Where are Republicans on health care?

Democrats have been pounding the issue of universal health care for years, and unless an alternative is offered, the allure of something "free" will eventually steamroller the Republicans. I think everyone knows that our health care system is broken, but the problem is that free market ideas have been abandoned.

The employer based health care system pools and distributes resources on a collective, not individual basis. Hence, it violates perhaps the soundest principle of economics: resources are best conserved where individuals bear the costs and reap the benefits of their conduct. Under the typical employer health care plan, the employee pays only a fraction of the cost of a particular service. Because cost is lowered at the retail level, demand for the service rises. Higher demand means increased costs. These increased costs in turn are spread to the general pool of employees to cover. The average employee pays for these costs in lower wages.

A similar problem is the role of government as a provider. When medicare and medicaid pay for services, demand likewise skyrockets, leading to increased costs. It is no wonder that health care costs now account for around 15% of our GDP.

So how did we get here and how to fix the problem? Employer health care plans arose as a consequence of the Roosevelt price controls during WWII. The government capped what employers could pay employees, so employers would offer health insurance in order to attract workers. Eventually, this system became embedded in our tax code by offering employers tax breaks for health care expenditures.

In other words, our government is subsidizing a broken, inherently inefficient system. Although you don't hear these ideas on talk radio or Hannity and Colmes, this isn't a revolutionary breakthrough in economics. But if these ideas aren't offered as an alternative, then health care will ultimately go down the tube. Costs will spiral out of control under socialized health care, so government will have to ration services.