Federal ‘help’ makes medical care more expensive and less available

In the eyes of most people, the intent of legislation matters more than the outcome. That’s the only way we can possibly explain why most people continue to support federal efforts to make health care more affordable and more available.

It wasn’t until the 1960s that the federal government got seriously involved with interfering with the medical industry. You can argue that it started before then, because it was certainly a gradual thing. But it was in the Great Society programs of the ’60s that the government started pumping massive amounts of money into health care. The purpose was to make quality health care available to everyone.

That’s not what happened, of course. In 1940, you could spend a day in the hospital in Greenville, Ohio, for $4. Adjusted for inflation, that would be about $31 today. Do you know any hospital where you can get a day in a room for $31 now? I don’t. Why is medical care so much more expensive today? And why do people trust the people who made it more expensive to fix the problem?

There’s no question that advanced technology is responsible for some of the higher costs of today — because much of the care we have today wasn’t available at any price in 1940. But a lot of it has been driven by government distorting prices by messing with incentives for doctors, insurance companies and hospitals, as well as by massive regulations and tort laws that make it profitable to sue doctors and hospitals when pretty much anything doesn’t go as hoped for.

(If you really want to see the background for what would eventually become skyrocketing health care costs and lack of consumer control over the process, you have to go back to at least the ’40s, when the tax system gave companies an incentive to start paying for insurance instead of letting employees buy their own. This made insurance companies and health care companies cater to employers’ needs rather than consumer needs. But that’s another story.)

So if we judge 50 years (or more) of federal involvement in the health care industry by its results, what has it achieved? Much higher prices and less availability of care. And now we get word that many doctors are slowly going broke. Over-regulation and tort laws have made the business so expensive that some doctors are starting to get out of the field, especially in rural areas where they’re needed most. They just can’t afford to stay in business.

The doctor whose picture is at the top of this page is Robert Thomas. In the early and middle parts of the 20th century, he was a well-known physician among the poor people of east Tennessee. He’s the doctor who delivered Dolly Parton, and she wrote a song about him. Why could people get home medical care in those days, but house calls had disappeared by the late ’60s?

It was Frederic Bastiat who wrote in 1850 about “That Which is Seen, and That Which is Not Seen.” He’s the one who had the insight to realize that much of what happens in an economy is unseen. If a government takes an action, it will have certain consequences. You can see the consequences, even if you can’t necessarily notice what was done to cause them.

What we see today in health care are consequences of government actions for 50 to 70 years. It’s an accumulation of good intentions. But are we better off? Do we have more affordable access to quality health care? You can successfully argue that the technology that has become such a huge part of the industry during that time has made us better off. You can’t argue that the regulations, price controls and rationing of services — de facto if not de jure — have made us better off.

Good intentions aren’t enough to justify what governments have done. We have to judge by the consequences. It’s not doctors, hospitals and health care companies that have created this situation. It’s the federal government.

People today want to blame the free market for the expensive health care mess we face. The truth is that health care hasn’t been a free market in many, many decades. The things that government has done so far to try to “help” have made things far worse. The things going into effect in the next few years (“ObamaCare”) will make them even worse than that. And when that happens, ignorant people are going to look around and blame “greedy businesspeople” instead of the politicians who created the mess and continue to make it worse.