The Real Cost of Health Care Why Health Care Reform Does Not Always Lower Costs By William Anderson <http://fee.org/author/wanderson/> Published: 24 June 2009 [image: The Real Cost of Health Care]
One regular theme in Paul Krugman’s column is universal medical care, and anyone who opposes him either is evil or simply wants people to be unhealthy. While he is not fully happy with President Barack Obama’s latest plan to create a government health insurance option, nonetheless he knows all central plans lead to government care. Knowing the details of this latest plan is not necessary to conclude it is bad. The reason it is bad is because it operates on the impossible premise that government can force up real costs of medical care while making it cheaper and more available. In other words, President Obama and his supporters are claiming that government can lower costs when it actually is increasing them. Normally, this is known as a fraud, but today it is politics. Let us understand what is happening and, more important, why it is happening so that we can better realize just why such fraudulent ideas gain any traction in the first place. For politicians, it is easy. Medical care “costs” too much. Thus, the government either should establish price controls or simply control all payments to medical personnel. Krugman and other economists have been parroting that line for years, and they are correct in that medical care is more costly than it should be. However, there is a problem in the typical analysis, and that is this little issue of just what is a cost. To the political classes and their court economists, a “cost” is a payment to individuals and organizations in the medical field. For example, if one pays $50 for a doctor visit, that is a “cost” to that person. If one pays $1,000 for a particular test, that is the “cost” to the patient. However, that is superficial analysis. For example, Krugman has claimed that devices like CAT scans and MRIs “drive up” the cost of health care. If that were true, then it would be the first time in history that a labor-saving capital device would be responsible for making goods more costly. In both cases, a patient can quickly and bloodlessly be examined and doctors generally can gain near-pinpoint evidence of the problem. For example, my father had knee surgery in 1966, and he was in the hospital for a week. The doctor cut a huge incision in his leg, took back a large flap of skin, and then went to work. It took Dad many months to recover. When I had knee surgery in 2003, I came to the hospital in the early morning and left by noon. Instead of a huge scar, I had two tiny, pinprick marks on my knee, and I was at work four days later. Within a few weeks, I was hiking on a nearby mountain. Yet, according to Krugman’s logic, my father’s operation was a “lower-cost” affair. To an economist, however, my opportunity costs were much lower. To someone like Krugman, the “cost” would be reflected solely in the medical bill, with the MRI costing one thing and the surgery something else. Somehow, had we eliminated the MRI, then the whole thing would have cost less. However, that test had shown the doctor exactly what he needed to do, which was why he was able to do it quickly, efficiently, and have me working within a few days. The problem is not the presence of medical capital; the problem is that government has forced the use of resources when they are not needed (either for doctors to avoid lawsuits or because political authorities are demanding their use). The so-called “cost crisis” did not come about until after the passage of Medicare in 1965. >From that point on, more and more medical decisions have been made by bureaucrats, which means that medical people must devote more and more resources to filling out forms and satisfying the government. Apologists for government insist that such actions somehow lower the cost of healthcare, but “not so fast, my friend.” When government forces people in the medical fields to expend resources in areas away from medical care, it makes care less available and more costly. William Anderson is an associate professor of economics at Frostburg State University. He received a doctorate in economics from Auburn University, and is an adjunct scholar with the Mises Institute and the Mackinac Center. He has written for *The Freeman* since 1981, and also has had articles in *Reason Magazine*, Forbes On-line, The Free Market, and a number of refereed journals. He is on the editorial board of *The American Journal of Economics and Sociology*, the *Journal of International Business Disciplines*, and the *Journal of Economic, Social, and Political Studies*. On Mon, Jun 29, 2009 at 2:17 PM, Frederick The Moderate < frederickshel...@gmail.com> wrote: > > I can't stand Nancy Pelosi. I'm not happy with the cap & trade bill. I > want healthcare legislation and I want single payor. I have lived in > countries that have much lower standards of living and yet, much > better healthcare than America. So I'm all for that. > But like you say, this is a far cry from transparency. > > On Jun 29, 10:35 am, Travis <baconl...@gmail.com> wrote: > > From: *Travis* > > Date: Mon, Jun 29, 2009 > > Subject: Pelosi Won't Give Public a Chance to Review Text of Health-Care > > Bill Before House Votes on It. > > > > Of course not...that would be too democratic for the arrogant bitch! > > > > B > > > > http://www.kuna.net.kw/NewsAgenciesPublicSite/ArticleDetails.aspx?id=... > > > > Pelosi Won't Give Public a Week to Review Text of Health-Care Bill Before > > House Votes on It > > Monday, June 29, 2009 > > By Marie Magleby and Monica Gabriel > > > > *(CNSNews.com) *- House Speaker Nancy Pelosi (D.-Calif.) will not give > the > > public a week to review the final text of a health-care reform bill > before > > it is voted on later this year. > > > > Senate Majority Leader Harry Reid (D.