Two Approaches to Health Care

Dr. Paul Hseih this morning offered an interesting insight on the health care debate. Hseih argues that people should not accept the premise that the market is just another form of rationing.

Nobel Laureate James Buchanan taught us that there are two ways to begin a discussion about economics. The first looks at scarcity. Naturally, one immediately goes into a discussion of how does one allocate that scarcity. So a lot of the discussion begins with all the discussion of supply-demand curves. But as Buchanan argued the alternative is to begin with a discussion of the benefits of exchange - in essence to go back to the notions of Ricardo and other classic economists and think about comparative advantage. Government solutions for the most part begin with the idea of rationing and allocating scarcity. Thus, any public option health care system begins with a premise of rationing - of limiting options for the greater good.

But if we were to start with the idea of looking for the benefits of exchange we might well come to some more creative responses. There are some things in the economy, as Chris Anderson has taught us in his new book Free some things are too cheap to monitor. We should be seeking out those things in the medical system and trying to figure out how to maximize them.