By ALLAN DOBZYNIAK, MD
Economics is apolitical. Economists can and often do have biases. But there are basic economic principles that are accepted. There are empiric data that provide the proof for their reliability. Trying to plough through healthcare and arrive at logical economic conclusions for a non-economist is not that easy. But hang in there if you can, and follow along as an attempt is made to do just that.
Healthcare is, like most everything, a scarce resource. Besides that, it is so complex that no single person or any limited group of persons is capable of completely planning and supervising the goods and services included in healthcare. It requires elaborate coordination of multitudes of producers of both goods and services. An unchallengeable statement by Armand Alchien is as follows. “The modes of coordination in a basic private property, individualistic society have dominated all other forms in productivity, growth and freedom.”
A free good or service exists when there is no scarcity; it is hard to think of any. Healthcare is certainly not one of them. Even if a zero price is charged, healthcare cannot be free. Consuming healthcare for “free”, really at a zero price, does not convert this limited, scarce, service into a “free” service. But paradoxically makes its scarcity not only seem but actually become greater. The principle of demand is explanatory. This principle is considered by many economists to be the most reliable and most important principle in economics. The first law of demand is: Less is desired at a higher price, and the amount demanded is greater at a lower price.
If you have managed to stay with me so far, please try to tolerate this stuff a little longer.
If healthcare is perceived at a zero cost (marketed politically as “free,” of course preposterous, but successfully sold as this erroneous perception), demand will increase. The lower the price, the greater is the demand. Of course, only is it not “free,” but, with increasing demand, overall cost will increase even if a unit cost such as provider compensation remains the same. Taxes to cover the cost will be levied initially, and then will increase as demand continues to accelerate. The increasing taxation might or might not be accompanied by a decrease in provider payments. My best guess would be a certain yes. To deny this by alluding to some increase in efficiency is nonsense. Will increasing taxes dampen demand? No is likely the correct answer. If one is paying higher taxes by government mandate, a person will not decrease consumption since the freely made choice between healthcare and other products or services has been taken away. There does become a point at which higher taxes will not be tolerated and no longer an option. The economic destruction inflicted by such high taxes also would actually decrease total tax revenue.
Why not just decrease provider compensation? Because a point would be reached when decreasing revenue to providers would no longer cover their costs. Add to this more regulations and mandates such as the horrific EMR costs. Three consequences are for sure and probably four. Production will fall and providers will face insolvency. Business investment will diminish accompanied by decreased innovation and its dependent, productivity. And the likelihood of fewer providers is predictable. Understanding what has been occurring, the desirability of healthcare as a profession would lessen. Picking medicine as a profession is a choice amongst many competing fields.
So we have arrived at the point where all socialized systems fail including socialized medicine, single payer or Medicare for all, whatever seems the most deceptive term of the day: progressively higher taxes and decreased productivity producing increased scarcity (fewer providers relative to demand and stifled innovation). There is a singular choice remaining for the newly minted wizards of deception. Care must be further rationed. The term further is used since with demand for healthcare already far exceeding supply, rationing by delayed access has already begun.
A PhD in economics is not necessary to arrive at these conclusions. A bit of historical analysis, a little unbiased, fact-based unemotional observation (no denial of reality allowed) and a common sense understanding of a few basic economic principles suffices. And no, it is not OK to virtue signal about the utopia or utopia-lite that socialism or socialism-lite have always been alleged to create without defining and explaining your vision of what can cure the constant Achilles’s heel of socialism. How are you going to pay for it?
Just a few additional reminders, “negative rights” limit what government can do. “This defines the U.S. Constitution. “Positive rights” would require government actions to benefit some people at the expense of other people – coercion. Not teaching healthcare economics as integral to a medical education while preaching the virtues of altruism seems almost immoral at present.