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Milton Friedman Quote

Economists may not know much. But we know one thing very well: how to produce surpluses and shortages. Do you want a surplus? Have the government legislate a minimum price that is above the price that would otherwise prevail. That is what we have done at one time or another to produce surpluses of wheat, of sugar, of butter, of many other commodities. Do you want a shortage? Have the government legislate a maximum price that is below the price that would otherwise prevail. That is what New York City and, more recently, other cities have done for rental dwellings, and that is why they all suffer or will soon suffer from housing shortages. That is why there were so many shortages during World War II. That is why there is an energy crisis and a gasoline shortage (the energy crisis of the 1970s).

ideas > Health Care in America

Health Care in America
The Problem with Health Care

As I see there are three main problems with health care in America. Before discussing these three main problems, I would like to talk about economics. Health care, just like any other product or service, is subject to the economic law of supply and demand. The supply of health care is determined by the number of doctors, nurses, and other health care professionals produced by the current health care educational system. The number of these professionals is restricted by the number of approved medical schools. It is also restricted by the government via licensing and regulations. Once we accept the reason health care costs have risen because the demand for health care has increased faster than the supply or the supply of health care hasnít kept up with the demand, we can begin to discuss the three main problems with health care.

The first problem is that the federal government gives millions of Americans free health care. What naturally happens if you are given something for free? You use it and use it and use it. If you pay for something, you donít use it as much. Also, because these people receive their health care for free, they have very little economic incentive to make wise health decisions. If you know that you can eat whatever you want, be as lazy as you want, and the federal government will continue to provide you health care, then what you think will happen. The federal government has inadvertently created a large increase in demand for health care.

The second problem is that the medical schools do not produce enough doctors or nurses. The state governments then restrict the number of people that can practice medicine via licensing programs and regulations. A foreign trained doctor cannot practice medicine in America until he has obtained a license to practice medicine which requires a long training period of residency, which the foreign doctor might have already done. There are many foreign trained doctors who could perform basic medical functions in America without having to go through residency all over again. The medical profession is using the government to restrict the number of doctors and nurses who can practice in America for one simple reason, MONEY. The smaller the supply of doctors and nurses, the larger their salaries will be.

The third problem is that Americans are living unhealthy lives. Check out the statistics on the number of obese people in America. It is staggering. Why do you think that Americans are so unhealthy? It is because the economic incentive to be unhealthy is so great. The federal government provides insurance to millions of Americans regardless of their commitment to lead healthy lives. Insurance companies, afraid of alienating customers and becoming easy political targets, refuse to charge unhealthy people more for their policies. The healthy people end up subsidizing unhealthy people.

The problem with health care boils down to the federal government providing health insurance and no cost to millions of Americans, the medical profession not providing enough medical professionals for the increased demand by using the government to restrict the supply, and the American people not living healthy lives. What is the solution?

The system needs to be changed so that people are not rewarded for bad health choices and the government needs to quit protecting the medical profession from competition. Anyone who has health insurance needs to pay something for it and those who do not take care of themselves need to pay more. It is unfair to healthy Americans to require them to subsidize unhealthy Americans.

When I see Hillary Clintonís solution for health care, I cringe. Her solution is to put more people under federal health care at no cost. What will that do? It will only increase the demand for health care. It will provide no incentive to lead healthy lives, because the person does not have to pay for their own poor choice. This solution will never work and will only serve to hurt all Americans. I wish that America would wake up and think about what is happening here. The government can make all the promises it wants, but it can never escape the economic incentives that are created by its programs and it can never escape the basic laws of supply and demand. If you want good health care, then start living healthy. It is the cheapest solution available. It costs no tax dollars. It only costs some sweat and will power.
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