The Freedom Bulletin

If one thing is for sure, it’s that medical costs have gone up recently. A new study showed that health insurance prices rose, on average, 9% in the past year. The Affordable Care Act may very well share the blame for this, and so might the fact that doctors perform too many medical procedures (surprisingly, doctors themselves admit to this).

But logic indicates that the main cause of how much something costs is…well…the price the seller chooses to charge. You wouldn’t think the New York Times would have to do an article on this obvious fact, but they did.

The reason why doctors and hospitals charge so much for their services is simple: because they can do so without losing customers. If you have cancer, for example, you might need chemotherapy to live, and if you have a broken bone, you need to get a cast. People don’t have the option of going without these things if they decide they cost too much money. In economic terms, the demand for health services is inelastic. Governmental policies have exacerbated this problem – for example, the Durham-Humphrey Amendment by requiring people to visit a doctor and get a prescription before being allowed to buy medication, and the individual mandate by actually requiring people by law to buy health insurance.

The only solution to this problem, in my opinion, is price ceilings. This idea has been floated around a little bit, including in California where a bill called AB 52 would limit health insurance price increases, by Massachusetts Governor Deval Patrick, who created a similar policy, and more recently, State Rep. Ron Mariano, who more sensibly focused on the prices of health services themselves, proposing a bill that would limit prices paid to the costliest hospitals. This bill is definitely a step in the right direction.

As such an ardent advocate of liberty, it might appear strange to support government telling businesses how much money they can charge. Shouldn’t people be able to engage in any transactions they choose? But I look at excessive prices as akin not to consensual transactions but to extortion. People have a right to their own money, and doctors do not have a right to suck a person dry of all their money for performing a medical procedure that the person needs to live. Doctors, just like any other merchant, deserve compensation for the services they sell, but because their customers are not truly choosing to purchase those services, doctors should not be allowed to take so much money that people have no more money left to spend on anything else. It would be impossible for everyone to agree on a particular price at which a transaction becomes extortion. But people should certainly be discussing this question and working toward instituting a price ceiling on medical services, instead of continuing to let doctors and hospitals extort people.

There’s nothing wrong with the government setting maximum prices that sellers are allowed to charge for goods and services that have inelastic demand. The Boston Herald called Mariano’s idea “a move toward government price controls, plain and simple.” But I believe there is nothing wrong with that.

This February, Governor Deval Patrick announced that health insurance companies would be required to submit proposed price increases to the Insurance Commissioner 30 days in advance of taking effect. Last month, the Commissioner, Joseph Murphy, rejected 235 of the 274 price increases that insurance companies proposed. Six companies – Blue Cross Blue Shield, Harvard Pilgrim, Tufts Health Plan, Fallon Community Health Plan, Health New England, and Neighborhood Health Plan – are suing the Commissioner, claiming that they will be forced to operate at a loss if they are not allowed to increase their prices as planned. A hearing took place on Thursday in Suffolk County Superior Court, with the six companies seeking an injunction against the state to allow them to raise their prices.

I think both sides have good points. I am all for price ceilings on goods with inelastic demand – necessities that people are going to buy no matter what the cost. I believe that allowing companies to charge whatever they want for necessities such as medical services amounts to extortion. If someone needs a medical product or service to live, then they don’t exactly have a choice about whether to buy it, so the transaction is not voluntary like most transactions in an unregulated market, but actually qualifies as coercive. For this reason, I believe that the government has a right (and if prices are really ridiculous as they are with health services, even an obligation) to set and enforce price ceilings on goods with inelastic demand.

But the insurance companies sure had a point when they argued that they themselves don’t have much control over the cost of health services. The exorbitant cost of health insurance is caused primarily by the prices that doctors and hospitals charge. It is doctors and hospitals, the underlying cause of health insurance prices, who should be subjected to price ceilings.

