Healthcare costs in California and throughout the United States have long been outpacing inflation rates for a variety of complex reasons — some related to government regulation and mandates, with others involving market conditions. Yet leave it to progressive California to believe that pushing an “easy button” will make healthcare more affordable.
As part of the recent package of budget bills, the Legislature created a $30-million Office of Health Care Affordability. It is responsible for “analyzing the health care market for cost trends and drivers of spending, creating a state strategy for controlling the cost of health care and ensuring affordability for consumers and purchasers, and enforcing cost targets,” according to an agency fact sheet.
That’s an open-ended and troubling charge, given that state regulators can’t create what’s needed — a more competitive healthcare market. They can only fine, investigate and regulate. One of the reasons that the nation’s healthcare system is so costly is that government mandates and red tape impeded private companies from offering additional choices.
How will a state agency enforce cost targets?
That sounds perilously close to price controls, which succeed only at creating shortages. “We economists don’t know much, but we do know how to create a shortage,” said Nobel laureate Milton Friedman. “If you want to create a shortage of tomatoes, for example, just pass a law that retailers can’t sell tomatoes for more than two cents per pound. Instantly you’ll have a tomato shortage. It’s the same with oil or gas.”
Or healthcare, for that matter. This law also gives officials a bully pulpit to investigate private healthcare officials. That will discourage companies from operating here. Energizing — rather than hectoring — the private sector is the key to reducing costs and avoiding shortages.
We’re reminded of the state’s efforts to investigate and control rising gas prices. Assembly Democrats created a tribunal to figure out the causes. They thundered about oil-company greed and searched for the culprits, but never acknowledged that they are the root cause of the problem thanks to the Legislature’s own tax and regulatory policies. (Maybe it has to do with the state’s myriad gas-related taxes and special-formulation regulations?)
Please spare us additional sham investigations.
How can a state government that failed to stop recent financial scandals involving its own departments expect us to believe that it will sort through price hikes in a multifaceted industry it doesn’t control? We’ll be more open to the idea after the Legislature determines how the Employment Development Department sent out $20 billion in fraudulent unemployment claims.
In fairness, not all of the new agency’s ideas are bad ones. It promises to increase public transparency in healthcare pricing. We’re always game for additional public information about healthcare costs and other matters, but most of the agency’s focus is on imposing regulations — and opposing market consolidation.
The new agency, however, has an even more nefarious purpose. “This elevates a very important, what I like to call, ‘single-payer principle,’ which is take control of costs and create a great deal of transparency on what consumers are getting,” said Mark Ghaly, secretary of the California Health and Human Services Agency.
In other words, it’s Gov. Gavin Newsom’s first step toward building a single-payer system. If you think healthcare is expensive now, just wait until it’s free.
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