees with merely on-the-job training. Yet many of these tasks are "union jobs" under the present system. Government regulations also restrict the supply of pharmacies who are able to fill prescriptions, tending to raise prices.

Excessive and unpredictable malpractice awards are another contributor to rising health care expenses. Doctors have to pay higher premiums themselves for malpractice insurance, and they order batteries of tests even for obscure risks, in order to protect themselves in court. These higher costs on suppliers ultimately lead to smaller output of medical services and higher prices for consumers.

Most people never stop and ask why their health care is tied to their employer in the first place. The answer is that government wage controls during World War II made it illegal for employers to attract skilled workers by offering higher salaries. Instead, they offered the legal maximum in explicit pay, but also offered to pay for a job candidate’s health insurance.

Thus we see the familiar process of unintended consequences: The government ran the printing press to help pay for the war effort during the 1940s. In order to combat the rising prices which followed, the government imposed price and wage controls. But this started the practice of employer-provided health insurance, which means that in times of high unemployment, millions of Americans are both jobless and uninsured. So a string of previous government interventions has led to a situation in which the government insists it needs yet more money and power in order to "fix" the country.

The way to fix health care is to get the government out of it. The same goes for every other "problem area" in society today.

June 26, 2009

Bob Murphy [send him mail], adjunct scholar of the Mises Institute, is the author of The Politically Incorrect Guide to Capitalism, The Human Action Study Guide, and The Man, Economy, and State Study Guide. His latest book is The Politically Incorrect Guide to the Great Depression and the New Deal.