Healthcare: A Primer

This may be the best healthcare primer I have ever read. It explains why Obamacare does not work, as well as why none of the Republican plans being floated around (other than Rand Paul’s plan – which you can read here: have any chance of being more successful than Obamacare has been.

In a nutshell, both Obamacare, as well as the plans Republicans have floated, all try to mandate away scarcity, and as much as we might want that to be possible – as much as we might be happy to vote as if mandating away scarcity were possible (hello ‘Feel the Bern’) – it is not possible.  Scarcity is a fact of life that exists in all things.  When something is ‘free’, demand becomes virtually unlimited, and there is no way to create enough supply to satisfy that.  As the growing demand curve causes costs to explode, the only way to control costs is to reduce access and/or quality.  This is not just true of healthcare; it is true of all things.  Imagine what would happen if you made having a car a ‘universal right’.  Would you take a Ford Fiesta, or a Bentley?  Would you keep the car ten years, or get a new model every year?

A true ‘Universal Healthcare Program’ would be a program in which everyone has access to whatever healthcare they want, whenever they want it.  There is no program on Earth that provides that.  What people call ‘Universal Healthcare’ are programs that let government bureaucrats ration care, rather than letting the price mechanism do so. There is nothing ‘universal’ about that.

Sensible, responsible adults, look at scarcity and understand that we have to make tradeoffs. With healthcare, we can move toward more universality, more affordability, or more quality, but because of scarcity, we can not have more of all three of those things. You can have two of those things, but if you try to have all three, something has got to give, because it is physically impossible to do. As such, ANY program, free market, socialized, or whatever combination we can come up with, will involve tradeoffs between those three things.

If you want more quality, either universality or affordability will have to suffer. If you want more affordability, either universality or quality will have to suffer. If you want universality, either quality or affordability will have to suffer.

We can accurately predict what different programs will look like. The original Republican plan, for example, sacrificed some universality in order to make healthcare slightly more affordable.

A free market system would sacrifice universality entirely, but would maximize both quality and affordability, and that should be our goal. Free markets make things more affordable over time.  To the degree that some people cannot afford healthcare, even when it is as affordable as possible, don’t give them free healthcare. Give them money.  Rand Paul’s plan would be a big step in this direction.

The reason healthcare is so hard to ‘solve’ is because of this notion that we have to ‘replace’ Obamacare with something else. As Thomas Sowell has so aptly put it, if you had cancer and your doctor wanted to remove it, would you ask your doctor what he or she is going to replace your cancer with?

The best healthcare ‘solution’ we could do, would be to repeal Obamacare, without replacing it, to end the exemptions healthcare insurance companies have from anti-trust law, to dramatically reduce mandates on what insurance companies have to cover, to repeal all regulations in healthcare that are not absolutely necessary, and to let insurance companies compete across state lines.  We also need to revamp Medicare and Medicaid to 1) make them truly means-tested, and 2) make them pay prevailing rates to doctors and other healthcare providers.  We should give up on universality, and let the market focus on affordability and quality.

If you want universality, then please tell me how much of our GDP you are willing to spend paying for it, and understand that people will die based on reduced quality.  Also understand that the more expensive healthcare becomes, the more people become harmed because of a lack of access to other things they would be able to afford were healthcare more affordable.

Currently, the Republicans are talking about ‘fixing Obamacare’.  I’m curious how they plan to do that.  To go back to Thomas Sowell’s analogy again, that would be like saying, “I cannot cure my cancer, but perhaps I can fix it.”  Obamacare is based on the notion that you can mandate away scarcity, and there is no possible ‘fix’ that can make that work, and yet that is all anyone wants to talk about.

We need a rational plan, and that requires a rational discussion. Unfortunately, rationality and politics seem to be mutually exclusive…

Anyway – here is the primer I mentioned in the first paragraph.  It should be required reading.

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