Obamacare's Inevitable Logic

8.18.09: It's magical thinking.

August 18, 2009, 6:51 PM

August 18, 2009 — -- False charges about Obamacare don't help.

Like the end-of-life tempest. Former Alaska Gov. Sarah Palin popularized the term "death panels." She said: "The America I know and love is not one in which my parents or my baby with Down syndrome will have to stand in front of Obama's 'death panel' so his bureaucrats can decide, based on a subjective judgment of their 'level of productivity in society,' whether they are worthy of health care".

The charge that the House and Senate health care bills would mandate end-of-life counseling -- hence "death panels" -- caught on. Rush Limbaugh, defending Palin's charge, said, "(D)eath panels ... it's a great way to phrase this end-of-life counseling".

Republican Sen. Chuck Grassley of Iowa piled on: "You have every right to fear. ... We should not have a government program that determines if you're going to pull the plug on grandma".

But no bill in Congress mandates end-of-life counseling, much less "death panels." And there's a deeper problem. When opponents of nationalization make such easily refuted charges, supporters of nationalization gain the upper hand. All criticism is undermined. Neutral observers can easily conclude, "If the death-panel claim is false, why believe anything else the critics say?"

That would be a disaster.

There's is reason to be concerned about end-of-life counseling, but the truth is more complicated. Here's the story.

The House bill does deal with the issue. (The Senate Finance Committee bill did until the provision was removed the other day.) Section 1233 amends the Medicare law to add "advance care planning consultation" (counseling about living wills and the like) to the list of reimbursable services. The provision defines "consultation," but nowhere does it require Medicare beneficiaries to participate or authorize death panels. (Grassley voted for a similar provision in 2003 when his Republican-controlled Congress added drug coverage to Medicare.)

But even if some conservative Republican critics are wrong about Section 1233, there is good reason to worry about Obama's nationalization scheme.

The reason can be found in Econ 101. Medical care doesn't grow on trees. It must be produced by human and physical capital, and those resources are limited. Therefore, if demand for health care services increases -- which is Obama's point in extending health insurance -- prices must go up. But somehow Obama also promises, "I won't sign a bill that doesn't reduce health care inflation".

This is magical thinking (http://tinyurl.com/5sznet). Obama, talented as he is, can't repeal the laws of supply and demand. Costs are real. If they are incurred, someone has to pay them. But as economist Thomas Sowell points out, politicians can control costs -- by refusing to pay for the services.

It's called rationing.

Advocates of nationalization hate that word because it forces them to face an ugly truth. If government pays for more people's health care and wants to control costs, it must limit what we buy.

So much for Obama's promise not to interfere with our freedom of choice.

This brings us back to end-of-life consultation. As the government's health care budget becomes strained, as it must -- and, as Obama admits, already is under Medicare -- the government will have to cut back on what it lets people have.

So it is not a leap to foresee government limiting health care, especially to people nearing the end of life. Medical "ethicists" have long lamented that too much money is spent futilely in the last several months of life. Are we supposed to believe that the social engineers haven't read their writings?

And given the premise that it's government's job to pay for our heath care, concluding that 80-year-olds should get no hip replacements makes sense. The problem is the premise: that taxpayers should pay. Once you accept that, bad things follow.

In the end, perhaps the biggest objection to nationalized health care is the "principal-agent problem." For whom does the doctor work? Ordinarily, the doctor is the agent of the patient. But when government signs the checks and orders doctors to reduce spending, it is not crazy to think that this won't influence their "advance care planning consultation".

Freedom is about self-determination. Obama's health care scheme would undermine both.

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