A Correct Prediction

Sometimes, I make a good call. In an op-ed in 2006 on what was then the newly-enacted Massachusetts health plan, I wrote,

The problem of paying for health-care coverage, which politicians are declaring they have “solved,” is really just beginning. The only way to make zero-deductible health insurance available at low cost is with a large subsidy; how much will depend on negotiations with insurance companies. Only when the size of the necessary tax increase becomes clear will Massachusetts’s leaders learn the laws of arithmetic.

Now, we have this WSJ editorial:

Health care was 23% of the state fisc in 2000, and 25% in 2006, but it has climbed to 41% for 2013. On current trend it will roll past 50% around 2020—and that best case scenario assumes Mr. Patrick’s price controls work as planned. (They won’t.) In real terms the state’s annual health-care budget is 15% larger than it was in 2007, while transportation has plunged by 22%, public safety by 17% and education by 7%. Today Massachusetts spends less on roads, police and schools after adjusting for inflation than it did in 2007.

The editorial is about a proposal for a hefty tax increase proposed for Massachusetts.

5 thoughts on “A Correct Prediction

  1. I’ve seen claims time and time again that this sector of the economy can’t be affordable if left to the market, because people would be willing to spend unlimited amounts of money on health care.

    That turns out to be almost right: people are willing to spend unlimited amounts of *other people’s* money on health care.

  2. Good policy does not produce a flood of burdens and confusions. Good policy provides immediate benefits and clarity, along with some adjustments to doing things differently. The PPACA is not good policy. Utopia is proclaimed while all of the costs and details have been delayed into the future, leaving greater burdens and confusion in the present.

    The Medicare Tomato Market

    This is an explanation of current Medicare economics by analogy. Say that tomatoes were declared vital to life and made available free through the Medicare National Tomato Bank. This translates the story of health care to the availability and price of tomatoes.

    Healthcare is expensive and scarce because it is being distributed mostly as a free good. Whatever people pay for it, payment is mostly in advance. Then, people demand unlimited services, and have no incentive to lessen their demands for a refund. A benefit administered this way is always rationed by detailed rules. Those rules will not be better for the patient. Worse, the rules slow any changes in the way care is provided, slowing the process of finding more efficient less expensive ways of delivering the truly needed services.

  3. to Mr Garland (and others) —

    there is a problem with the tomato analogy, and the problem is Canada.

    Health care has been free at the point of delivery for 50 years up north.
    Canadians have had no skin in the game whatsoever.

    And yet prices have gone up very slowly.

    Canadian bureaucrats are tougher and meaner than American types (I actually mean that.) But there are other explanations I am sure.