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Thursday, March 18, 2010

Can Obama-care Survive?

It looks like Obama-care is coming to an end this week. On one hand, he will show his determination to his supporters, and claim he got closer than anyone else ever did. On the other hand, our society does not want centralization or monopolization of the healthcare industry, and the Democrats will suffer greatly for this effort--as they should.

If you subsidize something, it will get more expensive. This is because there is no incentive to lower the price, while there is a good incentive to increase it. Think about this: if I go to a hamburger shop and offer to pay for the cost of hamburgers, what will happen? The hamburger shop will raise its price as high as it can. Demand for those hamburgers will skyrocket. This is what has happened in healthcare, education, and many markets where government has intervened.

This is why healthcare costs are so high. However, the Obama administration's philosophy is to shift subsidies from one location to another. This will do nothing to solve the problem.

When people pay for what they buy, in a competitive market, prices will lower and access increases. Paul Ryan has suggested as much. His plan puts existing entitlements on sustainable ground, while giving people more and more options. It allows people to opt out of the welfare state disaster. He incorporates the idea of using vouchers, which gives people ownership and control of their own decisions, while providing help for the needy.

The President's response to vouchers is that they will not work because costs will go up, while the voucher will not. However, the President is so fundamentally lost when it comes to understanding what makes costs go up or down that it is not even funny. A voucher program that forces people to pay for part of the their care can only drive costs down (presuming that the voucher-holder has to pay a significant enough cost).

Is it unsympathetic to rely on the spontaneous order brought about through market forces? Not at all. This is the most proven system in human history.

There will always be rationing in any system, because of scarcity. The pricing mechanism has historically been shown to be the best way to ration, because it drives down costs and improves quality, as producer seek to provide their product to more people, and those people demand lower costs. Since we have left the market system for a hybrid market/socialized system, Paul Ryan's plan is the best possible plan that is politically feasible. The CBO has supported this assertion.

In a free market, no transaction takes place unless both parties benefit. Nothing unleashes the creative and industrial energies of people like the free-enterprise system. The government-monopoly system may make many better off, but the ultimate winner is always the monopoly itself.

We must defeat the government-monopolization attempts in Congress right now. Paul Ryan's plan provides a truly good alternative.


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