How Will Government Deliver Health Care Savings? Paul Krugman says…..

Posted by Jason | Posted in Health Care | Posted on 02-04-2010


How do we get cost savings in the free market? Do businesses say they are going to deny people products and services that consumers demand in order to save money? No. People save money by entrepreneurs competing to deliver better and cheaper products and services. If an entrepreneur sees that a company is charging too much, he or she will say “I can deliver that same service for less money and still make a profit.”, and they jump into the business (well unless the government sets up a road block). In doing so, they push down the cost of that product or service.

Also, if a product or service has low profit margins but is still extremely expensive, an entrepreneur will say, “Couldn’t this substitute product deliver the same effect at a lower cost?”, and they’d come up with a substitute. This happens all the time. Look a copper plumbing. All the competition in the world isn’t going to lower the price enough, so entrepreneurs developed substitutes for plumbing. Now they run piping with PEX, which is about 1/1oth the cost of copper.

So, if we want to lower health care costs, we should remove the government’s barriers and allow the free market to bring prices down. Instead, what are we doing? What is ObamaCare going to do to lower costs? Well, ask Paul Krugman, the lefts’ superhero economist.

How’s a real economist put it? Here’s Robert Wenzel from EconomicPolicyJournal.

BTW, I do agree with him that many are, in one area, overestimating the cost of ObamaCare. Between death panels and the general decline in life expectancy that is going to occur, the actuarial costs based on life expectancy will be too high. That said, the structure overall is designed to explode overall healthcare costs. When you have demanders of services who don’t have to pay the direct cost, they will demand and demand.


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I saw that a day or two ago and I couldn’t believe it. When Sarah Palin mentioned death panels, the left exploded in fury. Krugman says death panels, there’s nary a peep. Even if the group of people aren’t called The Death Panel, that’s what they’ll be doing when they decide what treatments are worth spending money on.

The effect on innovation in the medical field will be staggering. What entrepreneur will want to invest in a new cancer treatment knowing the government might deny him willing customers? This will also have a profound effect on the healthcare systems of other countries because they get the bulk of their medical technology from us.

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