Tuesday, February 02, 2010

Throwing A Cost Curve

Thomas Sowell on the reality of costs:

Whatever position people take on health care reform, there seems to be a bipartisan consensus--usually a sign of mushy thinking--that it is a good idea for the government to force insurance companies to insure people whom politicians want them to insure, and to insure them for things that politicians think should be insured.

Contrary to what politicians expect us to do, let's stop and think.

Why aren't insurance companies already insuring the people and the conditions that they are now going to be forced to cover? Because that means additional costs--and because the insurance companies don't think their customers are willing to pay those particular costs for those particular coverages.

It costs politicians nothing to mandate more insurance coverage for more people. But that doesn't mean that the costs vanish into thin air. It simply means that both buyers and sellers of insurance are forced to pay costs that neither of them wants to pay. But, because soaring political rhetoric leaves out such grubby things as costs, it sounds like a great deal.

When it comes to health care--and almost anything else--the reality is that the government really isn't capable of (or really interested in) reducing costs. What it can do is take actions that obscure the costs and pass them on to others. As Sowell notes, the costs don't simply disappear. Just because the person with a pre-existing condition who now receives mandated coverage isn't paying them, doesn't mean that someone else isn't.


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