“When consumers feel the true cost of a product they look closely at the relative costs and benefits associated with their purchase and become much more discerning.”
Senate Republicans managed to get the 50 votes needed to open debate on their health care bill. This continues to be an issue of significant drama as the pressure is on the Senate and the Republicans that control Congress and the White House to pass meaningful reforms. Senator McCain even came back from his brain cancer treatment to cast the critical vote needed to open the floor to debate.
But the health care bill being debated is a rather measly thing that gradually rolls back the expansion of Medicaid, removes the mandate, and somewhat removes price controls on the price of insurance between older and younger consumers. Meaningful reform would lower the price of insurance to the point that nobody needs a mandate, subsidies, or price controls in order to buy it.
There are numerous items that people don’t need, or have very little government assistance to buy. Televisions, computers, cell phones, and even cars are all available to the population at large. The Heritage Foundation did a study and found that many of those classified as “poor” still manage to buy luxury items such as gaming systems and cable tv.
In contrast, areas where the government intervenes through subsidies or direct payments, such as school tuition, housing, and health care, have seen skyrocketing prices. There are many factors that have caused this, but the largest one is due to the government disrupting market forces that increase quality while decreasing the price. For example, the first cell phones were gigantic bricks placed in limousines because only the fabulously wealthy could afford them.
Thirty years later, phones are a thousand times more powerful with games, data, and apps that 1980’s billionaires never could have dreamed of, yet the average person has a smart phone in their pocket. And they largely didn’t need government subsidies or mandates to buy them. It was just a quality product whose value often matched or exceeded its price because the companies work within the free market.
When consumers feel the true cost of a product they look closely at the relative costs and benefits associated with their purchase and become much more discerning. For cable providers, they compare the overall price with the number of channels provided by Cable, Dish, or Direct TV, along with the length of contract, bonuses included free premium channels or Netflix, number of DVRs, and then make a savvy decision that maximizes the value of their purchase. In order to compete, the channel providers fall over themselves trying to provide the best value at the lowest price.
Consumers are that picky over their tv and phones, but in matters of health care they simply show up at a hospital and present the bill to their insurance companies or the government. Because they don’t feel the cost of their purchases, the market factors are distorted to the point that providers can charge 600 dollars for an epidural injector, knowing that insurance providers and the government will pay most of it.
The life of every American is touched by health insurance and the quality of health care. But the debate has been twisted by the monstrosity of ObamaCare, and over 50 years of government meddling in the health care industry. The free market works so well that even the poor manage to buy many luxury items without subsidies or mandates. It should be allowed to work in the health care market as well.
If Republicans focused on solutions to the fundamental problems involved, then customers will find the best deals, and hospitals will increase the quality of services while lowering prices to provide them. In short, the people wouldn’t need subsidies but would naturally see enough value in the product and the lower price to buy it on their own.
