Political Economy

Murphy’s Law of policy making: The costs of economic policy are always higher than promised and the benefits are always lower. Actually it wasn’t Murphy but Phaedrus, 2000 years ago, that made the observation.

How will a government run health care system benefit consumers of medical services? Let’s look at the track record of our government in the past when they attempted to modify the behavior of the citizens in this country.

Back in the 1970’s there was a gasoline shortage due to a so-called energy crisis. OPEC (Organization of Petroleum Exporting Countries), the oil cartel, succeeded in raising the prices of petroleum products – including gasoline – to record-high levels. Consumers reacted by conserving their use of gasoline. What did the government do? Congress responded by enacting legislation mandating energy conservation as the law of the land. One of these laws was the Corporate Average Fuel Economy (CAFÉ) standard. It required each passenger car sold in the U.S. must meet a federally mandated fuel economy standard.

Conserving gas is a good thing, just like low priced health care is a good thing. But what are the costs associated with government involvement? With their CAFÉ standards auto manufacturers began to build smaller, lighter cars, cars that were more easily damaged in accidents and more costly to repair. They also began to design engines that were less responsive and more difficult to repair as well, making the operation of the newer vehicles more expensive for consumers to operate.

But the costs of the CAFÉ standards are measured not just in terms of the dollars and cents of reduced economic efficiency but also in terms of the people whose lives are lost when they are involved in accidents. For every 500-pound decrease in weight of a vehicle the percentage of fatalities in that vehicle goes up 14%. That translates to an increase of 3,000 deaths every year in automobile accidents and 15,000 serious non-fatal accidents per year.

And what did the consumers do? They began purchasing pickup trucks and SUV’s. By 2002 the market share for SUV’s and other light trucks had reached fully 50 percent of the 17 million passenger vehicles. And with the addition of the SUV’s that used a great deal more gas than the smaller fuel-efficient cars they also posed a greater risk to the smaller cars on the road.

But why was the law originally enacted? It would have been much more efficient to tax gasoline to drive usage of the product down and protect the environment. The structure of the law, though, suggested a different motive by our government. The CAFÉ standards looked at domestic and foreign cars differently, and directly insulated the U.S. auto industry from the rigors of foreign competition.

So what is going to happen to the health care system in this country when the President and Congress try again to control what is consumed by it’s citizens – this time timely medical treatment and choices for doctors and hospitals? I don’t believe it will get that far. There is one all-important goal to politicians in this country right now and it isn’t the altruistic ideal of health care for everyone, it is to get re-elected. They know that the people of this country from across the political spectrum have found their voices and will take their anger and exasperation to the polls next year.

And the next time a SUV or mini-van takes your parking place just remember: Their owners are just trying to prevent Congress from killing you to save jobs in Detroit.