Michael Moore's new documentary was released on Friday. I have yet to view it, however, I have spent some time reading up on the video. It seems that the underlying theme is that there is a health care cost crisis in the U.S. and that other countries have found a way around it that seems to work (government transfers aka...welfare).

When I recieved my degree in economics, I had a professor that told me that I would see enormous flaws in reasoning, logic, and economics but that I wouldn't speak up until there was something so flawed that my inner self would feel guilty to let it go unchecked. I feel this way now.

It is nearly impossible to find an economist that agrees with socialization of private sectors. It inhibits growth and leads to inefficiencies. Governments are notorious for setting "caps", flat fees, and "floors". In doing so, the invisible hand that sets prices for goods and services is slapped on the wrist, and inefficiencies develop. While the profit maximizing firms where the ones that survived, the firms with best lobbying potential are the ones that win. This is no different in health care.

Moore talks about the 41 million Americans that are uninsured. Is a solution really just to give them health coverage via medicaid? Of course not--it will foster inefficiency. The solution is to privatize medicaid/medicare and require all citizens to carry health insurance. Patients will be responsible for the payments of premiums, instead of the government. This will foster "ownership" of one's health care. Using Health Savings Accounts will enhance this even further. If patients can't afford health insurance, then transfers will be made so that these citizens can purchase health insurance in the private sector. Patients that are on medicaid don't hesitate to visit the ER if their son or daughter is complaining of an ear infection, even when visiting a clinic is much more cost effective. If this father or mother actually had to pay for this visit, it would never happen.

Medicare has shown that reimbursements to physicians will be a fraction of what they are now if socialization of health system occurs. A large externality will be the number of physicians graduating from medical colleges in the United States. When I'm finished with my training, I will have spent 28 years of my life in school. I can't imagine many students doing the same if there isn't a large reimbursement coming their way after education. This will cause our physician shortage to be even worse, which, will increase the cost of health care dramatically! It is simple supply vs. demand economics. This is definately not a solution.

It is important to remember that our country is a major exporter of pharmaceuticals. In fact, the US pharmaceutical export is one of our top 10 products we export (cotton, semiconductors, electronics are some that we export more). These pharmaceuticals require considerable amount of capital for research and developmenet. Companies are willing to invest the capital, because they know that their product will be protected by patents and that they will also be remunerated accordingly. I fear that we will decrease R&D because of decreased compensation for these products from our "government health agency". Medicaid/Medicare already pays a fraction of other insurance agencies for pharmaceuticals.

We need to see money being spent where it will be most efficient...and that has been proven time and time again to be the private sector.

Many people don't understand this concept, such as policy makers. Even people in our own administration at KCOM feel we should socialize the medical profession. This just shows that policy decisions of this level need to be left to those that understand the ramifications of the changes, namely the economists.

I challenge anybody to provide evidence that privatization of medicaid will be less efficient than retaining the status quo. I also challenge anybody to provide evidence that socialization of the entire health care system will be more efficient than a complete privatization of the sector. I feel very confident making these challenges, because I know that you won't find any evidence.

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