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Rationing by price: The liberal bugaboo

By Kevin Gabriel
web posted March 1, 2004

Liberals love rationing. It makes them feel secure. And when they're the ones doing it, they find the experience absolutely exulting.

So when it comes to economic policy, they can't help but concoct schemes that allow them to play God. Because, they say, it is better for us to ration than to trust the allocation of economic goods to the market. We're a lot smarter than any dumb market. Besides, they say, the market already rations, it rations by price.

The debate over the future of the US healthcare system provides a case in point. As the presidential campaign heats up, the left finds it increasingly difficult to repress the seductive lore of bribing the electorate with a national health care scheme. Every Democratic candidate is busy buying votes with a plan that, it is alleged, will give us all the healthcare we need at no extra cost.

The liberal line is the same as always: privately held corpoarations, be they pharmaceutical manufacturers, insurance companies, HMOs, or whatever, are inefficient, spend too much money on advertising, and exploit their customers. Just hand the whole thing to the government. The waste will magically disappear, the delivery of healthcare will be instantly streamlined, and the quality of services will improve immeasurably!

But the most important gain will be that healthcare will be available to everyone. Even better, we'll all have the very same product. And nothing warms a liberal's heart more than an egalitarian outcome. Indeed, what irks the left the most about our current Healthcare delivery system is that not everyone has the same access to services.

Not only are the plans that cover people very different – some cover more than others or require less contribution from the insured – but, they claim, over 40 million people don't even have health insurance!

So it's time to nationalize the industry!

Of course, one need only look over the border in Canada to judge the results of such a system. The thing is bleeding the country dry. But that's not the only problem. You want to see your doctor? Sure. Just get in line. He can see you in six weeks. You want an MRI? Sorry, we don't have many of those – they're so expensive. Do you really need it? Indeed, the Canadian system seems to work marvelously – as long as you're not sick.

Such was the criticism leveled at a national health scheme recently by Sally Pipes of Pacific Research Institute. Ms. Pipes was speaking at a panel discussion on prescription drug issues sponsored by her organization. Other panelists included Dr. Milton Friedman and Don McCanne, President of Physicians for a National Health Program.

As one might imagine, Dr. McCanne was indignant at this criticism. And he quickly pointed out that we already have rationing in healthcare – rationing by price.
Can you imagine that? We have rationing by price!

But wait a minute, isn't that what a market economy does? Doesn't it put a value – aka, a price -- on all goods and services? If you want them, you can buy them – as long, that is, as you can pay for them. If you want a Mercedes and can pay for it, then go ahead and write a fifty thousand dollar check. But maybe your bank account isn't that healthy. Then you're out of luck. The supply of Mercedes is rationed by the price.

The automobile business would seem to be as unfair as the healthcare business. Isn't it an outrage that some people drive BMWs or gas guzzling SUVs, while others are left with used Escorts? There may even be a few poor souls without cars – perish the thought! How can they live that way? If only we could nationalize the auto industry. Then the government could make sure that everyone got the very same car.

Come to think of it, that's been tried in other countries. The results were the Yugo and the Trabant.

If Dr. McCanne doesn't like rationing by price, then he really doesn't like a market economy. Because one can make the same argument about the automobile industry, not to mention the housing industry (There sure are a lot of homeless. And what about the people living in apartments? Maybe we better nationalize that one, too). One can even make it about the paper clip industry.

This is the liberal bugaboo. They hate our market economy! They hate that it doesn't achieve their version of nirvana: equal distribution of goods and services (Except for them. They're a lot smarter than us and deserve more. But that's another story).

A government run healthcare system will lead to rationing. You can bank on it. And, by sapping incentive from the system, it will reduce the quality of the services delivered. We'll end up with less of an inferior product – kind of our version of the Yugoslavian auto industry. But people like McCanne don't care. They like the idea of a system that is equally cruddy for everyone. The guy probably wants to see us all driving Yugos.

Kevin Gabriel is a consultant and writer who lives in Boston. He works extensively in the healthcare industry.

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