Wednesday, June 24, 2009

The Public Option ... Only Your Wallet Will Feel the Squeeze!

In an editorial in the Wall Street Journal on Wednesday, Robert Reich argues that the central idea behind the public option for health care is to squeeze the profits of insurers and push them to make changes to reduce costs. This exposes his seriously infirm grasp of economic reality and points to his near religious belief in the power of "Good Government", a phrase which perhaps defines the word oxymoron. The only squeezing a public option would produce would be the squeezing of additional dollars from your wallet, and the only cost reductions will come from the imposition of health care rationing .

Mr. Reich is living both figuratively and literally in economic La La Land, with Liberally tinted political blinders so large that they block out reality. From his lofty perch at the University of California at Berkely, yes the very same California that is teetering on bankruptcy due to unrestrained "good governance ", a large part of which goes to pay for health care programs for state employees and the poor, he sends down his prognostications for fixing everything that is wrong with capitalism. His usual cure, as you may have guessed, is more spending on more "Good Governance". This time he's fixing health care.

You would think that with his bird's eye view, so to speak, of the destruction wrought by his beloved "Good Governance", he might change his tune. But this song bird of ever more government spending, can only warble for yet ever more government spending to fix the very problems too much government spending has caused. It's a vicious cycle.

That he can't or won't connect the cause (too much government spending) with the effects (a meltdown of his state's budget process) which have his state a mere 30 days from insolvency, and at the same time advocates even further expansion of the government's role in health care is nearly beyond belief.

The government option he promotes doesn't pass the economic smell test. People respond to incentives, even the " good governance" types will admit this when it comes to taxing cigarettes and soda pop, but not when it comes to government run health care. If you want less of something tax it. Want teenagers to drink less soda? Put a surtax on it. Want smokers to cut back? Add another dollar of tax, to the price of a pack of cigarettes. If, on the other hand, you want people to use more of something, lower the cost.

Robert wants to increase the demand for health care by providing it to more people for free, while at the same time reducing the cost. This flies in the face of economic reality. The end result is obvious. If you are buying steak for your family's dinner and your free- loading brother- in- law wants to pop by with his clan for a meal on the house , your options are the same ones the government faces . You can cut everyone's steak in half(rationing) eat hamburger instead (provide an inferior service) or bust the budget and provide steak for everyone.

Here's my prediction: When the same politicians, who only ever make political decisions because they are incapable of making economic decisions design and run your health care program, you'd better get ready to pay dearly. There will be lots of steak for some, a little hamburger for others and a great big tab for the taxpayers.

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