Move Would Mean Long Waits for Care

February 25, 2010 10:40AM

TCPR’s Justin Owen argues against the president’s new price control scheme for healthcare in today’s Tennessean. by Justin Owen President Obama unveiled his “new and improved” healthcare plan earlier this week and will host a healthcare summit on the plan later today. For the most part, the plan is more of the same, merely striking a compromise between the House and Senate versions that have already squeaked through Congress. There is one new element in the proposal that will be devastating if adopted: premium caps, otherwise known as government price controls. We have seen this before. It was the spark that sent President Clinton’s healthcare reform up in flames. In essence, the president wants to give the government the authority to determine how much insurance companies can charge for premiums. While they may seem attractive to consumers at first blush, price controls would harm the quality of American healthcare. Price controls run afoul of basic economic principles. In a true free market, price is determined by how much the consumer is willing to pay—and the seller is willing to take—for a given product. When the government arbitrarily sets prices, chaos ensues. To see how price controls will work with health insurance prices, take a ride back to the 1970s, when the government restricted gasoline prices. Demand increased drastically but supply did not. As people tried to get more gas than was available, long lines formed at gas stations across the country. Luckily, if people failed to obtain gas, it was only their car that died. If the president hopes to obtain long lines that will put the 1970s energy crisis and even the DMV to shame, he is sure to get it. Both Britain and Canada impose caps on healthcare prices in a similar fashion to what the president is proposing. At this very moment, three quarters of a million Britons are waiting to be admitted to hospitals. Even worse, nearly 800,000 Canadians await treatment for their ailments. Of course, unlike the average person, the privileged few can avoid these lines. Earlier this month, a Canadian premier jettisoned down to Miami for heart surgery. His reason: “I would’ve been criticized if I had stayed in Canada and had been perceived as jumping a line or a wait list.” Because of his position and wealth, he didn’t have to bother with any such line. The thousands of his fellow Canadians that fail to obtain treatment in time will be less fortunate. If any part of the president’s new healthcare reform package kicks the bucket during the upcoming summit, it should be the price control proposal. Rather than seek government control over insurance prices, both political parties should look for ways to reduce costs through free market means. Allow people to buy insurance across state lines. Eliminate mandates and other bureaucratic regulations that drive up health insurance costs. Give individuals the same tax incentives to purchase health insurance as employers so they have more control over their healthcare decisions. All of these measures would drive down costs, expanding access to more Americans. This is true healthcare reform, and you don’t even have to wait in line for it. Justin Owen is the director of policy and general counsel at the Tennessee Center for Policy Research, an independent, nonprofit and nonpartisan public policy organization committed to achieving a freer, more prosperous Tennessee through the ideas of liberty.