Merry Christmas...from Congress to your Home

Right now in Congress there a lot of senators and staff members running around in the capitol's halls. Usually the busy-ness of the holidays results from last minute gift shopping. Well, I hate to break it to you, but this year Congress is trying to get you a healthcare bill by Christmas Day. Yes, that's right. If all goes as Senate Majority Leader Harry Reid wishes, the Senate will be voting on the Healthcare bill at 7pm on Christmas Eve. I'm afraid however that this bill definitely won't be one of your favorite gifts this year. Let's see if I can explain.

A lot of people recognize that Healthcare in our nation needs some kind of face lift. In the United States, 15% of the population is uninsured and more money per person is spent on healthcare costs in the United States than any other country. In addition, United States healthcare spending is currently at 16% of our Gross Domestic Product (GDP), second behind only East Timor (anyone know where that is?). The graph below compares our spending with other post-industrial developed countries. Basically, we've got issues.



So how do we control costs while covering more Americans? Much of the debate has resolved around the public option. What is a public option? A government-run healthcare option that competes with private plans. Do we really want the government running our healthcare? They already waste our taxpayer dollars, why give them more? Considering its record with Medicaid and Medicare, I don't think so. Greg Mankiw, a prominent economist and the author of my macro-economics textbook, explains the following about the public option:

"Consumer choice and honest competition are indeed the foundation of a successful market system, but they are usually achieved without a public provider. We don’t need government-run grocery stores or government-run gas stations to ensure that Americans can buy food and fuel at reasonable prices.

Similarly, a public health insurance plan would enjoy the presumption of a government backstop. Such explicit or implicit subsidies would prevent a public plan from providing honest competition for private suppliers of health insurance. Instead, the public plan would likely undercut private firms and get an undue share of the market."

In short, taxpayer supported government-run healthcare would eventually lead to a single-payer system which means less choices and likely more expensive and higher overall spending. But I think my 13-year-old brother-in-law said it best:

Bob (name changed): Do I have to sweep the floor after you cut my hair? Bob's mother: Yes, it's your hair. Bob: Sounds like Obama's healthcare plan. We don't want it but have to pay it for it anyway.

So how do you keep costs down while covering more people? Though I am no healthcare erudite, it seems to me that we want competition among private insurers while providing light regulation to maintain a safety-net for those needing help and preventing excessive pharmaceutical gorging.

Let's leave healthcare to the people by giving them the freedom to choose and to reap the consequences of their choices. Let's keep this country the land of the free...