Recommended: Why Washington Can't Reform Healthcare

I highly recommend Bill Frezza's piece Why Washington Can't Reform Healthcare on RealClearMarkets today. He has a refreshing outlook on the problem. He argues that the reason health care costs are such a problem is that government regulation (mostly Medicare pricing) has created a market in which there are no reliable price signals. The price we pay for, say, a colonoscopy is not set by a free market exchange (what is it worth to me? how much will a competitor down the street charge?), it is set by what some bureaucrat in Washington thinks it ought to be set at. The article is quite readable, and wholly sensible.

Of course we have seen this problem before in all the centrally-planned economies that have eventually collapsed from their own inefficiency (think the old Soviet Union). Trying to control prices and resource allocation by bureaucrats never works right, because the bureaucrats never have enough information to do the job right, and because they have every incentive to take payoffs from special interests to manipulate the prices and resources.

One would think we all would have learned that lesson since it has been repeated often enough in history. But then how many people (especially politicians) ever really read history?