Indispensable Economics The Wise and Powerful Obama Knows the Cost of Government-Run Medical Care!

Jul 3, 2009

The Congressional Budget Office has given us an estimate of how much it will cost to insure one-third of all the uninsured medical patients in the United States by something like 2012, and it will cost a certain bazillions of dollars, which Obama is now saying will not expand the deficit, while also having promised in his campaign that he will not raise taxes of anyone who makes below $250,000. There is nothing in the media but talk about how he can possibly do this without taxing, and the fact that this ginormous amount of money will cover only one-third of those allegedly needing coverage.

 

Believe it or not, all this is beside the point! Why? Cost to the good or service provider and price to the consumer are decided at the point of exchange. Let’s look at a simple example. I like bananas. If I go to the supermarket and see bananas which are so green they look like St. Patrick’s Day bananas, I won’t buy them, because they might rot before they ripen, and in the summer, they may get fruit flies. The price does not even get consideration. But if they are getting yellow, I will look at the price. If they are already ripened, they had better be selling cheap, because I know that the store cannot keep them much longer, because they will begin to rot and the stock must be moved. If they are too ripe, I will probably avoid buying more than one or two, because I will not be able to eat them in time, again, regardless of the price.

 

Now look at medical procedures. Most medical insurance plans have a co-pay. This means that when you go for treatment, you must foot part of the cost of that procedure. Why? This prevents people from going to the doctor for minor problems that one could fix with things one finds in one’s medicine cabinet. Minor scrapes, bruises from sliding in at third, typical common colds, etc., no normal person wants to shell out money for a physician to tell them to go home and put ice on it, or stay in bed and drink plenty of liquids. The higher the co-pay, the less frequent the visits, and the more serious the complaints for patients to be willing to spend on doctor’s office visits. Just as in the bananas example, even though the provider seems to “set” the price, the consumer has the choice of paying it or not, by not buying the bananas or not going to the doctor’s. Of course, necessity changes things. If I promised a relative I would make banana bread, the fact that I might not like the bananas for sale might not make a difference. I will buy them regardless of price or condition, up to a point. It is the same with a doctor’s visit. If I get something with weird symptoms, or excessive pain, or suffer a more than ordinary trauma, I will seek help, regardless of cost, depending of the desperateness of the situation.

 

This brings us to the wise and powerful Obama and his cohorts in the Congress and the CBO. How is it possible for someone, anyone, to predict the future cost/price of medical care? One can’t. Since cost/price is decided at the point of exchange, the wise and powerful Obama would have to be present at every transaction, and update the cost figures at every moment. He would also have to predict events, such as car accidents, diseases, etc., which no one can predict, or we would avoid them. The only thing we have is current trends, which are only past history and may not continue at all. Remember that British Prime Minister Neville Chamberlain, in 1938, after meeting with Adolf Hitler and signing an agreement with him, never predicted the things that Hitler would do just a year after that document was signed. How can someone predict what people will do about conditions this observer knows nothing about in people he has never met? Only the free market can do that, because the market adjusts to these transactions on a minute-by-minute basis, and there are billions of transactions every minute.

 

This explains why, in all countries having socialist medical programs, the costs are going off the charts, the number of doctors are declining and health care is now being rationed. This is what is coming to the United States.