Monday, September 3, 2007

HillaryCare Round Two

I think more people are receptive to socialized medicine today than they were in the early 1990s, probably for a number of reasons -- the fact that it's getting more and more expensive being probably chief among them. It's hard to look into the future without some degree of concern, perhaps even despair, about whether we will be able at some point to afford decent health care or insurance to cover us into our old age. Some people are panicking.

And panicky people do stupid things. Like, socialize their medical system. This is tantamount to being so afraid that you run back into a burning building.

I say this, because we are already in this situation mainly because of the degree of socialism that already exists in our health system. Indigent folks and illegal immigrants can walk right into an emergency room and be treated with no obligation to pay anything. That's "free" medical care for them, but not free for you and me; it's why inpatients are billed $365 for an aspirin. Also, there's Medicare and Medicaid. The federal government strong-arms health providers into caring for older folks at low rates of compensation, and the paying customer base gets to subsidize the shortfall. This means that, when you're working well into May of each year just to pay your taxes, some of it pays for all this generosity.

If you believe in putting out a fire with gasoline, however, you will love the idea of solving our medical cost problems with newer and bigger doses in socialism. In the early days of the Republic, there were traveling medicine shows, where slick-talking con men would sell snake oil to incredulous suckers, as a cure for all ills. In modern times, instead of medicine shows, we have elections, and thus have elevated snake-oil salesmen to a higher calling. Socialism is political snake oil, and we have a lot of snakes out there trying to sell it. You can always tell a political snake-oil salesman. He's the candidate who tries to present a trade-off as if it were a solution. He's the one who indicts the status quo with a list of specifics, but describes the product he's hawking only in glowing generalities.

During the Clinton administration, the "he" was Hillary, and when asked specific questions about her plan, she would bite back testily. When the "reformers" get lured into talking specifics, they don't fare as well -- that's why so many of her top-level policy discussions took place behind closed doors (the transcripts are still unavailable). For example, when asked how small businesses would be able to afford paying their share under the plan for their employees, she snapped that she couldn't worry about every under-capitalized business in America. It didn't take long to figure out that small business owners were going to be the sacrificial lambs of her great experiment. She was selling snake oil, and the Republic is better off for her having been a poor salesman. But Hillary learns quickly, and round two is about to start.

The great illusion that forms the basis of all socialism is the notion -- not exactly denied but never exactly discouraged -- that something is going to become "free". And this can be done, depending on what you mean by "free". Prices, for example, can be reduced to zero. However, costs are not so easily done away with. No system is going to work without paying the providers. Doctors need to be paid. Nurses need to be paid. Hospitals need to have beds. Specialists need to spend years of their lives in grueling academic programs. Somebody pays for all this. Even the lowlier tasks cost real money; who is going to empty the bedpans for free? I doubt even the Boy Scouts will soon be offering merit badges for that. Somebody always pays the costs -- and under socialism, that means the taxpayers.

So the question becomes, can enough voters be convinced that socialized medicine is a good deal for them, or can they perceive that the costs won't vanish simply because the benefits are "free", and that they'll be the ones who get the bill?

And by the way, from an economic perspective, the "solution" is simple. If you want the cost of something to go down, you make it more efficient to produce. And if you want the price of something to do down, you increase the supply or decrease the demand. Reducing the demand for medical care may not be feasible, given that we are keeping people alive longer nowadays; perhaps all we can do is to reduce frivolous demand for medical care by increasing co-pays. However, we could easily increase the supply of medical care. One way to do it would be to create more medical schools and allow more students to become doctors. Each year, we turn thousands of intelligent young men and women who want to become doctors away from medical schools. Why we do this is another story, but the short version is because we let them. There is a wonderful description in Milton Friedman's book, Free to Choose, of the American Medical Association as the world's most successful labor union. One way labor unions try to increase the wages of their clients is to lessen the amount of competition. In other words, fewer doctors means higher rates.

So, if it's that simple, why don't we do it? Well, just because it's simple doesn't mean it's easy. My best guess is that taking all this on politically wouldn't be advantageous to politicians. They get along a lot better by promising "free" stuff to their constituents than by taking on established political power bases.

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