Sunday, September 20, 2009

You Can't Change Reality by Mandate

In a recent article in Forbes, senior analyst Shikha Dalmia examined the root intentions behind the President's healthcare reform proposals:

In his recent speech to Congress,

Obama promised Americans would get eternal health care "security and stability." To deliver that, he would of course ban insurance companies from denying coverage to those with pre-existing conditions--tantamount to forcing fire insurance companies to write coverage on a burning building. He would also prohibit insurers from putting any limits on the coverage they offer and cap what they can require patients to pay out-of-pocket.

In other words, Obama would encourage unlimited health care consumption by patients while eliminating the last vestige of price consciousness. But the reason America is facing unsustainable health care cost increases is precisely because its third-party system of insurance doesn't encourage prudent consumption by patients. [Emphasis mine]


The statement in bold bears repeating.

Obama would encourage unlimited health care consumption by patients while eliminating the last vestige of price consciousness.

This is the most fundamental reason that health care costs have soared. And what has caused consumption to be divorced from cost? Government policies in the form of tax laws, insurance mandates, regulations on hospitals, subsidies and preferential status of HMO's, and the entire set up of the medical welfare programs of Medicare, Medicaid, and the rest.

It is the Tragedy of the Commons applied to healthcare....except instead of land, what will be destroyed by these policies will be anyone involved in the provision of medical care: hospitals, medical supply companies, pharmaceutical companies, doctors, nurses, physical therapists, and on and on and on.

Just as private property is the remedy for the Tragedy of the Commons, so personal responsibility operating within a free market is the remedy for run-away health care costs.

And no presidential proclamation or government mandate can change that reality.


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2 comments:

Michael Labeit said...

Shikha Dalmia's accuracy is impressive. I'm surprised Congress even let him complete the speech.

What's happening with "simply Capitalism?"

Beth said...

RE: simply Capitalism...I am not sure.