India Uncut

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Wednesday, October 18, 2006

'A vicious cycle of moral hazard'

Don Boudreaux of Cafe Hayek explains in CSM why treating healthcare as "a human right" actually makes it less accessible and more expensive. Boudreaux writes:
Because providing healthcare takes scarce resources, offering it free at the point of delivery would raise its cost and reduce its availability.

To see why, imagine if government tried to supply food as a universally available "right."

To satisfy this right, government would raise taxes to meet all anticipated food needs. Store shelves across the land would then be stocked. Citizens would have the right to enter these storehouses to get "free" food.

Does anyone believe that such a system would effectively supply food? It's clear that with free access to food, too many people would take too much food, leaving many others with no food at all. Government would soon realize that food storehouses are emptying faster than expected. In response, it might hike taxes even higher to produce more food - raising the price that society pays for nutrition.

Stocking stores with more food, though, won't solve the problem.
Read the full piece. Healthcare is, in fact, a classic example of a disconnect between intent and outcome that characterises so many of the pet causes of those who think that the answer to our problems lies in the state stepping in to solve them. (Here's another.) Most often, the state just makes it worse.
amit varma, 4:20 PM| write to me | permalink | homepage

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