Beware the Costs

Campus Report ^ | June 29, 2009 | Evan Sumortin

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Beware the Hidden Costs

by: Evan Sumortin, June 29, 2009

Supporters of government-run medical care frequently point to the “affordability” of this type of system, but such terms are inherently misleading. What pundits really mean by slogans about “bringing down the cost of healthcare” often involve programs or policies that lower the price paid out-of-pocket by the patient. This is not to be confused with the actual lowering of the total cost of medical treatment.

Thomas Sowell explains it best in his recently revised book, Applied Economics (2009 edition):

“Since governments get their resources used for medical care by taking those resources from the general population through taxation, there is no net reduction in the cost of maintaining health or curing sicknesses simply because the money is routed through…government bureaucracies, rather than being paid by patients and doctors.”

In fact, it’s bureaucracy—either a government bureaucracy or a private insurance company bureaucracy—that raises the cost of medical care.

Nevertheless, the popularity of a government-run medical care program remains high. For example, in a recent New York Times poll 72% favored a government administered health insurance plan while only 20% opposed. Sowell attributes this popularity to an expectation by many people for a net benefit. The net benefit that they expect is the “affordability” of a government-financed system. In the same New York Times poll part of this illusionary net benefit is exposed: when asked whether or not they were concerned that a government-run medical care may limit access to their own treatment 68% respondents said that they were very or somewhat concerned. It is important to note the poll’s respondents were only 24% Republican and 69% Democrats or moderates—the latter usually favors a government-run system.

Sowell warns consumers to beware the hidden costs:...