Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“That men may rightfully be compelled to submit to, and support, a government that they do not want…No principle … can be more self-evidently false than this; or more self-evidently fatal to all political freedom … a man, thus subjected to a government that he does not want, is a slave. And there is no difference, in principle — but only in degree — between political and chattel slavery. The former, no less than the latter, denies a man's ownership of himself and the products of his labor; and asserts that other men may own him, and dispose of him and his property, for their uses, and at their pleasure.”     Lysander Spooner

July 8, 2008

Universal Coverage Will Reduce Costs?

by Brad Warbiany

From Ezra Klein, regarding reducing costs in the Massachusetts health care system:

The mandate presumes residents can afford coverage, and it’ll spark a political revolt if voters find themselves penalized for not buying a product they can’t afford. In other words, one of two things can happen: Either Massachusetts can figure out how to control costs, or it can let the program become unaffordable and repeal the legislation.

This is, at least in the abstract, the political logic of focusing on access first: Expanding access creates pressures that force the system to figure out how to control costs. (emphasis added)

Really? Conservatives have tried this approach many times, with what they call the “starve the beast” mentality. Reduce taxes, reduce revenues, and eventually the government will restrain spending just out of necessity.

The truth is, though, I’ve never seen it happen. When they can’t raise tax revenue, government goes into deficit-spending mode. If that doesn’t work, they find a way to inflate their way into paying it. We’re in deficit mode now, and they’re trying to spend $50M a year on bedbugs.

You simply can’t assume that buy burdening the system, they’ll find a way to magically reduce costs. You can force cost reductions (as Medicare tries to do), or you can ration care (as Britain tries to do). But you can’t pile demand onto the system and simply assume that it’ll have economies of scale or other efficiency improvements that will reduce costs in any meaningful way.

Hat Tip: Cato@Liberty, who has some added snark on this topic.

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1 Comment

  1. Pretty basic stuff. Less supply, same demand = costs go UP, not down.

    Comment by tfr — July 9, 2008 @ 7:10 am

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