Government-Imposed Health Care Demand Spells “Ration”

By William B. Conerly, Ph.D.

What’s the problem with ObamaCare? Recent technical problems call that question to mind, but the answer is not what you may be thinking.

ObamaCare’s website is getting help in what administration officials called a “tech surge.” The Department of Health and Human Services announced that it is bringing in “the best and brightest from both inside and outside government to scrub in with the team and help improve HealthCare.gov.” The youngsters in the administration probably don’t know that “the best and the brightest” is the label given to those who ran the Vietnam War. They may not even know how that war turned out. (I feel old just mentioning such a long past event.)

The tech surge flies in the face of one of the classic books on computer programming, The Mythical-Man Month by Fred Brooks. In what is now known as Brooks’ Law, the author wrote: “Adding manpower to a late software project makes it later.” Like all simplifications, this one may be overdone, but it has two key truths behind it. First, it takes time for the new people to come up to speed on the project, during which time the experienced programmers are helping the newbies instead of writing code. Second, everyone has to spend more time on communications because the team is so much larger.

Critics of ObamaCare are chortling over the fiasco, but everyone should remember that big technical projects frequently run amok. That includes public sector projects as well as private sector projects. It’s unfortunate but true. At some point the bugs will be crushed. The project is technically feasible, and even ham-fisted programmers will eventually get the code right. This is not the underlying problem, though it’s certainly a stumbling block.

ObamaCare suffers from several defects, but the one that seems most likely to bite us is the absence of supply side change. The focus of the program is demand: getting more people enrolled so that they can get care. The new law will certainly enroll more people in the program, but it does not provide more doctors or nurses or medical technicians. Stimulating demand makes sense when there are unemployed resources, but how many health care professionals are sitting around idly waiting for patients? Certainly there are efficiencies possible. We may be able to reduce wasteful demand, such as surgery that could have been prevented by earlier care in a clinic. It’s unlikely, though, that we’ll get efficiency improvements fast enough to offset the increase in demand.

When demand goes up without a supply response, price normally rises. However, fee restrictions in the Affordable Care Act are likely to prevent that. With demand greater than supply, care will be rationed. It may not be officially rationed, but appointments will become harder to get and waiting times will lengthen. Some people will get better on their own without treatment. A few will die. This is how demand will be limited to the available supply.

ObamaCare tries to impose top-down direction on a complex system. The economy normally provides bottom-up direction, through the individual choices of consumers and suppliers. We have learned many times over which approach works better. We’ll learn the lesson once more when the technical glitches are fixed.

William B. Conerly, Ph.D. is the principal of Conerly Consulting, an economic and financial consulting firm, and chairman of the board of Cascade Policy Institute. A version of this article originally appeared on Forbes.com.

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3 Responses to Government-Imposed Health Care Demand Spells “Ration”

  1. Bob Clark says:

    Oregon state government is banking a lot on the federal subsidy gravy train to keep supplying billions for Oregon’s expanding welfare, healthcare state. This gravy train is liked to be scaled back or go flat at some point; and at that point, the Oregon Health Plan will either revert back to its previous state, which was largely a lottery system only a portion of those in public healthcare need were admitted; or, there will be a push to increase Oregon taxes sharply to prop up a bloated state healthcare machine.

    I would add to this article that ObamaCare misses a truly important supply side opportunity which would be to allow individual Americans, or groups of Americans, buy health care insurance across state lines and without the ObamaCare mandates.

  2. Neil Huff says:

    The eventual cost of the Affordable Care Program will end up being a ‘pass through’
    expense that every business in the US affected by higher insurance premiums will simply pass these along to the consumer public by raising prices. As insurance companies must accept all applicants regardless of age or health and preexisting conditions the higher heath care costs for these people will be apportioned out among all policy holders and everyone’s premium will shoot up. How many of these policy holders will no longer be able to pay those rising premiums is anyone’s guess. But I suspect the final number of people left without health care will be about the same as it is now.

    The sign-up “glitches” are small potatoes next to the economic mess that is going to result from enforcement of its provision.

  3. Neil Huff says:

    PS

    Medical care has always been “rationed” in the US system of ‘cure for fee’. Without the “fee” or ability to pay for cure many people have been denied decent health care for most of our history. The poor, if lucky, may have received some form of palliative care through a local charity. But for many who were too poor to pay for cure or insurance, or had the misfortune of living in an under served area they simply died.
    Today the nation doesn’t have enough doctors to adequately serve the population. Every corporate practice has thousands of open cases. The average time my late wife spent with her primary oncologist was (by my watch) 5 minutes a visit. He never remembered her name and took all of 1 minute to scan her chart. He was both uncaring, cold and utterly contemptible. The others were no different.

    Most doctors are not healers today. They are simply people who decided that medicine was the best and surest way of becoming millionaires. The AMA works tirelessly to keep the ratio of doctors to patients as high and profitable as possible. The medical industry sees people merely as the human material that must be processed through the system as quickly and easily as possible in order to obtain the product. That ‘product’ is not wellness for the patients, but money for the business.

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