Health care reform’s unseen costs

Chad Wilcox nicely sums up why many libertarians lament the passage of the health care reform bill:

A libertarian professor I know once said he believed that libertarianism’s greatest intellectual contribution is a recognition of the unseen. We’ll never see what open competition could have done to health costs in markets for health care left free of government interference. We’ll never see how the voluntarily uninsured would have spent the money they’re now required to spend on plans. We’ll never see how many lives could have been saved or how much healthier we could be in a world with technological innovations that are more costly and burdensome to develop as a result of government. I’m not saying there will be no technology and no innovation, I’m saying when we make these choices “as a society ” we sacrifice the unseen what-could-have-been for a “bird in the hand is worth two in the bush” philosophy that defies the most basic tenets of economics.

Like many libertarians, I think it takes a remarkably credulous faith in government to think that this bill is fiscally responsible. But what really disappoints me about it is that it fundamentally rejects the sort of reforms I’d favor and puts up new barriers to their enactment. Specifically, I’d like to see us move away from insurance as the primary means of paying for routine health care. This bill takes the opposite approach with its individual mandate that everyone purchase insurance, immediately inviting aggressive lobbying on behalf of providers to expand minimum levels of coverage. It additionally weakens Health Savings Accounts first by increasing the penalty for making non-health care related withdrawals, then by further limiting the amount people can contribute to them. One of the few nods in the direction of penalizing excessive insurance is the so-called “Cadillac tax” and it doesn’t even go into effect until 2018 so who knows if that will survive.

The seen costs of this health care bill will become all too apparent in the deficits to come. It’s the unseen costs of making it much harder to try out the market-oriented ideas of people like Milton Friedman, Michael Cannon, Arnold Kling, and yes, John McCain, that are most depressing.

Previously:
Bartenders for McCain?

Comments

  1. Matt R. says:

    Just curious, what approach would you like to see in place of insurance?

    I saw the actual bill that my insurance company paid when I had pancreatitis and spent a week in the hospital and got my ambulance ride to get there. The ambulance alone was $1200.

    Without my insurance I’d have been completely unable to pay.

  2. Jacob Grier says:

    @Matt R.: I think part of the reason prices are so high is that health care consumers pay for very little directly. The short list of changes I’d like to see are 1) eliminate the tax advantage of employer-provided insurance 2) promote HSAs and 3) provide subsidies in the form of vouchers or HSA contributions to those who need them. A longer explanation of what ails the system that I mostly agree with is this excellent piece in the Atlantic:
    http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/7617/1/?

    It’s long, so if you want to skip to the policy proposals go the last page.

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