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Government Is Not Cheaper by John Campbell [congressman] 7/10/07

One of the late-night TV comedians recently quipped, "If you think health care is expensive now, just wait until it's free."

Funny. But, also very true. The liberals in Washington and Sacramento these days are on a mission to have government provide "free" health care and "free" college tuition for everyone. Their argument is that the cost of these services is too high for many people to afford, and therefore government should pay for them using as yet undetermined new tax revenue. Like many liberal ideas, this one is premised on incomplete facts and a complete lack of understanding of free market economics.

First of all, government already gives massive subsidies for both health care and education. Nearly 40% of the population already receives health care through Medicare, Medicaid or VA health services. In education, the subsidies are even higher. The president of an Orange County private college recently told me that 85% of its students receive some form of financial aid. And that's at a private institution. Obviously, every student at any of the more than 100 state colleges and universities in California have their tuition subsidized by tax dollars.

And what cost benefit has the public experienced from these subsidies? Arguably, none. Evidence shows that the more government subsidizes something, the more the costs actually increase. Since 1984, the cost of college tuition and fees has risen 384%, as measured by the consumer price index. Health care costs have risen 340% in the same period. Compare these to the increases of non-subsidized goods and services. Housing (nationally, not Orange County) has increased by only 104% since 1984. Similarly, food, energy and transportation have increased by 97%, 85% and 75% respectively.

The more something is subsidized, the more the costs go up. This may seem counter-intuitive but it actually is not. Subsidies desensitize and disconnect people from the real cost of a good or service. That allows providers of that good or service to charge more, without risk of losing the customer, because the customer is not paying the true cost.

And there's another huge problem with the proposals for socialized health care and college tuition. The money for the subsidies has to come from somewhere. Since the plan is to provide this "free" service to everyone, you will have to tax everyone to get enough money to do it. You literally cannot tax the top 10% of incomes enough to cover the cost. So, the government will take money from people in more taxes, and then give it right back to those people in the form of health care and tuition.

Federal Reserve Board Chairman Ben Bernanke has pointed out that it makes no sense to tax the middle class in order to provide subsidies for the middle class. This creates huge waste and inefficiencies along the way. All it does is concentrate social power in Congress and government, which is what the people who propose these things really want. They want to take power and money away from you and give it to themselves.

We actually already have taxes and subsidies that are too high. That is much of the reason why the costs of health care and education are rising disproportionately to the rest of the economy. We all understand the need and obligation to provide for those in society who cannot provide for themselves. But when it comes to the rest of us, government should leave us with our money and our choices, and let the marketplace work its magic to provide us more service at lower cost. Because health care will be way more expensive if it's free. CRO

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