In Thursday’s edition of The Daily Reveille, columnist Parker Cramer delivered a respectable — albeit factually misguided — moral argument in favor of expanding our government’s role in the health care sector to provide for the needs of less fortunate citizens.
Having once held similar beliefs, I can certainly sympathize with his observations. However, after diagnosing a conspicuous malady regarding the inefficiencies of the American health care system, Cramer goes on to propose a dangerously misinformed and potentially highly counterproductive solution to our health care woes—more federal involvement.
Any discussion about health care in this country must start within a proper context so as to not be distorted by petty ad hominem attacks and politically charged accusations of “not caring about the poor.”  Virtually everyone agrees on the problems — high costs, relatively limited provision, etc. — and wants to make our health care system more affordable and, hence, more sustainable for everyone involved. The debate, therefore, is centered on trying to figure out how best to achieve those goals.
In this case, as with so many morally-charged political talking points these days — the controversy is not over “what” we wish to accomplish, but rather “how” we wish to go about implementing that desired change. One option is to increase the government’s role in the medical sector. The second is to reduce government interventions and allow more voluntary market activity. If Cramer is indeed pushing for the first option, I presume he does so solely out of negligence and not any sort of malicious attempt to warp the truth.
Implicit in Cramer’s argument that government should do more to help streamline health care costs is the claim that the government hasn’t done nearly enough to try and fix the problems already and, tautologically, more government will provide more efficiency. Based on empirical evidence and an honest rendering of the historical record, this claim is impossible to support.
In 1960, prior to Medicare, Medicaid, and countless other government initiatives directed to slash costs and vastly extend medical coverage, the government only covered 21.4 percent of personal medical expenditures. Americans covered 55.2 percent out of pocket. Most of the rest came from private medical insurance.
In 2000, however, after 40 years of dramatic government intervention, the government covered 43.3% of personal medical expenditures, through Medicare, Medicaid, SCHIP, and other government programs. Out of pocket spending totaled less than 10 percent.
Yet over the same 40-year period, total personal medical-related spending increased more than ten fold, from inflation adjusted $111 billion in 1960 to an incredible $1.13 trillion in 2000.
In the era of intense government control and cartelization, health care cost as a share of GNP have increased 4 times, climbing from 4 percent to 12 percent of the overall domestic economy. Rising costs, burdensome regulation, suppression of competition — via various licensing and insurance schemes — are the true culprits in America’s health care struggles—not any purported vestige of “laissez-faire.”
As economist Steve Leavitt has noted, virtually every good economist would agree there are two things the government should’ve done to fix health care: 1. break the link between employment and the provision of health care and 2. make individuals pay for the services they get, rather than sharing or the costs and thereby driving up consumption demand and, hence, costs.
Unfortunately, the 2010 health care legislation did nothing to ameliorate these problems. If anything, it greatly exacerbated them. In a world of scarce resources and infinite needs, Obama’s plan failed to create more resources to deal with our nation’s health care needs. It simply loaded more passengers on an already overburdened ship under the guise of providing “affordable health care for all.” Not surprisingly, medical costs have accelerated their upward trend since the bill’s passage.
Cramer asserts the problem with the American government is that it is managed too much like a for-profit business. The problem is, in fact, just the opposite.  Given the deluge of red ink on the liability side of the government’s balance sheet — more than $14 trillion in debt and $100 trillion in unfunded liabilities — it’s hard to draw a comparison between a profit maximizing firm and our government. (Granted, in today’s age of crony capitalism and massive corporate bailouts, there might indeed by some unintended similarities.) If this is the kind of return American investors can expect from their government, CEO Barack Obama has a lot of explanin’ to do at the nation’s upcoming shareholder’s convention next November.
Besides, with a balance sheet swiftly tilting towards insolvency, the burden of proof is on Cramer to explain why tossing millions of uninsured Americans on government entitlement programs isn’t analogous to loading more and more unsuspecting passengers on the Titanic knowing full well ahead of time its doomed fate.
It is no accident the most highly regulated industries in America — health care, education, banking, and perhaps most despicably: foreign imperialism — are also the most wildly inefficient. Economically speaking, there are no economies of scale in health care that require explicit government monopolization of an already government-cartelized — if not implicitly socialized — industry. Bigger government is not always better. To the contrary, it almost never is. This leviathan is not only an affront to individual liberty, but is also an assault on more than two centuries of economic knowledge and experience.
The answers to our nation’s health care problems lie not in increased government initiatives, but in innovation, open competition and (gasp!) massive deregulation. Sadly, the ideas presented in today’s political debate represent a false dichotomy. I can’t blame Cramer for forming his opinions without proper economic research and understanding. I roll my eyes every time I see a Republican speak of the free market for the same reason I shudder when a progressive speaks of “market failure” and the need for further government intervention. But calling for further government cartelization and compulsion to fix the problems caused by government cartelization and compulsion is like using a guillotine to cure recurring migraines.
As long as we fail to address the myths of our past, we will forever be slaves to our own delusions
Scott Burns
Economics senior
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