Systemic Risks and Moral Hazard

When the financial melt down started we heard two much-used phrases called systemic risks and moral hazard. But, Wall Street don’t own those terms. The medical care and medical care reform also can contain both systemic risks and moral hazard.

SYSTEMIC RISKS

  Among systemic risks in the medical world would be to allow health care expenditures to advance form the current 16% of GDP to 25% or more. The impact of that kind of bite would be to restrict all other growth and development and throw us into a dark age. A dark age that would collect even more defenders and make it harder to extricate ourselves.

  A companion to that outcome would be to try to provide health insurance coverage to everyone without reducing the cost of that health care. This would require unthinkable amounts of borrowed money, which could make for an unstable and unreliable currency that could bankrupt the country. Reluctant international lenders could take us on the road to inflation and the compounding of the misery.

MORAL HAZARD

  It would be a devastating mistake to remove the responsibility for health care away from the individual. It might be said that is already the case as HMO’s and insurance companies are somewhat dictatorial in prescribing and paying for medical care. But, it can be a lot worse. It is not hard to get the bulk of the population to think that health care is free. If free, you might want to run risks with your health. After all, we still believe in medicine. We, often mistakenly believe, that technological advances can correct all that we might break or would go bad.

  A good portion of the population still smoke (20%) and if health care treatment and expenses are all or near all met that figure might not come down anymore.

  Many parents of the nation do not provide children with healthy food. Likewise, many schools in the nation do not serve healthy food in their lunch counters and cafeteria. We supply children with what they want to eat and not what is good for their health. As a result, 30% are overweight. Just unhealthy and they look unhealthy. At some time they will pay for a bad diet. But, if the government takes care of everything, where is the incentive to eat right. Maybe medical consequences is a risk worth taking in order to be satisfied for the moment.

  As you move from individual responsibility to the collective care of the central government you have changed America. It has been a quiet revolution. It is not just who is paying the bills, but who has power and control. The rationale is that as long as the central government is paying the bills they should exercise control. This is dangerous! Dangerous for our liberties. The MedPAK proposal that will establish a panel to render the direction of medical care will usurp that power form Congress. If you take power away from the Congress you take it away from the people.

  Congress is often incompetent to deal with matters of our time and a recent history of failure. And, no conclusive indications this will soon change. However, the Congress remains the legitimate repository of power. The hope is that people will catch on and change the Congress while there is still time.

  Soon, there will be “MedPAKS” coming from the Treasury Department to deal with Wall Street crooks in a way that will shift more and more power to the Federal Government. This power shift must be resisted!