Thursday, August 20, 2009

Can you trust the Feds with your health?

The federal government has announced that the Cash for Clunkers program is going to end on Monday. Is that a surprise? When the program first started in July with $1 billion, it was supposed to run until November 1st. Of course whenever you give away free money people will want it. So the money ran out in about one week. Obama and Congress, in their generous Santa in summer mode, gave an additional $2 billion. This was supposed to last until Labor Day. Well that prediction was wrong too.

So many things have gone wrong with this. First, the feds don't know how to predict demand for a product (money) that is being given away for free. Second, they don't know how to implement this program. Dealers have stopped accepting trade ins because the government is not able to process all these applications quickly enough to reimburse the dealers. Thus the dealers are out thousands of dollars until the feds get their act together. Third they ran out of cars to sell. With free money, so many people wanted cars that the infrastructure was not able to handle the crush of demand. Now there is very little choice of products for these customers.

Now take those three conditions and you can apply them almost directly to the planned government takeover of health care in this country. When the Medicare prescription drug benefit was passed in 2003, the ten year cost was predicted, and propagated by the politicians, to be $400 billion. Only ONE year later, the cost was raised to $500 billion. And you think you can trust Congress to make the cost of health care revenue-neutral? Inevitably there will be higher (much higher) taxes, lower reimbursements, and restrictions on care to keep health care costs from devouring our economy.

The government can barely run Medicare now without severe delays in reimbursement. Doctor's operating margins are already thin. The physician usually has to pay himself last behind all his staff, rent, taxes, utilities, vendors, etc. If we suddenly have a mob of new patients with government insurance and reimbursement slows, who do you think will eat the cost? This would be the end of the romanticized small practice primary care doctors that are so beloved by the public.

Finally, demand for services would be enormous. You can already read about the long waits and denial of services common in countries with socialized medicine like Canada and Europe. Remember what the Canadian Supreme Court ruled--access to a waiting line is not access to health care.

So while universal health coverage for Americans is commendable, a government implementation would be problematic. This Cash for Clunkers program clearly demonstrates the pitfalls that would await us all if the government takes over our health care.

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