That's a lengthy quote, but necessary to provide context.
The relevance of Bastiat to the health care debate struck me when reading a quote from Nancy Pelosi in which she said that she wants whatever compromise health care bill emerges from their closed-door negotiations to "lower costs at every stage" of our health care system.
As someone who thinks carefully about word choices, I found her statement troubling not only because I know she's lying about what she wants. It took me a few minutes, but then it hit me. The Bastiat fallacy lies in the word "costs."
What Pelosi really means is that she wants to lower prices paid by end-user consumers of health care.
She wants it to appear that costs have gone down, but in fact the bill will exacerbate the single greatest existing flaw in our health care system: the insulation of consumers of health care from the costs of what they consume. The majority of Americans, when they go to the doctor, feel as if they're spending someone else's money -- a situation which both Milton Friedman and common sense tell us cannot lead to disciplined spending.
All credible evidence and opinion points toward the current "reform" plans increasing the cost of insurance and medical care. Health insurance companies have said that premiums for almost everyone will rise, with prices doubling or tripling for many, particularly in the individual/family rather than employer group market.
When Democrats' plans to give everything to everyone for free or near-free and their intent to allow people to wait until they're sick before buying insurance (which would seem to defy the very definition of insurance, i.e. insuring against an unknown future event), take effect, costs will skyrocket.
The only way, then, for Pelosi to make prices for consumers decline in an environment of actually increasing costs is through massive government subsidies.
Go, read the entire thing - it's well worth the time.