Healthcare services are scarce goods... To an economist, the term “scarce goods” means something very specific: that there is greater demand for something than can possibly be supplied. Healthcare is such a thing: it isn't possible for everyone to get the most exotic cancer treatments, nor can everyone be treated at the best hospitals, or by the very best doctors. So healthcare is a scarce good.
With any scarce good, some means must be found to decide who gets the care, and who doesn't. For healthcare in the U.S., that used to be decided by who could (and was willing to) pay. That system is called capitalism, and it's the most efficient means of allocating scarce goods that anyone has ever come up with. But for healthcare in particular, allocation on the basis of ability to pay seems unfair to the majority of our citizens. So we've come up with alternatives.
Fast forward to now, and the advent of ObamaCare. Healthcare is still a scarce good, and ObamaCare – having replaced anything remotely resembling capitalistic allocation – still has to allocate that scarce good. No matter how much we might wish it were so, there's not enough healthcare to cover
everybody for
everything. ObamaCare takes two approaches.
First, there are the committees of bureaucrats that Sarah Palin so memorably called “death panels”. These committees are deciding what procedures will be covered by ObamaCare policies, and which will not. That's a form of allocation: if a procedure you need is covered, your ObamaCare policy will cover it. If it
doesn't cover the procedure, you'll have to pay for it yourself – if you can. Otherwise, you die or suffer. Thanks to the ObamaCare health insurance “mandates”, you
cannot purchase an old-fashioned major medical policy that will cover such risks.
Secondly, there's a new aspect of the ObamaCare healthcare policies called “reference pricing.”
This article treats reference pricing as though it were just invented, but actually it's been a part of ObamaCare all along (and many opponents of ObamaCare wrote about it during the legislative process). Fundamentally it is a way to discourage people from choosing the most expensive (i.e., the best) doctors and hospitals. It accomplishes this by imposing some fairly draconian financial burdens on anyone who chooses to do so – and by making it impossible to insure for such expenses.
There's a third step I expect to hear about very soon: the expansion of ObamaCare allocation steps to MediCare. It seems almost inevitable...
The end result of this situation is very predictable, thanks to prior experience by two nations we know very well: the United Kingdom and Canada. In both of those countries the overall quality of healthcare lags that of the U.S. substantially – and only relatively wealthy people can escape the consequences (generally by paying for more advanced treatment in the U.S., India, or China).
It seems to me that for all their trying, the ObamaCare supporters didn't really accomplish very much in the way of better allocating healthcare. Now, as then, only the people who can afford to pay can get top notch healthcare. In one significant way, ObamaCare has made it worse: it used to be true that
anyone who desired it could buy simple major medical coverage. The price might be high (especially if you had pre-existing conditions of some sort), but you could buy it. Now those policies are illegal. You cannot have them at any price. That means if you want top notch healthcare, you have to be wealthy enough to pay for the care directly – not just wealthy enough to pay for the insurance.
I sure hope we can get ObamaCare repealed...
