It is fascinating to see a second Democratic president immolating himself on the political pyre of nationalized health care. One would have assumed that with the original architect of Hillarycare in his Cabinet, Obama would have known better than to spend his political currency with the public in an area that has been such a major minefield for politicians at both the national and state levels.
If Obama is fortunate, his health care proposals will go down to defeat, he will regroup and turn his attention to more amenable matters. If he is unfortunate, he will manage to convince a sufficient number of skeptical Democratic senators and congressmen to vote for a plan that will not only ensure that he does not serve a second term, but may even preclude his winning the Democratic nomination in 2012. With approval ratings that are already plunging – the latest Rasmussen Reports show that his strong disapproval rating of 39 percent now exceeds his strong approval rating by nine percentage points – subjecting the entire United States to a health care regime that has hitherto been limited to the unhappy residents of Massachusetts.
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On July 25, the director of the Congressional Budget Office sent a letter to the Democratic majority leader of the House of Representatives which stated: "The available evidence implies that a substantial share of spending on health care contributes little, if anything, to the overall health of the nation. Therefore, experts generally agree that changes in government policy have the potential to significantly reduce health care spending – for the nation as a whole and for the federal government in particular – without harming people's health. However, achieving large reductions in projected spending would require fundamental changes in the financing and delivery of health care."
Of course, stasis in the overall health of the nation does not imply the same amount of treatment being provided on an individual basis today. The fact that the average American life expectancy remains static isn't going to be very relevant to you if you injure yourself and are unable to make an appointment to see a doctor for several weeks, as happens more than occasionally in countries with nationalized health care systems such as Great Britain and the Netherlands – because what the CBO means by "fundamental changes" in the delivery of health care is nothing more or less than the government-dictated rationing of health care services.
The stated purpose of Obama's health care reform is to extend health care coverage to 50 million uninsured Americans while simultaneously reducing the total costs of the health care system. Despite the rationalizations of economists such as Paul Krugman, who claims that economic laws don't apply to health care, Adam Smith's law of supply and demand makes it very clear that Obamacare will inevitably lead to not only government rationing, but a reduction in the level of services presently provided to those in the system.
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The expansion of the health care market by 50 million uninsured is equivalent to shifting the demand curve out from the blue line to the red line. Normally, this would lead to an increase in both the price of health care as well as the supply at the point marked by the blue star. This is problematic enough because the health care market is not free, and therefore the supply of necessary elements such as doctors and nurses cannot be readily expanded. But compounding this problem is that fact that Obama intends to make use of the government's lawmaking power to artificially suppress prices. As decades of central planning in numerous socialist economies have shown, supply does not magically obey government dictates. Some doctors will retire instead of taking pay cuts, some medical students will change their courses of study, and a percentage of current equipment suppliers will shift their attention to markets not subject to the health care regime. The supply curve will not move, but will shift back along the curve to the point where it intersects the dashed line marked by the red star.
This combination of artificially expanded demand with naturally reduced supply is what produces the rationing that history shows is the consequence of nationalized health care. The triangle formed by the points marked by the blue star, the red star and the arrowhead represent the amount of supply rationing that will have to take place. This rationing is the result of interference with the market operations and has nothing to do with structural government inefficiencies, although those do tend to further compound the problem.
The U.S. health care market is already very inefficient due to previous government intervention in its operation. The additional intervention dictated by the proposed Obamacare program can only further reduce the average quality and quantity of care received by the American public.