Massachusetts’s universal health care plan faces a ginormous budget shortfall, reports the Times:
Governor Deval Patrick wants to cut costs by instituting “a new payment method that rewards prevention and the effective control of chronic disease, instead of the current system, which pays according to the quantity of care provided.” Good luck with that. Price is determined by supply and demand. If you have great demand for health care but a limited supply, like we do now, the price will be high. Preventive medicine could reduce demand by making people healthier in the long run, but it will take a long time for those cost savings to be realized. In the meantime, demand for medical services will keep prices high, and government subsidies will make costs go higher, because if you subsidize something (in this case, health insurance and thus demand for health services) you get more of it. How do you reduce demand? Well, you could institute rationing and limit the medical services available to the consumer. Or you could make the consumer more responsible for his health care decisions. But our political system isn’t ready for either option. The upshot: demand continues to increase as government shoulders more of the burden. And the cost of government health care swells. So, when the Washington Post reports that the Obama health care plan could cost $1.5 trillion over 10 years rather than the $635 billion set aside in the FY2010 budget, we should take that information with a grain of salt. It’s likely that the real number will be much higher than that. The U.S. health insurance system produces a tremendous amount of social and economic distortions. It ought to be reformed. But, if you advocate a reform that insures more people at the government’s expense, you ought to realize that the only way to pay for such a proposal is through much, much higher taxes. And not just taxes on the top 2 percent.
