Friday, August 28, 2009

And How

NPR has a story up about how fear is trumping logic and reason in the current debate about reforming the healthcare system, and it's completely on point. Following the debate is tremendously frustrating precisely because so many of the players involved seem intent on avoiding rational discussion of the issue in favor of fear-mongering to score political points, and the voters are too misinformed to know better. Anyone who has studied the health care problem seriously, or taken an in-depth look at the various approaches to providing health services deployed by governments in other industrialized countries, will realize that the American system is by most objective measures among the worst in the developed world. That is not an ideological statement - it's true irrespective of whether one favors bigger government or freer markets. Lefty complaints about the U.S. healthcare system are at this point well-documented, but (and this is an underplayed angle in the media's coverage of the debate) even from the perspective of a libertarian-leaning free market enthusiast like me, it's a complete mess. The American healthcare apparatus is not an open marketplace - it's a sclerotic tangle of overlapping and sometimes redundant government bureaucracy, inefficiently allocated private resources, and expensive, unnecessary red tape which costs twice as much as any other system out there and doesn't deliver anything more. It's not by any stretch of the imagination a free, open marketplace - thanks to differing state laws it's more like 50 different marketplaces, each with its own norms, rules, and price points, and because of the administrative costs that entails, no one but the largest and most well-entrenched companies are able to compete effectively on a nationwide basis. In wide swaths of the country the health care market has essentially been cornered by one or two players, and as anyone who paid a bit of attention in economics 101 can tell you, that's a recipe for higher prices and lower quality services. Furthermore tying healthcare to employment creates massive distortions in the labor market, restricting the ability of workers to change jobs, discouraging entrepeneurship, and hamstringing startup and small businesses. It's just as possible to envision a better system coming from the right as it is from the left - and indeed, some of the better systems out there are something closer to a true competitive marketplace. But who needs to acknowledge reality when you can trot out the bogeyman of government bureaucrats pulling the plug on grandma to score a few points in the polls in time for the next election?

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