-Nev.) has also declined to commit > to > > giving the public a week to read and consider the final health-care bill. > > > > At her press briefing on Thursday, Pelosi was asked whether the > health-care > > bill would be handled differently than the stimulus bill, which came up > in > > February. The 1,071-page final text of that bill was posted on the House > > Appropriations Committee’s Web site late on a Thursday night and then > voted > > on the next day. > > > > “When the stimulus bill came out earlier this year, members and citizens > had > > less than two days to review the final version that came out of the > > conference committee before it was voted on,” CNSNews.com asked Pelosi on > > Thursday. “Will you commit to giving Americans at least a week to review > the > > full conference version of the health care bill before it is voted on? > And > > also will you commit to submitting the final version to the CBO > > [Congressional Budget Office] so that they can report the cost to the > > public?” > > > > Pelosi would not commit to giving the public a week to review the bill, > and > > did not respond to the question of having the CBO report on the cost of > the > > final bill. > > > > “Well, we will abide by the regular order. You heard the question,” she > > said. “It was about having the health care bill out there a week in > advance. > > We will have the regular order in terms of the appropriate amount of > time, > > 48 hours in advance for amendments before you file the bill, another day > > before you can take up the bill. > > > > “But this bill is something that has been unfolding before the American > > people for a long time now. The areas of controversy are well known,” > said > > Pelosi. > > > > “The issue of a public option is probably the most significant debate > that > > we will have in the House on the legislation, as I see it now. But the > bill > > will come forth under the regular order, and that's why the three > chairmen > > put out the draft now,” she said. “They put out some principles earlier > on. > > The President put out his principles. We had a month before the Memorial > Day > > break for everyone to see what was happening there to take ideas from our > > members. > > > > “So it was in the public domain, but not as a bill,” said Pelosi, > continuing > > to respond to the question of whether she would give the public a week to > > review the final bill. “Now they have put out this draft which has been > well > > received, and I'm very proud of the work. It's a well managed approach to > > how we go forward. And when we are ready with a draft then we will put > that > > forth, but as I say, it will be under the regular order.” > > > > The three House committees working on the health-care plan have released > > what they call a “discussion draft” of the legislation. It is 850 pages > > long. > > > > The Senate Health, Education, Labor and Pensions Committee has produced > its > > own 615-page draft that is missing key sections, including the section > that > > would explain the “public option”—or government-run health insurance > > organization. > > > > After the House and Senate actually pass bills, the two versions of the > > legislation will go to a House-Senate conference committee where they > will > > be reconciled and where entirely new provisions can be added. The final > > version of the bill that emerges from this conference committee will be > > voted on by both houses, and if passed, sent to the president for his > > signature before it can become law. > > > > This final bill is likely to be well over 1,000 pages long and will > include > > mandates and regulations that could permanently transform the U.S. health > > care system. > > > > Like Pelosi, Senate Majority Leader Harry Reid also said last week that > he > > would not commit to giving the public a week to review the final text of > the > > health-care bill. > > > > “We are going to follow the rules and do the best we can so that the new > > rules we have for transparency will be effective,” Reid said at his own > > Thursday news briefing when asked about giving the public a week to read > the > > final health-care bill. > > > > “We have been putting things online. We’re doing so much more than we did > > just a year or two ago, so I think there’s no secrets, we try to be as > > upfront as we can, give everyone as much opportunity as we can to move > > forward,” he said. > > > > House and Senate rules differ slightly, but basically the House allows a > > vote three calendar days after the conference committee’s report is > posted > > and the Senate allows a vote after 48 hours. > > > > House Rule XIII, section 4. (a)(1), says: “. . . it shall not be in order > to > > consider in the House a measure or matter reported by a committee until > the > > third calendar day (excluding Saturdays, Sundays, or legal holidays > except > > when the House is in session on such a day) on which each report of a > > committee on that measure or matter has been available to Members, > > Delegates, and the Resident Commissioner.” > > > > Senate rules allow a voted 48 hours after the conference committee > version > > of the bill has been posted. > > > > Senate Rule XXVIII, Section 9. (a)(1) says: “It shall not be in order to > > vote on the adoption of a report of a committee of conference unless such > > report has been available to Members and to the general public for at > least > > 48 hours before such vote.” > > > > In February, lawmakers had less than 48 hours to review the final > conference > > report on the economic stimulus bill before voting for it. > > > > President Obama is pushing for both houses of Congress to vote on > > health-care legislation before they take a recess in August. He wants the > > bill on his desk by October. Republicans argue that such a sweeping > reform > > should not be rushed. > > > > “This is much more serious than the rushed and ill-conceived stimulus > > legislation,” Sen. Orrin Hatch (R-Utah) said last week. “If we fail to do > > this the right way in order to simply check the health reform box, we > will > > all suffer the consequences for the rest of our lives.” > > > > One should either write ruthlessly what one believes to be the truth, or > > else shut up. -- Arthur Koestler > > > > __,_._,___ > > > > -- > > *~@):~{> > > > > -- > > *~@):~{> > > > --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
