At the Center of the Health Care Mess

Everyone agrees that the health care system is a mess.  But that is where agreement ends.  Democrats believe that the solution to the mess is universal health care, maybe a single-payer system like Canada.

Republicans think that the problem is rather different.  It is that few people actually know what they are paying for health care.  What is needed is a true market in health care so that the price system can do its magic, just like it does in houses, in automobiles, and in movie tickets.

As Scott W. Atlas writes:

Unlike other products and services, consumers use medical care without having any idea of its true costs. Can you imagine buying a house, a car or a dress without knowing what it would cost? Without price information, it is impossible to be an informed customer.

It’s the old, old problem that we spent the entire twentieth century arguing about, although Ludwig von Mises resolved the it with a paper in 1920, subsequently expanded into a book, Socialism. 

The problem with a socialist commonwealth, he wrote, is that you cannot compute prices, and that means that you don’t have a clue what things cost.  For that reason, Mises predicted, three years after the Bolshevik Revolution, that socialism would never work.

In the United States we have our own socialized sector and it is just as messed up as the old Soviet economy.  In education, in health care, and in government welfare, nobody knows the cost of anything, and nobody cares.

President Bush has proposed that the cost of health insurance should be exposed by limiting the amount you can deduct in your income tax return.  That’s a start.  But Atlas recommends also that:

• “the prices of medical procedures be fully available and clearly presented to patients before any medical procedure”
• “qualifications of doctors be made available to their potential patients”

That is surely not too much to ask.

Of course, if we make the health care system “transparent” it is going to change everything to do with health care.  Given that health care is 15 percent of the economy, the transition will be staggering.  People will be looking for someone to blame for the pain of it all.

Look for the innocent to be lynched, and the guilty to go free.