The U.S. Supreme Court has declared the federal health care law constitutional. That doesn’t mean it will work.
H. Woody Brock, president and founder of Strategic Economic Decisions, writes in the latest Barron’s about fundamental flaws in the legislation.
In spite of its laudable objectives, the administration’s health-care initiative most likely will make the problem even worse.
Obamacare addresses only two of the three key elements of the health-care problem: It attempts to expand access to medical treatment by increasing coverage under private insurance and Medicaid; it attempts to control the costs of medical treatment, which have been growing at very high rates.
While these two goals sound reasonable, they are in fact contradictory. Increasing insurance coverage will create a huge surge in demand for medical services as some 40 million previously uninsured Americans seek treatment, and several million people with pre-existing conditions become eligible for insurance. At the same time, implementation of the required cost-cutting measures by Obamacare will end up restricting the supply of a large number of treatments.
The combination of increased demand and restricted supply can only result in a new wave of rising prices or a rationing of available care — or both. It’s a fundamental law of economics.
Brock notes a need for a “radical increase in the overall supply of medical services,” then devotes the rest of his column to setting out ideas for addressing the problem.
It’s unfortunate that this advocate of “supply-side” health care reform makes no mention of another idea that supporters of supply-side economics are likely to understand and support: consumer-driven health care.
