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Tuesday, August 18, 2009

Free Market or Government Rationing

With the specter of government rationing provided in the health care bill, many liberals have taken to pointing out that we already have rationing today. They are absolutely correct. In fact, economics, by nature, is all about rationing. Economics figures out how the production of goods and services are distributed with the limited resources of the world. In fact, life is all about rationing. If it weren't, I would be writing this piece from some tropical island in Hawaii off my 50000 square foot cruiser. I am not because I can't afford that. So, of course liberals are right. The free market rations health care right now. The lates liberal to make this argument is Fromma Harrop in this piece.

Death panels"? I'll tell you about death panels. My husband faced one some years ago, and it didn't involve any government bureaucrat. It was run by our private insurer, the sort of corporate entity that foes of health care reform say will give you anything you want.

My husband was diagnosed with liver cancer. We were "insured" by United Healthcare. The deal was as follows: You had to use doctors on its list, but if you needed specialized care outside the network, United's health-maintenance organization would pay for it. Fair enough.

A liver expert within the network said point blank that for my husband's case, there was but one place to go, a specialized chemotherapy program at Deaconess Hospital in Boston. Fortunately, it was only 50 minutes away.

In fact, we've all heard stories of insurance companies denying treatment for many reasons. In fact, President Obama famously tells the story of his mother. In that story, his mother battled with the insurance company all while lying on her death bed. Frankly, if insurance companies are gaming the system, there are ways to fix that. No matter what there will be rationing. Donald Trump will always receive better health care than a garbage man. That's because like everything health care is a limited resource. As such, it must be doled out based on its limitations. That's the nature of economics, but that doesn't mean that government rationing is suddenly all right or better.

Of course, there's a huge difference between an insurance company rationing your care and the government. You can always choose another insurance company. What happens when the government decides your care is not cost effective?

When you choose an insurance company, you enter into an agreement. When the government rations your care, that's then by governmental fiat. We'd all like to see insurance companies pay for their insured's treatment when they are sick, however those are business decisions made with their own money. The government is working with someone else's money.

More than that, insurance companies work in a market. If they cut people off far too often, they get a bad reputation and they don't get new customers. Personally, I believe that insurance companies pull these stunts far too often because there isn't enough competition. That insurance isn't sold across state lines is, in my opinion, a major contributing factor to the explosion insurance companies cutting off payments at the worst times. That's because their ability to create regional monopolies create a market place that is frankly something much less than a real market.

Of course, if the government is the final arbitor that is a true monopoly. Unelected bureaucrats are answerable to no one. Insurance companies are answerable to the insured they cover. Of course, the market rations health care right now. Economies ration everything right now and all the time. That's how economies work. The question is do we want the purity of the market to ration or a government bureaucrat.


Anonymous said...

Your cult-like faith in the market aside, this idea of regional health care monopolies reminds me of another type of regional monopoly: cable and telephone companies.

mike volpe said...

Yeah, those regional monopolies in cable and telephone didn't work much better in those industries either. The only difference is that cable is not as important as health care. I am really not sure what your point is. Are you saying that the sort of monopolies we allowed in cable and telephone were good for the industry? Did you happen to notice the innovation following the break up of AT&T compared to before?

As for free markets, those are basic economic principles. Don't blame me, I just wanted a good grade in Econ 101 and in that class they said the free market works best.

Anonymous said...

I'm just saying, its the market that allowed AT&T to get to the size it was before it was broken up. It's also the market that allowed both SBC and ExxonMobil, the largest pieces of AT&T and Standard Oil, to reform large portions of those former monopolies.

mike volpe said...

I don't think you know what you are saying. The market didn't allow for anything. Politicians allowed for AT&T t get that big. Monopolies have been illegal since Sherman and AT&T should have never gotten that big. Insurance companies shouldn't be so big that they are monopolies either. Oil has never been a market, so nothing that happens in oil has anything to do with a market.