Healthcare: Government is the Problem, Not Cost August 17, 2009Posted by federalist in Healthcare.
Craig Karpel makes an excellent point in his essay today, “We Don’t Spend Enough on Health Care.” He cites studies suggesting that it would not be unreasonable for the American healthcare industry to grow from 17% of GDP today to more than 30% of GDP in a few decades.
Why not? Industrialization has steadily decreased the resources Americans must devote to satisfying the basic human needs of food, clothing, and shelter. With increasing resources to spend on non-necessities it should not surprise us to find individuals more disposed to indulge in advanced medicine. Entertainment and luxury goods have a limited power to increase quality of life, especially once health and vitality begin to decline. Until we have achieved perfect immortality health technology is the ultimate luxury good.
Yet government and the liberal establishment are evangelizing an odd perspective on the healthcare industry. Obama’s attempts to increase the federal government’s role as a purchaser and provider of healthcare are premised on the argument that, “The cost of health care has weighed down our economy.”
The President’s complaint seems to be about the efficiency of healthcare — i.e., the amount of dollars it takes to purchase a given level of service. It is true that any market inefficiency “weighs down our economy,” insofar as we enjoy greater production at a lower costs when markets run more efficiently. We could say the same about any sector of economic activity — “The cost of transportation has weighed down our economy. If only we could move people and goods more efficiently our economy would certainly grow!”
In this case, the President is actually saying, “We’re spending 17% of GDP on healthcare, and that’s too much because I happen to know we could get the exact same goods and services for just 15% of GDP!” Of course, anyone who still believes that a government can acquire or provide goods and services more efficiently than for-profit enterprises in a free market hasn’t been paying attention for the last century. Indeed, insofar as there are obvious inefficiencies in the healthcare industry government interference is invariably the dominant cause.
A slightly different formulation of the President’s complaint might be, “We’re spending 17% of GDP on healthcare, and that’s too much because we need to increase spending on [insert the cause du jour — the war, or the space program, or entitlements to special interests….]” In which case this is just an opportunistic appeal for increasing government control of the economy.
In the first case the President is almost certainly correct — America’s healthcare spending is less efficient than it could be — but for the exact opposite reason he would stipulate: The federal government’s staggering regulation and spending in healthcare impairs the efficient operation of that industry.
In the second case, we should celebrate a society that can afford to devote such unprecedented resources to any sort of discretionary spending. We might debate priorities: Perhaps there is some level or character of individual healthcare spending we should find as tasteless as megayachts. But so long as we are a free republic that is a debate that should be conducted outside of the halls of a coercive government.