Ever since passing the House of Representatives, the “Repealing the Job-Killing Health Care Law Act” has sparked much discussion. It’s not going to pass in the Senate, unfortunately, but the bill is at least a nice political gesture by the GOP.
Let it be clearly stated that the following column is not a character attack on Ezra Klein. I merely disagree with a conclusion he made about health care reform in his highly respected Washington Post column.
I feel it’s important to state an obvious fact which many people seem unaware of: The health care system in the United States is very, very far from laissez-faire, with or without President Barack Obama’s new health care law.
If the government weren’t involved in health care and the U.S. still had so many people without health insurance, the left would have a better argument.
And, while we’re at it, remember that this “lack of coverage” is a reference to health insurance, not health care. You can still get health care without health insurance, and, while it will seem very expensive for one trip, I know many people who spend much more on health insurance than the insurance company spends on them each year.
About one week ago, Klein commented that the 32 million Americans who don’t have — not can’t get — health insurance would have it under reform. Although this is true, it’s not the complete truth.
It’s similar to how our country could also have full employment if the government decided to provide annual stimuli.
If the government were to tax Warren Buffett’s $47 billion net worth at 100 percent, it could easily pay, at least for a short time, for every citizen to have a well-paying job doing such menial things as sketching my face in chalk onto Palm Walk.
Some see this as a good opportunity, but the jobs created would be temporary and would provide nothing useful.
As the government is not an economically rational entity, its influence on the market should be considered two ways. What happens due to government intervention? And what does not happen due to government intervention?
Providing universal health care to citizens seems a noble goal. But this is the case for every economic government intervention. If it were not popular, such a decision could not be sold to the public.
In reality, high-income earners will see a 3.8 percent tax increase on investment income for Medicare starting in 2013 under the Affordable Care Act, Obama’s new health care law.
Hypothetically, let’s say taxes on the wealthiest citizens are increased by 10 percent in order to pay for subsidized health care. The vast majority of high-income earners will still have plenty of funds remaining for everyday spending, and other people will benefit from the health care they’re now receiving. That’s one interpretation of the economy, and it’s usually all that people see.
Seeing how the economy is affected in the second way, however, requires that you ask yourself what would have happened to the excess money if it had not been taxed by the government. There are usually three potential answers to that question.
First, the money will be donated to charities or churches that provide health care. For some reason, that answer isn’t good enough for people these days.
Second, the wealthy will use the money to buy things they probably don’t need. They may decide to buy two brand new Cadillacs and a ton of clothes for their teenage daughters. But who cares?
Purchasing those things aids in the hiring of new employees at General Motors and Hollister who now have their own money to spend on health care.
Third, people complain that excess money will just sit in bank accounts throughout the country.
But money sitting in an account will lower the bank’s interest rates so that entrepreneurs can more easily start new businesses.
In turn, these new businesses compete with similar firms in the market, eventually lowering prices altogether.
Now everyone has excess money, the benefits are long-term and the country is more likely to make exports. None of these things would have happened if the government took that excess money for temporary benefits.
The business reaction to high health care costs would be to raise the supply of health care providers, meaning charities, hospitals, medical schools and physicians.
The government reaction was to raise demand by putting in an individual mandate that requires everyone have health insurance. This increases the number of patients and thus increases the costs they meant to deter in the first place.
If the government is truly serious about lowering health care costs, it needs to get out of the way. That means eliminating the need to license entities like medical schools, hospitals and physicians.
It’s the only way to naturally decrease costs without taxation. Cost reduction would be accomplished almost immediately.
Getting into the details of the medical field, though, means debating the ethicality of the Food and Drug Administration. The FDA, in its monopolized privilege, oversees medicines and potential cures to diseases.
The government’s primary target should be increasing the supply of health care providers.
Past administrations believed it’d be easy to take care of the poor, the elderly and children, but their interventions turned into the mess we’ve now inherited.
In the book “Is Reality Optional?” by Thomas Sowell, a senior fellow at Stanford’s Hoover Institution, the author wrote, “Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good.” The same is true for our economic history. It’s time to get back, once and for all, to our free market and competitive health care system.
Reach Brian at brian.p.anderson@asu.edu
