Fareed Zakaria neatly explains the problem with the healthcare reform that is now the law of the land:
Most Americans have health care. What they worry about is the cost of insuring 20 million to 30 million more people. Unless the meteoric rise of health-care costs is slowed, a big expansion of coverage might well remain unpopular, no matter how it is explained.
but then continues as though there were a method of allocating the scarce resource, i.e. healthcare, other than by market or by fiat:
Republican alternatives to Obamacare, such as Rep. Paul Ryan’s plan, don’t bother with expanding coverage, which is a mistake because they leave in place a broken insurance model in which people can freeload. But most do have a strategy to control costs — get consumers to pay for more of their health care. The basic idea is intuitively appealing. Markets produce efficiencies; they presumably would do the same thing in health care.
But the situation on the ground suggests that markets work imperfectly in this realm. A new study conducted by the pharmaceutical company Novartis and McKinsey and Co. shows a stunning difference among countries with regard to health-care efficiency.
citing the examples of the United Kingdom and France. The problem with this is that healthcare costs are rising at an unaffordably rapid rate in the United Kingdom and France, too. Any fiat system however well-intentioned will inevitably result in misallocation, less healthcare, and less total happiness. The problem with a market system is that in the case of healthcare the best that can be done is not good enough. We constrain the supply because we are concerned about the quality of care. As long as that’s the case (and I don’t recommend doing otherwise) there is no market system to defend.
The choice, then, is among a variety of sub-optimal fiat systems. Claiming otherwise is a lie.
I continue to believe that the problems with the U. S. healthcare system will only get worse until the incentives are properly aligned with what we’re trying to accomplish. As long as the incentives call for care rather than health, care we will get. Even if it doesn’t make us healthier. Even if it accomplishes nothing other than to increase the costs.