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Healthcare and the vicious cycle of government intervention

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I traveled overseas for a couple weeks this summer for an international conference. While there, I met people from the UK, India, Germany, Poland, China, and even Brazil. One of the topics that came up during the week was healthcare. When I mentioned that I was opposed to government run healthcare, I received an immediate response, particularly from the UK gentleman. His point was: Everyone should have healthcare. My point was: Things always run better without the government involved.

We went back and forth for a bit, but eventually we found some middle ground when I asked… “When you take your car in to get the oil changed, why don’t you run it through your insurance first?”

If car insurance were run like health insurance, every time we went to get our tires rotated or our brake pads replaced, we would send the bill through insurance. Luckily, car insurance (and home insurance) is designed to be, well… insurance. In other words, we have it primarily for major mishaps we can’t easily pay out of pocket. If we asked for money from our car insurance every time we went in to the shop, our insurance rates would climb. How could they not? No one works for free, and that includes insurance companies who need to make a profit to stay in business. Yes, liberals, they earn a profit – But everyone works for profit. That paycheck you receive on Fridays… That’s a profit.

Yes, healthcare is a very personal topic, because people’s lives are directly affected by it. How then, can I so easily say that it is better without the government involved? Because of these two statutes: Milton Friedman’s Four Ways to Spend Money, and the Law of Unintended Consequences.

I. Milton Friedman once described the four ways a person can spend money:

  1. “You can spend your own money on yourself. When you do that, then you really watch what you’re doing, and you try to get the most for your money.
  2. You can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.
  3. I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!
  4. I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get.”

Government is always in this fourth category. It spends someone else’s money on someone else. This is exactly why government will always remain inefficient, with a poor return on investment.

II. The law of unintended consequences states that actions of people always have effects that are unanticipated. This is especially evident with government intervention, where millions of lives are impacted by the actions of a few elected officials. Unfortunately, this tends to be a vicious cycle that governments are in the business of perpetuating. It generally goes like this:

  1. Government finds a problem which they seek to fix
  2. Government passes a law which proposes to fix the problem
  3. Another problem arises from the solution
  4. Government seeks to fix the new problem

Then round and round we go. In healthcare, it’s developed like this:

Problem Government Solution Unintended Consequence
Some people can’t afford healthcare Medicaid started by Johnson administration Medicaid payments to doctors are low
Doctors (who need to make a profit to live) refuse Medicaid
Doctors refuse Medicaid Government mandates hospitals take Medicaid Healthcare costs increase due to low Medicaid payments to doctors
Insurance costs increase to cover higher healthcare costs. Some people can’t afford health insurance
People can’t afford health insurance Obamacare mandates businesses provide insurance or pay fines Businesses can’t afford to pay for everyone’s insurance. Businesses cut benefits or jobs
Some people can’t afford healthcare
Some people can’t afford healthcare

h/t Andrew Wilkow

Notice that the last problem is just the original problem coming back round again! So why exactly are we looking to the government to solve this? The truth is, these things never get solved by the government. Sooner or later, the free market provides a solution, because the best ideas usually come from those of us who reside within these fields in our daily lives – not some bureaucrat who reads about it from afar.

Now if we could just come up with a free market solution to keep the government in check… Like, something that tells them what they can’t do… And put it in writing… And display it for all to see… Yeah. Wouldn’t that be great?

A full time engineer by trade, Dan is a conservative, Christian, father, and veteran. He considers himself a rebel against the dominant liberal culture.

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