I am no fan of Patrick, but I appreciate that he is finally trying to do something about the ridiculous cost of medical services. Price ceilings are something that, unfortunately, few politicians have considered as a solution to this problem. I salute Patrick’s willingness to try something that resembles price ceilings; I just wish he would focus on doctors and hospitals, who are the real cause of the problem, instead of insurance companies.

Ridiculously high textbook prices have burdened college students for years, and Congress is finally trying to help. The House Education and Labor Committee has proposed a bill that would require publishers to sell unbundled books and colleges to inform students about required reading before classes start.

The average student pays about $900 for textbooks each year. Adding to the problem is the fact that many books are bundled with workbooks, answer keys, and CD-roms, which add significantly to the price of the book but often go unused. Additionally, in my experience at least, many professors release their syllabi on the first day of class. As a result, students are forced to buy their books from overpriced campus bookstores, since books ordered online won’t arrive in time.

I personally support government-mandated price ceilings on books. The marginal cost of a book is under a dollar. Plus, because you need textbooks to take courses, the demand for textbooks is inelastic. Therefore publishers are able to rip students off. There is no reason why a hardback book should cost over $25 and no reason why a paperback book should cost over $10.

But, Congress’s bill is a good start. Anything that will enable students to pay less for textbooks is welcome by me. There is no reason why professors can’t figure out and release their syllabi sooner and no reason why publishers should force people to buy products they don’t want or need.

Source: The Crimson

Hillary Clinton has just unveiled her plan for health care in America, and I don’t agree with it at all. According to Hillary’s plan, all Americans would be required to have health insurance, and all large businesses would be required to provide insurance. Small businesses would have tax incentives to provide insurance, but would not be required to. Naturally, the government would provide subsidies to pay for poor people’s insurance, so the federal budget would be increased by $110 billion!

First of all, no one should ever be required to have any kind of insurance. The government has no right to tell people what they must spend their money on. If any state mandates health insurance or auto insurance, the federal government has an obligation to step in and overturn the state’s law.

Second of all, I don’t think employers should provide insurance; I think insurance companies should provide insurance. People should decide if they want health insurance or not, and then, if they choose to, buy it from the company that sells it. Health insurance should be bought and sold like any other commodity, not automatically deducted from people’s paychecks.

Finally, I oppose Hillary’s plan because it would cause the federal government to spend more money, and the feds already spend vastly more money than they should.

Here is my plan for health care: Health care and health insurance should be completely optional. To make health care affordable, the government should set maximum prices that doctors and health insurance companies can charge for their services. I think anything significantly more than $20 a month for health insurance is unreasonable. Different medical procedures would have different maximum costs, probably each under $100. If you want health care or insurance and think the price is a good deal, then you can buy it. If you can’t pay or don’t think it’s worth the money, then don’t get it. If the insurance companies can’t make money without charging ridiculously high fees, then they should go out of business and people can just pay for the health care they choose to get.

My plan is the only one I’ve heard of that is just. The government has no right to force people to get insurance, or to take people’s money and give it to poorer people. Health insurance companies and doctors have no right to charge exorbitant prices. My plan solves these three problems and would create a truly fair system for America.

Taxes are so ridiculously high that the government needs to be doing as much as possible to cut its expenses. My family pays about 45% of our income in taxes, and we get very little back in return. We don’t get government subsidies for health care, food, college tuition, or anything else. Congress is about to send President Bush a bill to expand government funding for SCHIP, a program that provides free health insurance to children who have too much money for Medicaid. Bush says he plans to veto the bill, and I agree with him. Congress wants to pour billions more dollars into SCHIP. In my opinion, this is one of the last things America needs. It is not the government’s job to take people’s money and distribute it to other people that the government has decided need it more.

How, then, would poor children pay for health care they need? The answer is simple. The government needs to set a limit on how much health care and health insurance can cost. For example, health insurance can cost a maximum of $50 per month. Or setting a broken bone cannot cost more than $30. Then people could choose whether they wanted health insurance or not. Want health insurance? Fine. Don’t want health insurance? That’s fine too, you can just pay individually for each procedure you get.