The New Healthcare Scheme Is Guaranteed To Fail

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The Democrats’ new healthcare proposal — which would establish a public plan, penalise companies that don’t provide healthccare to employees, ration some late-stage care, and raise taxes on the rich — has wonks on both the left and the right trying to make sense of it all.

So we thought we’d just cut through the nonsense, and tell you, simply, why it’s guaranteed to fail.


— It’s got nothing to do with government inefficiency. Private insurers are a total nightmare.

–And it’s not about creating incentives for patients, because most people won’t comparison shop when it comes to something as important as health.

— It’s not even about government regulations and meddling, since there’s tons of that already.

No, the real problem is that it doesn’t address SUPPLY of healthcare. It’s trying to fix things on the demand side (making sure everyone has access), but the real crisis is on the supply side.

Doctors and hospitals are stretched thin, and with the country ageing that’s only going to get worse. Notice that even with prices dropping everywhere, healthcare inflation continues to spiral — because there’s no slack in the system. People don’t cut back on going to the hospital in a recession. They can’t.

Mental exercise: Imagine a world without insurance and without money (maybe it’s barter-based). All you knew is that doctors were stretched thin, and that the world was ageing. Of course, you’d say, “Well damn, we need more doctors (and more nurses, and more phlebotomists, and more pharmacists, etc.).”

Of course in that world, everyone would recognise that the problem is supply. But because we are uncomfortable with some people being denied treatment, and because we can all see costs spiraling, we think the answer is to address it from that perspective.

There are all kinds of reasons for limited healthcare supply: The AMA is an evil cartel. Torts make people not want to be doctors, or give care freely, or recommend not getting more tests done. There’s also the strong incentive ($$$) to specialize, rather than be generalists. All of these are big problems, no doubt, and they deserve an aggressive response from politicians.

But all of our efforts are focused on expanding supply and access, which guarantees inflation, RATIONING, and shortages.

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