Thursday, November 5, 2009

Pay the price, or pay the consequence

Thomas Sowell has an excellent series of articles on "The 'Costs' of Medical Care: Parts I, II, and III.

A few key points from Part I:

There is a fundamental difference between reducing costs and simply shifting costs around...Costs are not reduced simply because you pay less at a doctor's office and more in taxes--or more in insurance premiums, or more in higher prices for other goods and services that you buy, because the government has put the costs on business that pass those costs onto you...

Costs are not reduced simply because you don't pay them...Letting...people die would undoubtedly be cheaper than keeping them alive--but that does not mean the costs have gone down. It just means that we refuse to pay the costs. Instead, we pay the consequences...

Anyone of us can reduce medical costs by refusing to pay them. In our own lives, we recognize the consequences. But when someone with a gift for rhetoric tells us that the government can reduce the costs without consequences, we are ready to believe in such political miracles.

From part II:

Although it is cheaper to buy a pint of milk than to buy a quart of milk, nobody considers that to be lowering the price of milk...

And from part III:

One of the strongest talking points of those who want a government-run medical care system is that we simply cannot afford the high and rising costs of medical care under the current system. First of all, what we can afford has absolutely nothing to do with the cost of producing anything. We will either pay those costs, or not get the benefits...

Economics and politics confront the same fundamental problem: what everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want, and letting those individuals make their own trade-offs...That leads to self-rationing, in the light of each individual's own circumstances and preferences. Politics deals with the same problem by making promises that can not be kept...

The self-rationing that people do when prices are free to convey the inherent impossibility of any economy to supply as much as everybody wants is replaced...with rationing imposed by governemnt, which cannot possibly have the same knowledge of each individual's circumstances and preferences---least of all when it comes to medical care, where patients differ in innumerable ways.

That's just a smattering of the economic wisdom in Sowell's current series of articles. He also points out the importance of distinguishing medical care from health care, debunks the misleading statement that American medical care costs more but delivers less, and the laughable claim that THIS administration will eliminate "waste, fraud and abuse" where every previous one has failed. He packs a lot in to rather brief essays that are worth the time to read in full.

I am hoping there will be a Part IV.

(Update 11/06/09: Multiple typos corrected.)

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