The Real Reason Why the Government Should Exit Health Care

Published: Thu 04 Feb 2010

Donald Chase

The Constitution never grants the federal government the power to meddle in health care, but we won't split hairs. Constitutionally-verboten forays into reform aside, members of Congress continue to insist that the health care system of the United States is in tatters, and that they are the only ones who can fix it and magically bring down costs in the process. The prospect of such an overhaul is terrifying and poses calamitous consequences for the economy.

One of the weaker arguments against health care reform-as if the federal government's embarrassing track record with reform isn't reason enough-is that because health care reform comprises 16 percent of the gross domestic product, reform would inevitably be deleterious to the economy as a whole. Although any government overhaul would surely weaken the delivery of health care, that is hardly our most pressing concern.

What the GDP argument fails to acknowledge is that health care is almost pure consumption, not an economic input. Aside from the life-saving, bone-healing element, what we refer to as health care fails to enhance our productivity or value to our employers. Rather, it is a consumption of a good and a transfer of wealth that is hardly any different from going to the movies or purchasing a home. It is because the United States is a wealthy country that we purchase a great deal of health care, very little of it of the life-saving kind.

For example, look at the paucity of practicing psychiatrists in countries like Bangladesh or Pakistan. Likewise, how many citizens of those countries do you think partake of the myriad anti-depressant offerings of pharmaceutical companies? When it comes down to it, facing one's personal issues is a non-essential luxury only present in wealthy countries.

Basically, a large part of what we define as health care in a wealthy country is little more than a reward for our productivity in other areas. It stands to reason that America's preoccupation with wellness may actually take away from the base of capital in economically detrimental ways.

In other words, health care consumption is far from the economic stimulant that politicians would have you believe. In reality, health care is the result of our productivity, but not a driver of it.

Under that assumption, free-market reforms by which the federal government exits health care altogether would do indisputable good to our economy by encouraging us to spend less money on care we don't necessarily need.

Returning to the GDP, health care may make up 16 percent of America's economy, but that is hardly a positive thing. It's the consequence of unconstitutional efforts by the federal government to subsidize a prodigious amount of profligate spending with tax incentives and transfer payments. In that regard, the only appropriate reform would require the government to get out of health care entirely so our spending on what is an economic good and not a right works to the benefit of our economy.