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The High Cost of “Free”

When government programs are seemingly free, recipients tend to use them more. Medicare is a perfect example, where pharmaceutical and diagnostic tests multiply with the change in new benefits (Pauley 2004). Research shows that even when controlling for age and medical condition, if medical care is a bargain, people on Medicare as opposed to people on private insurance utilize 50 percent more care (Matthews and Littow 2011). They point to the fact that especially when Medicare patients have supplemental care in the private sector, their out-of-pocket expense nears zero, encouraging even more utilization. They conclude: “Since private insurers are much better at controlling utilization and reducing fraud, why not turn to the private sector to resolve Medicare’s excessive utilization?” (p. A16)

Mises (1990) analyzed this double-edged sword of government dependency and the cost to human value. Today, George Gilder (2012) echoes this risk by pointing out that 70 percent of government discretionary spending devalues human life by paying people to be disabled, sick, reproduce, be unemployed, unmarried, retired, poor, homeless, hapless, or drugged. He believes these supposed problem-solving programs accomplish nothing beyond expanding themselves by spreading dependence and tragic waste and saying: “Reforming them [the first rule of bureaucracy (Pettegrew and Vance 2012)] is all upside.”

Read the complete article at The Mises Institute here.

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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

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