Joshua Muravchik: Neocon Corner

I don’t have a home-entertainment system. I buy my clothes off the rack at Macy’s. I drive an ordinary sedan. My dinner table is graced with wine costing less than $10. We shop sales.

But my wife and I splurge on health care (as we did on our children’s educations). 

Are the values reflected in these choices unusual? I doubt it. But this is the nub of the health care issue at the epicenter of American politics the past year.

We have had a confusing and dishonest debate. Senator Kennedy made this a crusade. Presumably, the reason for crusading was compassion for the uninsured, an estimated 50 million Americans who are not without health care, but who get less of it and of a lower quality. Fair enough. Had Obama had the political courage to ask the rest of us to kick in an extra hundred bucks, or whatever, in taxes so that these folks can get the same care most of us get, I’d have been ready to ante up.

But he didn’t think he could sell that, so he said the urgency of health reform was to save all of us money and reduce the deficit. This is what motivated Teddy’s last crusade: Reducing the deficit? Balancing the budget? Give me a break.

We were told that the reason for Obamacare was that health costs were eating up 17 percent of GDP and rising faster than inflation. Yes, and so are college costs. And for the same reason (i.e. these things are more precious to us), buyers will stint on them less than other things, tilting the market to the sellers’ advantage.

This is the basic engine of rising health costs. It is compounded not, pace Obama, by greedy insurance companies, (they are greedy, of course, but not more so than other companies), but by three factors sacrosanct to Democrats. First, malpractice suits, which add to the cost of practicing medicine and encourage excess treatment. Second, untaxed employer-provided health insurance that further diminishes cost-conscious shopping by health consumers. Third, Medicare and Medicaid, which are worthy programs that I support—but if the government is buying things for people they couldn’t afford themselves, the dynamic of supply-and-demand will drive up the price. Additional government subsidies, as Obama proposes, will increase it further.

Obama’s plan to reduce costs is a Rube Goldberg machine requiring a 2,500-page bill. But the issue can be simplified. Where will the savings come from, especially if 50 million people will now get more and better services? Will the providers get paid less? Then we will have fewer and less talented providers. Can the insurance and drug companies be squeezed? Perhaps some, but they are not earning more than other enterprises. If profit margins are reduced too much, capital will shift to other sectors. In short, the only way to hold down medical costs is by providing less or lower quality medicine.

Is that a goal worthy of a crusade? Why exactly is it bad that health costs are 17 percent of GDP? What percent should they be? So what if they rose to 20 percent? Here’s a question for my fellow aging boomers. Say medical breakthroughs make it possible for us all to live to 100 relatively spry. But the costs are high and will drive medicine to 25 percent of GDP. Would that be a tragedy?