Health Care Reform and Gov’t Bureaucracy

Within the past week, House and Senate Democrats delivered Congress two Health Care Reform bills, each meeting the nonsensical guidelines set forth by our President Obama. As well, the president released a statement praising and endorsing the House bill, saying this “proposal will begin the process of fixing what’s broken….”

According to Fortune’s senior editor at large, Shawn Tully, “The two bills [will] require states to establish insurance ‘exchanges’ that [will] offer a variety of plans.” Interestingly, each state’s ‘exchange’ will exist as completely separate markets, not benefiting from national competition--thusly, not benefiting consumers and taxpayers.

For all of these plans, the federal government will impose across all states minimum standards;--that is, standards “often more stringent and expensive than the existing laws require.”

The Senate bill already has a preliminary menu, including mental health and substance abuse programs.

Tully continued, “A special panel of experts [will] add to that list, and [one] can bet that the additions [will] be substantial and costly.” Noteworthy, added regulations and more bureaucracy have only augmented and exacerbated costs and inefficiencies, never lessening.

The myopic idea that a “public option” will compete squarely against private plans--let alone spur innovation--lacks basic economic realism. Ultimately, this “public option” will spur private insurers thoroughly out of the marketplace altogether.

In the 2005 article, “The Thing Itself,” political economist Michael Munger wrote, “We [cannot] make government more efficient, or more like business, because it insulates officials from such pressures by design.”

Government bureaucracy, or as Calf. Rep. Henry Waxman wants it known as “accountable organizations,” shares not in the incentive mechanisms by which the private sector must abide.

Public options, merely by the inescapable nature of bureaucracy itself, cannot efficiently allocate its resources to meet its demand; from this occurrence, a deadweight loss materializes. With such a loss, we can only expect unparallel shortages and surpluses nationwide, as witnessed in energy markets through the 1970’s.

More so, bureaucracy with its prodigal incentives survives solely by undercutting its inefficiencies and incompetence through government appropriated subsidies at the taxpayers’ expense.

Private insurers, however, lacking such profligate capacity, compete by addressing their allocation of resources efficiently and doing so continually.

By maximizing profits, whilst minimizing costs, they are impelled perforce through competition to provide better benefits at better prices to their consumers, or they simply cease operations, in which freeing up resources for others to use more efficiently.

This--Capitalism--is what spurs innovation, not government monopolies, dancing on political heartstrings at bureaucratic impulses.

As health economist Patricia Danzon explained, “Both economic theory and a careful review of the evidence… suggest that a government monopoly of financing and provision achieves a less efficient allocation of resources to medical care than would a well-designed private market system.”

In addition to the forgone benefits experienced by the consumer, government health care structures and systems harbor numerous hidden costs, unlike free market systems.

However, when by good intentions government gets involved, consumers and taxpayers get taken obligatorily in lordotic fashion by roughshod bureaucrats.

The president, nonetheless, has proclaimed from the stump to the Oval Office: “[I]f you’re happy with your plan… you keep it.” Yet, with the federal government underwriting costs artificially by use of taxpayer subsidies, no private insurer will be able to compete.

Our President Lincoln once said, “You may fool all the people some of the time; you can even fool some of the people all of the time; but you cannot fool all of the people all the time.”

Undoubtedly, President Obama, as most, has heard this hackneyed passage before, yet one must question if he bides by such an overtly honest sentiment.


This my second column in the series on Health Care Reform for Marshall University's campus paper, The Parthenon. It is presently the Featured Article at the Marshall Libertarians website. Links to both site in the top left-hand links' box. The column itself turned out to be better that I thought it might at moments.