The Health Care Follies Continue

Megan McArdle lays out the basic counter-argument to the Democrats' health care plan being worthwhile even with the runaway spending...

I have to say, I'm woefully underimpressed with the argument that I am now hearing to the effect that "Medicare will bankrupt America anyway if we can't cut health care costs, so we might as well do health care reform."

Anyone who has dated a manic-depressive has heard some version of this argument. "I can barely make ends meet now, so I might as well use my tax refund check to buy a boat! After all, if I can't figure out a way to fix my budget, I'm going to go bankrupt anyway."

And anyone who has dated a manic-depressive knows where this ends.

I have no idea why anyone would think that there is no difference between going bankrupt now, and going bankrupt later, which is assuredly untrue. Bankruptcy is a really quite traumatic event with very far-reaching consequences, and you should always try to maximize the distance between it, and you.

I also have no idea why anyone would think that there is no difference between going bankrupt for a huge sum, and going bankrupt for a smaller amount. I mean, there's sometimes no difference for the debtor, but of course, there are a whole bunch of creditors who are also people, and who are not going to be paid back, some of whom may end up in bankruptcy themselves if you default. Since in this case, many of the creditors are the American people, I would think that even the most corporation-hating, bank-despising, littleguyophilic liberal would sort of worry about this.

If we pass this health care reform bill, a bunch of people are going to leave their employer health insurance under this plan for some subsidized plan--millions of them, according to the CBO. If the government goes bankrupt, millions of people will lose that subsidized coverage and be much worse off than if we'd done nothing.

And as any competent bankruptcy attorney could tell you, adding a powerful new creditor also makes it harder to "resolve" the bankruptcy--i.e., to figure out who isn't getting what they're promised. Which is to say, each new entitlement means that you have more interest groups to negotiate with, and also that our prior unsecured creditors--Social Security and Medicare recipients--will have to have their entitlements cut even deeper when the crisis comes. Since those people have structured their lives around the promises of the US government, this is no small thing.

It's worth a read. The biggest counter to this plan is that it will lead to bankruptcy or an incredibly oppressive tax burden, in order to solve an alleged problem of social justice (there are others that are politically worthwhile, and since both sides will play politics, those will be on the table). But this is the one Dems can't counter -- unless they really believe government will suddenly discover a way to cut costs where the private sector would fail, despite decades of evidence and government programs to the contrary. If they were honest, they would merely argue that the higher taxes and social justice are worth it. But the American people wouldn't buy it.