A lot of people on the Obama side of the health care debate seem to think that “the market” is some monster you can sweep under the bed by simply not thinking about it. They accuse conservatives and libertarians of thinking that “anything market driven is perfect, and anything government driven is terrible”.

Calling a government program “market-driven” or “not market driven” is like calling a building project “gravity-bound” or “not gravity-bound”. The market is inescapable. Government programs that take the market into account (food stamps, for example) can succeed. Government programs that don’t take the market into account crash just like government buildings that don’t take gravity into account will crash.

At best, such programs simply fail, wasting only the money spent on them; at worst, they create mass corruption and vast extra costs as the market goes around the obstruction. These extra costs are then used to justify further government programs that add to the corruption and wastefulness. Such programs become vicious cycles of spend, fear, and spend more.

Take a look at medicare, medicaid, and private insurance. Two of these systems are bankrupt, and will be unable to make payments beyond the next ten years. The third is solvent, and can make all of its payments for the foreseeable future. Obama’s plan is to take the system meeting its obligations and fold it into the two bankrupt systems.

For all the good they’ve done, Medicare and Medicaid don’t take gravity into account, and they’re crashing. As more and more people fall into Medicare, they distort the market even further, raising prices for everyone and reducing quality of service. But because people have been paying into these programs for decades, there is no quick fix: the money that workers have paid into Medicare and Medicaid are gone, already spent; they can’t be returned. We must meet our obligations to those folks.

Which, I should add, includes me. Like Dafydd at Big Lizards, I’d love to be able to opt out of the system if it meant getting my investment back. I don’t trust any of these programs to be viable when I retire. Hell, I’d even accept a buy-out at a discount if it was part of a real reform plan that takes gravity—that is, the market—into account. The health care savings from smart, market-savvy reform would make up for the lost investment.

When we inject money into a system, it will raise costs. That’s inescapable. In some cases, such as food for people who can’t afford it or (in this case) health care for people who can’t afford it, we deem that inescapable effect worth the trade. But there are other ways that our policies can raise prices, and they do this because we pretend that we can control the market by pretending it’s a policy rather than a law of human nature.

One of the ways that our current health “insurance” system raises prices is by changing a negotiation between the customer receiving the service (the patient) and the supplier providing the service (the doctor or hospital) to a negotiation between two unrelated organizations: the insurance company and the employer. This encourages monopolies, and monopolies raise prices. That’s an inescapable effect of pretending that gravity doesn’t exist. The market prevails, and prices drastically rise while service to the person receiving health care inevitably declines. The person receiving health care is no longer the customer.

The Obama plan (what we’ve seen of it) and the Democrat plan takes what doesn’t work about the current system and makes it the core of health care going forward. These plans pretend that gravity doesn’t exist, as if the money to pay for health care doesn’t have to come from somewhere. The more people who get between you and your doctor, the more people there are who have to be paid. The more regulations between you and your doctor, the more money needs to be spent to overcome those obstacles.

Programs that recognize the market will avoid these problems. While food stamps, for example, raise prices slightly by injecting money into the grocery system, they don’t create a food services monopoly. The negotiation remains a negotiation between the customer and the grocer. The market prevails, and prices remain low, while service to the customer remains high.