RIGHT OF CENTER: JUNK CARS AND HEALTH CARE REFORM

The debate over national health care reminds me of when I was 16. New driver's license in hand, I couldn't wait to get a car. My dad said it was OK. "Cool," I thought, until he said I would pay for the car, liability insurance, and gasoline. I also would be responsible for maintenance. Of course this put things in a different light. While my buddies had fathers willing to cosign on a loan for their Camaros and four-wheel drive pickups, I had to save by hay-bailing money to buy a beat-up 1969 Buick LeSabre for $100.

Because I paid for the gas, I wasn't able to cruise around town like so many of my friends. The "Cow Catcher" -- which I dubbed the car because its prior owner collided with a wayward Holstein -- was transportation only. And because I was responsible for the cost of maintenance and repairs I didn't abuse my $100 car. What about my friends, who had their cars bought for them, or at least subsidized?

My beater outlasted most of their vehicles. After all, they had no real incentive to maintain their cars, because they had little invested. Besides, if they trashed the car, who's to say Dad wouldn't have bought them another? So what does my beat-up first car have to do with the health-care debate? It has to do with incentives.

I admit our health care system needs reform. But is the system a disaster, as our president has claimed?

The primary problem with health care, and health insurance, is illustrated in the example of my LeSabre. Because I was responsible for my transportation costs, I shopped around and bought what I could afford and made certain it lasted by taking care of it. My friends probably had no more invested in their $3,000 and $4,000 cars than I did in my cheap car. But somebody did -- a third-party payer -- Dad.

In health care, a third-party payer, the insurance company, likewise affects the incentives consumers have for maintaining their health. Just as I pampered the tired motor in my old car, so also is someone footing 100 percent of the tab for health care more likely to take better care of his body.

What about the person whose health care is subsidized by a third-party payer? Let's look at another analogy. What would consumers do if a third-party payer footed 80 percent of the bill for their groceries every week? I know what I would do. I'd walk past the ground beef and pick up the filet mignon. In the same way, someone responsible for only 20 percent of his medical bill will seek the Cadillac or filet mignon of health care, instead of seeking treatment only when necessary, and searching for the best price.

But health care is so expensive? How could anybody afford it without a subsidy? And shouldn't everyone be equally entitled to that subsidy?

Yes medical costs are high. But should we look to government price controls as the solution? How about another analogy? What happens when the government intervenes to control skyrocketing housing costs through rent control? Landlords, no longer able to get market value for their property, cut back on maintenance expenses. At the same time, new investment in housing falls and in some cases over-regulated landlords simply abandon their properties. Eventually the quality of housing stock drops to a level consistent with the level of fixed rent payments. That's the market at work folks, and the same thing gradually will happen in health care if such price controls are imposed.

Instead of turning a less-than-perfect health care system over to the federal government and guaranteed disaster, let's consider more modest reforms, which I will suggest in a later column. But we first must stop any attempt to turn health care, one-seventh of our nation's economy, over to the same folks who run the post office and division of motor vehicles.

~Jay Eastlick is night editor of the Southeast Missourian.