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Friday, March 26, 2010

Alarmism or Realism?

A standard charge against opponents of the medical insurance overhaul is that the dire predictions are nothing but alarmism. The argument is something like this: “You said the same thing when Medicare passed in 1965.”

This is actually a very funny contention. One of the arguments against Medicare was that it would pave the way to greater government control of the medical system.

Does anyone now think that was a bad prediction?

Medicare has made $37 trillion in promises (over the next 75 years) for which there is no money. Even Barack Obama acknowledges that Medicare is responsible for a major part of the federal deficit, which is creating the huge national debt. To deal with the out-of-control budget, coverage for some services is being denied. The bureaucratic burden is prompting doctors to stop accepting new Medicare patients.

By paying for the medical care for retirees, the government program has stimulated the demand for products and services, pushing up prices for everyone. More expensive medical care means more expensive medical insurance. As the price of insurance goes up, many people are priced out of that market, adding to the number uninsured. (This is not the only factor in price inflation, but it is a big one.)

Higher prices and the growing number of uninsured — in large part a product of Medicare — fueled the effort to increase government power over the medical system.

So: Q.E.D. The predictions about Medicare were valid. It has led to deeper government control of medicine, which is to say, us.

Are we alarmists or realists?

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.