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July 6, 2009

SCHANSBERG: The promises and pitfalls of health care reform

What should we do with the incredibly important issue of health care? Will additional government involvement improve its availability, cost and quality? And which proposal is optimal? Since the Democrats control the national political process and favor increased government intervention, we’ll stick to analyzing those options.

Let’s start by noting that the proposed reforms largely assume rather than explain how they would increase efficiency. Part of this is reasonable and expected but still frightening: We don’t really know what we’ll get when we embrace grand changes in policy.

In addition, there is often a considerable gap between the theory and practice of government. Politicians often overestimate benefits and underestimate the costs of their policies.

Will special interest groups have more or less influence than under the status quo? In his movie "Sicko," Michael Moore expresses admiration for single-payer health-care systems in other countries. But it’s interesting that he is not at all optimistic about it working here, given the power of special interests in our democracy.

The current mix of government and markets in health care certainly has an amazing amount of inefficiency. But will bureaucracy and red tape be reduced or enhanced with more government?

It’s difficult to imagine much if any gain. Thus, extending health-care availability will probably involve higher costs or reduced access in other contexts (rationing).

Higher costs are possible, but congress and the president are limited by the recent, stunning increases in spending and debt by George Bush, Barack Obama and their congresses.

Considerable rationing is quite likely. It may be necessitated by cost constraints. And we’ve seen rationing with Medicare and in countries whose governments are heavily involved in health care. The first major uses of rationing would most likely be to restrict expensive “end-of-life” treatments and health care attached to unhealthy “lifestyle choices.”

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