Medicare For All
Government spends 90% of its time trying to correct problems of its own making. If you put the government in charge of the Sahara Desert, within five years there would be a sand shortage. Those are approximate quotes, the first from George Will and the second from Milton Friedman. They should give pause to those wishing to turn one sixth of our economy over to the folks who brought you California’s DMV and the New York City’s subway system.
Our current presidential election process revolves around a debate about the relative merits of capitalism and socialism. The debate is driven by ideology. It shouldn’t be. It should be driven by results. Socialists claim we need government control of medicine because insurance companies make obscene profits and its CEOs are obscenely compensated. Medicare has, by contrast, very small overhead. Overlooked in that argument is the fact that AT LEAST 25% of Medicare dollars are stolen. Patients game the system. Providers game the system. And thieves submit a tsunami of fraudulent billings, very few of which are rejected.
I would submit that the capitalist model works better because it better comports with the nature of human beings as they are, as opposed to the way socialists wish them to be. Profit is the socialist demon, but profit is not the driver of capitalism. Capitalism punishes failure; socialism usually does not. Managers who make mistakes get fired. Companies that can’t provide a good or service that customers want at a price that generates a profit go bankrupt. The VA had a massive scandal but it’s still in business. A few people were fired and all were later reinstated.
Does that mean capitalism is perfect? No, it is not. Does that mean that some intervention in markets is not justified to ameliorate suffering or deal with an externality (such as pollution)? No, it does not. However, intervention should be the last resort, because it distorts pricing signals and can have other unintended consequences. It also creates interest groups that profit from the intervention. Intervention should be infrequent, limited in scope, attentive to unintended consequences and automatically terminated after a few years. If it is working well, it can be renewed.
The drive for health care reform was fueled by a perceived victim group — those who could not buy affordable insurance due to preexisting conditions. Their number was estimated at 5 million, 1.5% of the population. Why did we spend two years, a huge amount of political capital and a major disruption of the health care sector to deal with 1.5% of the population? The drive for Obamacare was fueled by ideology. The minimalist solution was simply to have an “assigned risk” system requiring any company offering health insurance to take its share of applicants with preexisting conditions. It could have been supplemented by the government acting as re-insurer of last resort, picking up cost of care that exceeded some inflation adjusted threshold like $250,000. That would have allowed the insurance companies to price the policies at a reasonable level.
If we want better medical care at a better price, let’s focus on results. A free market with minimal and astute intervention has the best chance of achieving those objectives.
