Let’s Think About Rationing

by Burt on August 30, 2009

Recent discussions of the Obamacare plans have made clear that, if adopted, the rationing of health care will occur.  It could hardly be otherwise–a wave of new persons enrolled in the federal plan will not be followed by a rise in the number of physicians.  Rationing must be the result.
Critics of rationing have (rightly) focused on the loss of liberty and property.  People will no longer control their own medical futures; a panel of so-called experts will.  If you are too old, you don’t get a hip replacement; if you are sickly you don’t receive heart surgery.  And so on.
A neglected point in the argument is that rationing will lead to increased corruption and distrust of government.  Many physicians will probably do surgeries and other services on a cash basis against existing rules.  Also, some patients will circumvent rules and receive medical services contrary to bureaucratic regulations. 
Black Markets always occur when rationing is instituted.  In World War II, for example, gasoline was rationed for much of the war.  In 1944, long after the rules and enforcement machinery for gas sales were in place, Marshall Clinard of the Office of Price Administration (in his book The Black Market) estimated that 10 percent of all gasoline was illegally bought and sold.  Both car owners and gas station employees were in on the illegal sales–an army of bureaucrats tried to stop the black market in gas but few were caught.  One enterprising lad stole a 250 pound drum of coupon paper and sold counterfeit ration stamps throughout New England.
Fortunately World War II ended the next year and the damage to the integrity of our political system was not permanent.  But during the time of rationing, many Americans protested the existence of rationing, the favoritism of who got extra gas and who didn’t, and the corruption of illegal sales going on throughout the country.  With Obamacare a reality, can our political system withstand the attacks that will surely come when we have a favored group, politically connected or clever, receiving medical treatment denied by law to the rest of the population?


David Thomson August 31, 2009 at 11:28 pm

The odds are that Barack Obama no longer possesses the necessary political capital to get his medical health legislation through Congress. The threat seems over. Nonetheless, we should not take anything for granted. Warning the citizenry about the inherent corruption which will occur therefore remains a good idea.

Wakefield Tolbert September 1, 2009 at 1:01 pm

Dr. Folsom.

I know you’re busy.

But the Left is cranking out the Newspeak on Health Care issues faster than some of us regular plain folks can keep up with and answer. Thus for example this Washington Post article from TR Reid.


One great idea would be to have experts as yourself answer these common claims.

After all, the article form this expert purports to ‘diss’ all the common complaints us right wingers have against socialized meds–waiting lines, rationing, and bureacratic paperwork, “it’s not socialist after all”, etc., as in most cases sheer poppycock in most of the Euro-Canadian styled systems.

Might be worth a peek and a response?

I’m not armed for all this, and generally most of the American people are not. But economists used to analyzing such things certainly are! To my line of thinking, however, I know enough to know this is one of the most important and potentially culture and liberty altering issues that has come about in many a generation.

Tony Prado September 11, 2009 at 11:00 pm

First a hat-tip to Burt, who was a wonderful source for me in econ stories when I wrote for Investor’s Business Daily. I was honored to receive your wonderful books from you and your good words.

I can attest first hand to the resentment an inequality that a black market can create, in this case in public education.

To get around the de-facto rationing and controls that are part of a no-choice system, my wife and I were heavily involved in our daughters’ elementary schools. She even attained the PTA presidency and obtained amazing control over resources by means of the bully pulpit and the influence she earned.

Not to say we did not have fun, putting on events and organizing activities that, now that the older one moved on to junior high, they miss dearly. And I’m certain that a lot of kids benefited. But there is an opportunity cost in hard work and time spent.

In return we also had the ear of the principal or school district officials – being an editor at the local paper helped too – and we got to hand pick my daughter’s teachers and had what amounted to an assurance that she was safe and treated well at school.

The reaction? Well, folks notice this kind of thing. So besides being perceived as snobs by some, which didn’t bother me (because some hardworking volunteer parents of modest means got criticized for this too) we couldn’t do anything without someone claiming that we got some benefit because of my wife’s or my position. I even had my daughter and me yelled at by a mom at a birthday party over her getting a good part in a play (which she had to audition for with a director from the local university who didn’t know who we were).

Now translate that kind of petty resentment into health care and it’s not so petty anymore. As the parent of a younger daughter who uses a wheelchair, I have plenty of training in working a system and having to fight for what she needs and wants. And we’re ready to pull whatever we need to politically or economically to circumvent whatever controls come on as needed.

One does what one has to as a parent for the good of one’s children. It’s bad enough that, unlike when we were treated as customers when our daughter was in a Montessori school, we have to work it like this to get around rationing at the public school. But in health care? This kind of thing could only widen inequality in quality and delivery.

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