Shifting the Blame for America’s Health Care Woes
Covering the similarities between Obamacare and Romneycare The Washington Post’s Ezra Klein wrote on July 26th:
[E]ven a cursory read of the evidence would show that whatever the drawbacks of central planning, it covers people at an extremely low cost. Romney Care’s cost problem is a result of pasting a coverage-oriented quick fix atop our insane health-care system. Compare its costs to the British system, the French system, the German system, or any other system, and whatever your conclusions, you won’t walk away unimpressed by the ability of cen
First, this reasoning violates Cannon’s First Rule of Economic Literacy: when people write that centrally planned systems cost less, when what they really mean is that they spend less.
Second, the phrase “whatever the drawbacks of central planning” is some serious hand-waving. Those “drawbacks” include (among other things): the Medicare program’s suppression of comparative-effectiveness research, error-reduction efforts, care coordination, and other delivery innovations; Canada’s human-rights violating Medicare system; and the suppression of untold innovations in health insurance and medical treatment by government price controls.
Third, our insane health-care system is the product of the old raft of government price & exchange controls, mandates, and subsidies. Prior to Obamacare, government already controlled half of all U.S. health care spending directly, granted control over another quarter to employers, and regulated health care more heavily than perhaps any other sector of the economy. Our “insane health-care system” is the product of central planning.
Finally, only a cursory read of the evidence could lead to the conclusion that central planning contains health care spending. Klein posts the following charts and concludes that since all those (other) centrally planned systems spend less on health care than the United States, central planning must result in lower health care spending.
But if that were true, then one would expect per-capita spending on elderly Americans — who have universal coverage through the centrally planned Medicare program — would not be far out of line when compared to how much other nations spend per elderly resident. Yet the United States is just as far out of here as overall. According to the OECD, the United States spends about twice as much per elderly person as Canada, and more than twice as much as Australia spends.