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| Lines were a way of life in the Soviet Union. |
If you're old enough to remember the Soviet Union, you'll remember stories about severe shortages of important consumer items and insane oversupplies of other items. For example during the winter there would be a shortage of warm, waterproof boots but a glut of summer shoes.
The same has been true in China. For a long time, political leaders in those socialist countries thought they could make decisions that were smarter than the decisions made by a free market. The Soviet Union collapsed. China, in large part, has transformed its economy to a free market model.Top down, central economic planning is always inefficient.
The same central planning that has failed so badly in socialist nations is now starting the process of failing in the health care sector of the U.S. economy. We won't see boxes of summer shoes on the store shelves during blizzards, but exactly the same thing is happening as the Affordable Care Act starts to take control of one-sixth of the nation's economy.
People all across the country are being forced to give up the insurance coverage they freely selected in the marketplace and instead purchase insurance coverage selected by federal government central planners.
Still hoping for that free lunch
Proponents of this change say, as does President Obama himself, that they will get "better" coverage. Sometimes they even claim that they will get "better coverage" at a "lower cost." That, of course, is patently untrue. There is no such thing as a free lunch.
However, for the purpose of this discussion, let's just look at the "better coverage" versus the coverage originally selected in a (somewhat) free market.
Those who are losing their coverage are losing it because it fails to meet the minimum standards for coverage under the Affordable Care Act. Central planners decided all the things that should be covered by a health insurance policy. These are called "essential health benefits" under the law. These include things like dental and vision care for children, birth control, maternity and newborn coverage, addiction treatment, abortion, mental health services, pediatric services and more.
Many people, both young and old, do not need a number of items on that list of "essential health benefits" and in a free market could reduce the cost of their coverage by selecting insurance polices that do not provide coverage for those items. However, now couples gearing up for social security have to pay for pediatric and maternity benefits.
Just like the Soviet Union had an oversupply of summer shoes in the winter, the United States will have an oversupply of maternity care—and a myriad of other insurance coverage items—for its senior citizens and other groups, such as those who will never have children of their own. That sounds funny, but this oversupply of insurance benefits comes with a real cost to the economy and that means it comes with a real cost to American consumers and taxpayers.
Costs will climb
If you believe that centralizing the control of health insurance would lower the costs of health care you are seriously mistaken. I predict that within the first three years of the Affordable Care Act's full implementation, health care costs will go from one sixth of the economy to one fifth, and the trend will continue to climb.
Finally, here's the real reason I took you on this little tour. I want you to understand one thing: there is no more efficient way to allocate resources than the free market. Many do not like that fact, but that doesn't make it less true.
Perhaps you don't mind the inefficiency if you believe "fairness" can be accomplished through central planning. First, let me say that it's not really "fairness" that you're after; you really want everyone to end up in the same condition—you want the same results for everyone. To state it in the rawest terms: The free market system is completely fair. Anyone who can afford to pay can purchase whatever they want. A level playing field is fair. But on that playing field there will be some who perform better than others.
So let's briefly look at the issue of everyone ending up with the same results. First, in the Soviet system that created a shortage of winter boots, do you think Communist Party members and leaders were going without winter boots? Of course not. In a free market, those with the most money can afford the best items. In a controlled economy, those aligned with the power structure receive the best items.
Quality will go down
But what about all the rest, the masses? Generally they receive equal treatment or equal access to consumer items. But on a whole, the quality and supply of the consumer items and services they receive goes down.
The United States may decide that controlling health care from Washington, D.C. is a good idea, but I predict that within a generation or two, the masses will be receiving care in the equivalent of the local V.A. and county hospitals.
I intend no offense to those who work in those institutions. They are good people. But we know that they are overcrowded and underfunded, which is exactly what will happen when we disconnect our health care system from the free market system and make it rely on central planning.
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