Thursday, July 30, 2009

The Myth of Cheaper Health Care

Just exactly how is government provided health care supposed to be cheaper than health care provided by the private sector? How does that happen? An economist will tell you that it's slight of hand. When you get something from the government that you don't pay for you think it is free. But of course nothing is free. TANSTAAFL (There Ain't No Such Thing As A Free Lunch)
The costs are actually covered by money taxed from you and from businesses who pass on the taxes they pay to you through the costs they charge, so it isn't free but it's invisible and it is also less efficient because of the round trip the money takes through Washington, various government bureaus, through paperwork disasters that everyone has to fill out and boards and study groups and all sorts of other things.
The likely overhead before you get to any kind of medical expenses is conservatively 20% to 30% relative to competitive private options. And we haven't touched the disincentives which reduce efficiency and technical innovation. In the final analysis it is not only not cheaper it is a spiraling down disaster in the form of growing inefficiency, poorer delivery, restraint of innovation, rationing of expensive options. The illusion is that it is cheaper, but the reality is that it is both more expensive and poorer.

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