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Economics in One Lesson: Book Notes vs. Health Care

I just completed the second weeks reading of Economics in One Lesson.  Most of the reading assignments seem to be about 40 pages, so I made it through Who’s Protected by Tariffs.  I said it last week, and I think it is worth repeating: I really am amazed at just how relevant this book is to the current political debate.  Last week I attempted to apply some of the reading to the Stimulus Plan.   This week, I thought I would look at the Health Care bills passed in Congress keeping in mind some of the lessons from our reading.

First, in the chapter on Tariff’s, Hazlitt quotes Adam Smith as saying,”In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.” It is a sign of how dishonest our political debate has become that I felt this one sentence was like a ray of sunshine from heaven.

I also want to point to  the chapter on “Spread-the-Work” schemes.  In this chapter, Hazlitt is critical of government programs that are created for the only purpose of providing employment.  He argues that these government programs in general hurt the taxpayers.  They may create work, but they do it by taking money from taxpayers who might create work that is actually necessary instead of work programs that simply get officials reelected.  This is an important point.  We as conservatives should ask any bill,“Can the taxpayers do this same task cheaper than government can?”

How does this apply to the current Health Care debate?  We have two bills that attempt to provide health insurance to more Americans at a higher cost to taxpayers.   At this point in the debate, no one but President Obama believes the Senate or the House version of health care reform will “bend the cost curve down”.  The question is, just how much more will health care cost us?  On top of this, the bills don’t really increase “health care coverage”.  If you are sick, or injured, you can go to any hospital and get treated even if you don’t have insurance. There is no crisis in our nation of people who don’t have access to health care.  This debate is really about passing a massive law that will cost the taxpayers an untold amount of money, when the taxpayers don’t want it.

I believe Hazlitt would say a real solution to this problem would be to make it easier for consumers to buy the health insurance they want.  Get the government out of the way so the private consumer can decide how to spend his money.  For example: many states require that insurance sold in their state cover particular issues or procedures.  Some states require insurance plans cover treatment for drug abuse.  If we remove these requirements in the states, then insurance companies can make plans that cover drug rehab, and cheaper plans that don’t cover drug rehab.   Then the consumer (or taxpayer) can decide what is best for him or her.  This takes the power of choice away from elected officials and puts it in the hands of the individual.   That makes the most practical sense.  It’s another sign of how far our debate has gone downhill that this isn’t obvious to the average voter.

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