On Medicare, President Obama makes a classic and revealing blunder: Describing profit as a deduction from consumers’ good, rather than a measure of the value that a firm creates. If Obama’s thinking were correct, then we’d all be better off with government-made cars, because the government could plow the money that would have gone toward profit into improving quality or lowering prices. But nobody wants to drive a Zaporozhets. Obama’s shockingly naïve outlook is not actually how the world works, and nobody who is not a sophomore at NYU should believe any such foolishness.
In practically every area of life, consumers are better off with profit-seeking enterprises than they are with state-run enterprises, and there is no reason that health care should be any different. Medicare is popular because, popular rhetoric aside, beneficiaries don’t really pay for it. But ultimately somebody has to pay for it.