Thursday, October 25, 2007

A Grand Delusion

I see in the papers that Presidential candidate Sentator Joe Biden has unveiled his health care plan. As I have mentioned before, I read these less as serious proposals than as indications of what the candidates think the voters either want to hear or don’t care about.

What I find interesting in these proposals is the easiness with which candidates project pouring major amounts of new money into the health care system. In Biden’s case it is between $80 and $100 billion per year. Those with experience in interpreting political rhetoric will immediately double or triple such numbers.

Polls consistently show that people rank the cost of health care high on the list of public issues that concern them. It is an economic truism that you can only incur a cost by spending money, and that the more you spend the greater the amount of cost. It follows that spending an additional $80 to $100 billion per year for health care will increase the cost of health care by more or less the same amount.

Candidates like Senator Biden apparently either don’t understand that or, more likely, assume that the voters don’t.

Perhaps there is also something else that people don’t understand. When they complain about the cost of health care, maybe what they have in mind is the cost of health insurance, not recognizing that the main determinant of the cost of health insurance is the cost of the health care that health insurance pays for.

All of which leads me to speculate that a major barrier to reforming our health care system is a grand delusion in which people are assuming that the cost of health care is unrelated to the amount of money spent on it.

Abandoning that delusion will be painful and something politicians will want no part of.

One wonders who will get the job of breaking the bad news.

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