"Knowledge will forever govern ignorance

 and a people who mean to be their own governors

 must arm themselves with the power which knowledge gives."

Tuesday, May 31, 2005

Bringing Down The Cost Of Health Care

Straight Talk From Thomas Sowell:

Some believe -- contrary to all evidence -- that the government can provide things cheaper, that it can "bring down the cost of health care," for example.

Virtually everything that the government does costs more than when the same thing is done in private industry -- whether it is building housing, running prisons, collecting garbage, or innumerable other things. Why in the world would we imagine that health care would be the exception?

When people talk about the government's bringing down costs, what they really mean is that the government can impose price controls. But bringing down costs is wholly different from not allowing those costs to be paid in full.

Keeping prices lower than they would be under supply and demand produces shortages, quality deterioration, and black markets -- whether the price that is being controlled is that of food, housing, medical care or innumerable other things.

The only difference with medical care is that the consequences are more disastrous.

-----

Politicians who claim to be able to "bring down the cost of health care" are talking about bringing down the prices charged. But prices are not costs. Prices are what pay for costs.

No matter how much lower the government sets the prices paid to doctors, hospitals, or pharmaceutical drug manufacturers, none of this reduces the costs in the slightest.

It still takes just as much time, equipment, and training to turn a medical school student into a doctor. It still takes just as many hospitals to care for the sick. It still takes just as many years of scientific research and clinical trials to create a new medicine.

Those who are dying to control the prices of pharmaceutical drugs are oblivious to the fact that other people may be literally dying unnecessarily if they succeed. There is no free lunch, even though politicians get elected by promising free lunches.

Government price controls on medicines and medical care simply mean that these costs do not all get covered. This works in the short run -- and the short run is what politicians are interested in, because elections are held in the short run. But the rest of us had better think ahead, if we value our health.



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