At the center of the health care debate is the simple – but profound – question of whether government can deliver services, in this case health care services, better than private enterprise sensibly regulated.   President Obama clearly believes that the ‘public option will not only be more equitable but more efficient as well – a claim he made when he spoke to the Joint Session of Congress earlier this year.  Of course, nothing could be further from the truth.

The reason Obama is wrong, and the Left in general on issues of public options versus private enterprise, is simple human nature.  When it comes to such matters, it was never so well explained as by the legendary Milton Friedman:

“There are four ways in which you can spend money.  You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else.  For example, I buy a birthday present for someone.  Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.  Then, I can spend somebody else’s money on myself.  And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!  Finally, I can spend somebody else’s money on somebody else.  And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get.  And that’s government.”

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With Democratic support coalescing around Sen. Max Baucus’s (D-Mt.) health care reform proposal, passage of a comprehensive overhaul now appears more likely than ever.  Opponents had their summer of protests.  But, Democrats have shown a renewed sense of energy since discrediting Sarah Palin’s “death panels” and Sen. Charles Grassley’s claim that ObamaCare would “pull the plug on grandma.” Still, while those charges may have been a little overwrought, there is plenty to be concerned about with the Democratic health reform effort.

As I explain in a new Competitive Enterprise Institute paper, “A Cure Worse than the Disease: Obama Care Won’t Cut Costs, But May Cut Quality,” most of the alleged cost-cutting measures in the Baucus bill merely shift costs from the federal government onto the states or private payers, without affecting long-term health care inflation.  The only measures that could reduce the annual rate of growth in health care costs would erect government barriers between patients and their doctors, while jeopardizing long-term medical innovation.

Skeptics have made hay arguing that the so-called Sustainable Growth Rate can’t be counted on to cut $245-billion in Medicare spending. But Senate Finance Committee negotiators have designed a Medicare Commission—what the White House previously called an Independent Medicare Advisory Commission—to make similar cuts in physician and hospital payment rates in a more opaque way.

In an April New York Times interview, President Obama suggested that such a group, working outside of “normal political channels,” should guide decisions regarding that “huge driver of cost…the chronically ill and those toward the end of their lives.”  That’s not exactly a death panel roving the country to pull the plug on innocent grandmas who’ve survived past their sell-by dates, but the effects could be equally pernicious.

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