Health Care Reform

I’ve got a new favorite NPR radio show: On Point with Tom Ashbrook, out of WBUR in Boston.

Yesterday, they had a discussion of health care costs and solutions for the US. The highlight had to be Uncle Miltie, Nobel Prize winning economist explaining why a single-payer system would completely and totally blow health spending out of the stratosphere. (Friedman article archive and thoughts on health care )

His central tenet (and one with which I completely agree) is that the only way that we as a country will ever stop health care costs from skyrocketing is to forget a “single payer” system, and even to step back from the current structure of insurance we use, and to put the actual costs of health care back on the people at large. In the words of Friedman: “nobody spends somebody else’s money as wisely or as frugally as he spends his own”.

And a point I continually keep trying to make (Maybe a Nobel prize will make it carry a little more weight):Enactment of Medicare and Medicaid provided a direct subsidy for medical care. The cost grew much more rapidly than originally estimated - as the cost of all handouts invariably do. Legislation cannot repeal the non-legislated law of demand and supply. The lower the price, the greater the quantity demanded; at a zero price, the quantity demanded becomes infinite. Some method of rationing must be substituted for price and that invariably means administrative rationing.

Another decent bit:

We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical. Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?

Look, I know that no-one ever clicks through to the NRO links - but this guy won a Nobel prize, and has arguably been the most influential economist of the latter half of the 20th century. He’s the great advocate of globalization and the supply side. He’s not some half-cocked kook.

Posted by jank at January 30, 2004 1:57 PM