As noted in earlier posts, we believe that common sense is often a much better guide to  economic policy than the schemes that our “leaders” come up with.  Consider this example.  Imagine what would happen to the price of hotel rooms if:

• The guest does not have to pay for the room.  Someone else pays.
• No matter what room you pick, fancy or not, someone else gets the bill.
• The prices for the rooms and all of the guest services are hidden. The price doesn’t really matter, though, because someone else pays.
• People can enjoy the rooms and guest services whenever they feel the need.
• If you use a room and don’t have someone else pre-arranged to pay, that’s no problem, the hotel operator can hide your bill inside the bill of those who do pay.

If customers don’t know or care how much rooms cost, what will happen to prices?  The customers have no incentive at all to be careful with money.  Quite the opposite.  They will demand their fair share of this service and they will want the best that someone else’s money can buy.

The provision of medical care is very much like that.  If you ask a provider how much a medical service will cost, you are likely to be met with a surprised look.  Asking how much a procedure costs is the exception, not the norm.  Since cost does not matter to the individual consumer, costs are rising rapidly.

In parts of medical care where the consumer is more likely to pay directly, like cosmetic services or laser eye surgery, costs are directly controlled by the consumer.  Prices must remain at a level acceptable to cost-conscious consumers.

A group of Doctors in Oklahoma who realized the insanity of the current system decided to do something about it.  They have successfully attacked the high cost of medical care in a way that should be a model for the nation.  Take a look:

As you evaluate their approach, remember that all it does is dramatically reduce the cost of medical care.  It does not give politicians or unions more power.  So it’s not an option they would want to consider.  For them, it’s all about power.

In an imaginary world, government does things efficiently and economically.  In that world, you would want government to provide health care.

In the real world, politicians cobbled together a monstrous piece of legislation called Obamacare, with a structure that cannot possibly be efficient or economical.

John C. Goodman at Townhall.com has a superb analysis of what Obamacare will do when reality comes up to bat.

If you read this at the source, you will see links to other supporting information.  John Goodman:

The morning after Tuesday’s vote, there is one thing every commentator agreed on. The election of Barack Obama guaranteed that his signature piece of legislation — health reform — can now go forward. Republicans are powerless to stop it.

Yet there is something all these commentators are overlooking. There are six major flaws in ObamaCare. They are so serious that the Democrats are going to have to perform major surgery on the legislation in the next few years, even if all the Republicans do is stand by and twiddle their thumbs.

Here is a brief overview.

ObamaCare is not paid for. At least it’s not paid for in any politically realistic way. As is by now well known, the legislation will lower Medicare spending over the next 10 years by $716 billion in order to fund health insurance for young people. This reduction will primarily consist of lower payments to physicians, hospitals and other providers — reductions that are so severe that they will seriously impair access to care for senior citizens.

In the last two Medicare Trustees reports, the Office of the Medicare Actuaries has predicted that these cuts will force one in seven hospitals out of the Medicare system in the next eight years. Payments to doctors under Medicare will fall below Medicaid levels in the very near future and will fall continuously behind Medicaid in the years ahead. From a financial point of view, seniors will be less desirable patients to doctors than welfare mothers. Harvard health economist Joe Newhouse envisions that seniors may have to seek care in the same places that now cater to Medicaid beneficiaries: at community health centers and in the emergency rooms of safety net hospitals.

During the election campaign, Barack Obama claimed that his administration had found $716 billion of “savings” and Democrats generally claimed that the money would come out of the pockets of doctors, hospitals and insurance companies, with no bad effects on seniors. In fact, no “savings” have been found and seniors will indeed be affected by low reimbursement rates — just as low-income patients must deal today with the fact that almost one in three doctors is not taking any new Medicaid patients.

But if the current crop of politicians is afraid to admit that they have taken something away from senior voters, what do you think future politicians are going to do when real pain starts setting in? The betting in Washington is that the cuts will be restored. That will mean that ObamaCare will hugely add to deficit spending, indefinitely into the future.

ObamaCare promises what it cannot deliver. To most politicians, acquiring health insurance means that people will be able to get medical care that the uninsured are not now getting. Yet in order for the country as a whole to get more medical care, there must be more doctors and nurses and hospital personnel — something that ObamaCare does not create. Continue reading →