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“Free” Uhuh, Right.

Ah, John Kitzhaber, everyone’s favorite cowboy-booted former governor.  He’s back, and as further evidence that doctors don’t know anything about economics (or business, a fact to which anyone in the financial sector will gladly attest), he’s proposing “free” healthcare for all Oregonians.  Proving that kids in the Journalism school don’t learn anything while busily failing the world’s easiest economics class, Ryan Knutson buys the “free” line hook-line-sinker.  The nut ‘graph:

In the future, O’Leary and all other Oregonians may not have to pay a dime for health coverage if former Oregon Gov. John Kitzhaber’s proposed health plan is put into effect. The former emergency room doctor announced his goal to implement drastic reforms to the Oregon health care system to provide free health care to all Oregonians. He hopes to get an initiative in November’s elections and possibly enact legislation in 2007. [Emphasis added]

Right, because the taxes they pay don’t count as expenditure.  I guess the $5000 I paid to Uncle Sam in one way or another in 2005 doesn’t count, then.  Moving on to Kitzhaber’s actual plan:

Kitzhaber’s plan says that pooling tax dollars and federal funds that currently pay for Medicare and Medicaid with the tax break employers currently receive for providing medical insurance for their employees would create an approximate $6.4 billion fund. That fund would provide universal coverage for everyone in the state, yet allow citizens to purchase private insurance if they wanted.

That money breaks down to about $2,000 per person per year, which Kitzhaber said isn’t enough to provide for all Oregonians because the current health care system is too inefficient. However, by overhauling the system to be more cost-effective, the funds would be enough, he told the Register-Guard.

Let’s get this straight, shall we?  His plan relies on diverting money already going to Medicare/caid, diverting other tax revenues from other sources, and “streamlining administrative costs”.  Color me unimpressed.  If the geezer drug giveaway is any indication, this plan is likely to cost much more than initially expected.  Further, there’s going to need to be an additional government bureaucracy to administer this new “free” healthcare.  A couple of years ago the cost of Measure 23 was estimated at $10 billion once the model assumed people with health insurance would drop it to sign on to the socialist medicine.  Kitzhaber’s plan comes up $3.6 billion short of that estimate, and unless he’s got some sort of mystical power over administrative costs, the money is going to have to come from some place.

 States have only two ways to raise money: taxes and debt.  Being that debt is really just deferred taxation, states only have one way to raise money in the long run.  With the heavy anti-growth sentiment in Oregon, the 5.8% unemployment rate (nearly a full percentage point above the national rate), and the cyclical volatility of Oregon’s primary revenue stream (personal income taxes), Kitzhaber’s plan would be a disaster for Oregon.  Unfortunately, the same people who roundly rejected a similar proposal just a few years ago may be duped into ruining their economy with compassion this time.

  1. Timothy says:

    Andy: I will fucking cut you.

  2. Josh M. says:

    “I dont believe that some people should have health care while others do not.”

    If you have some sort of medical crisis, you will not be turned away from a medical provider. You just go into debt and declare bankruptcy.

    Personally, I don’t feel like paying for others’ healthcare. I have a job that a lot of people probably wouldn’t like doing because I want to pay for myself and not be a burden on society. It’s called a job, get one. There is such a feeling of entitlement among the “less fortunate” in this country. Full-time students can’t get food stamps, but the people sucking out the welfare and unemployment can? Then they go to Safeway and spend $10 on a sandwich or try to get the deli girl to mark their fried chicken as cold so they can get it on the Oregon Trail card (trust me, it happens).

    Anyway, the point I’m trying to make is that I’m already paying enough for the lazy people in this state, I don’t want to pay more for them to make my healthcare worse. This ballot measure will (hopefully) fail just like the last one and maybe one day the politicians in this state will figure out that we’re tired of being gouged (yeah, right).

  3. Andy says:

    But Tim, that’s all good in theory, but in reality the governor is going to reform the medical system saving over 3 billion dollars because the greedy CEO’s and stock holders won’t get the profits.

    Under socialized medicine everyone will have “access” to healthcare. And because it’s a public good, everyone will “have” healthcare. Just look at canada.

    When the government started rationing healthcare, they did it with time. Now it takes 3 months+ for an MRI, 18+ months for non-emergency surgery, and politicians get to skip the lines because they are deemed more important.

    Sounds exactly like the soviet system of healthcare. And don’t forget the cubans have the best healthcare in the world. (which was espoused at the UO campus)

    From each according to their ability, to each according to their need.

  4. Timothy says:

    The federal government’s money has to come from some place, that place is taxation. For instance, part of the FICA-HI I paid working in Texas this year will go to Oregon in one form or another through Medicare/caid. More to the point, the government has no resources of its own and must gain resources through debt instruments or tax. Debt instruments are simply a claim on future tax collections, so really, taxes are the only source of government revenue.

    We can have a long discourse on the role and importance of stable, non-tyrannous government in the development and sustained existence of free market economies, and there’s certainly room for debate about the direction of the causal relationship (I’m of the Milton Friedman school of thought, myself), but, regardless, the government must still sap off of the productive sectors of the economy in order to have revenue. Taxes cause dead-weight loss, and thusly in cases that aren’t provision of true public goods* a government solution will be less efficient (and thusly not maximize utility) than a market solution. And don’t start on me with the stuff about aggregate preference orderings, I’m well aware of this.

    On the Oregon question: I’ll gladly concede that there are problems with the health care market (Link). However, I’d argue that government intervention through subsidy of consumption, aiding cartel pricing, making it difficult to bring new treatments to market, and heavy regulation is a cause of many of these problems rather than a solution to them. The socializers will often argue that the government is doing a lot anyway so it might as well do more, but if so much government intervention is demonstrably failing to have the intended positive effect, how can more possibly be the solution?

    If the goal is provision of the best health care to the most people, the market-based solutions that work for so many other things will work just as well.
    *Goods that are BOTH non-rivalrous in consumption and non-excludable. Healthcare is definitely not one of these, although it is a private good with (some and I’d say less large than many would suspect) positive externalities.

  5. Michael G. says:

    “I repeat, I dont believe that some people should have health care while others do not.”

    What if I’m a healthy 20-something who doesn’t want to pay for health insurance?

    What if I’m a rich guy who can afford to pay for any medical expenses out of my pocket?

    You going to make either of my hypothetical persons pay for health care they do not need or want?

  6. Joshua Geck says:

    “Right, because the taxes they pay don

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