Rationing and Universal Healthcare

If you read the title above and instantly thought to yourself, "There's no rationing in the healthcare bill right now. All you have to do is read it! Ha!", here is a rather important fact to keep in mind: rationing can and likely will take place regardless of whether or not it's mentioned in a bill. A government-run industry cannot function without either incurring rationing or extreme prices.

Confused? Flash back to Econ 101: supply and demand dictate price. When demand outweighs supply, prices rise. When supply outweighs demand, prices fall. Assuming a fixed demand, supply is inversely proportional to price (s=d/p). Now, assuming the number of sick people remains constant, apply these principles to healthcare. When there are too few doctors to provide care or too few pharmaceutical companies to provide medicine, prices rise. Because profits now rise, existing doctors and pharmas are able to provide better care and people may see these profits and enter the medical industry. If this creates the opposite problem of too many doctors and pharmas, increased competition results, prices are driven down, and quality is driven up.

Now flash forward to a government-run health system. Because prices are no longer a reliable indicator of supply and demand (they never are when funds are taken from and services are supplied to a collective; see the article "Healthcare: Understanding the Status Quo" for more), the correct supply to meet the demand is unknown. If supply is too high, exorbitant costs result and there is no price mechanism to show any way of lowering costs. Cuts will be taken across the board, and that means that some people will be unable to receive care. If supply is too low, well--you're already there.

"But we'll be able to calculate costs without prices. We'll just find that happy spot where supply is perfect to meet demand!" You mean just like the Post Office? Just like the public education system? Just like the government-run healthcare systems we already have, Medicare, Medicaid, and the VA? All of these entities give substandard service and are drowning in red ink. A national health care system will be no different.