Monday, April 10, 2006

The Problem With Massachusetts

The biggest disappointment with Massachusetts health care plan is that it is likely to raise health care costs and give statists more ammunition with their accusation that the free-market doesn’t work; furthering their fight for single-payer health care.

The problem is that it isn’t a free-market system – consumers are insolated from the costs of health care and only pay indirectly via co-pays and premiums. The result will be even more over consumption of healthcare and slowly increasing costs. It wouldn’t surprise me if lower quality of care is experienced as well.

The incentive problem, of course, is little different from the current system of employer-paid healthcare, but now we’ve added rent seekers to the mix as providers soak up government provided dollars to cover those at the bottom. It will take years for the system to degenerate into a complete cluster, but by that time more states will have joined the bandwagon bringing us to a point of no return.

It would be encouraging to see a state trying the opposite approach of dealing with the incentives that cause high costs, but the federal government has caused most of that problem so I’m not optimistic that any will have the courage to try.

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