Obamacare

Perhaps the only four minutes you will ever have to spend explaining to friends and family why government run services fail — every time.

Suppose the boss gives you $150 to buy a door prize for the office party. In a store window, you see a six-foot tall stuffed frog marked $149.00 You think, Oh, that’s perfect – let’s buy it. The raffle winner is awarded the six-foot frog. Everyone laughs at the gag.

Now, this is called a third-party purchase – a purchase that is made with money that is not yours (therefore you don’t care about the cost) to buy something you’re not going to consume (therefore you don’t care about the quality).

Here’s the point: By definition, all government purchases are third-party purchases. The government spends other people’s money on things it won’t consume. It doesn’t care about the price or the quality. Thus, there will always be waste in government spending.

With health care, this is the precise problem.  The federal government isn’t paying for it; you are.  The federal government isn’t using it; you are.  Ergo, costs go up via waste and quality goes down via inefficiency.

…and that’s why free markets work for all of us, because when costs go down and quality goes up, availability follows in due course just like all other forms of insurance (fire, life, auto).