The Goal Is Freedom: The Welfare State Corrupts Absolutely
What's wrong with healthcare reform.
Let’s begin at the beginning. Medical care is not a free good found in nature. Of course, no one really thinks it is. But that doesn’t keep most people from wanting to pretend otherwise, and the current institutional setting makes that possible. After a while, one forgets one is pretending. Yet medical care goes on being a collection of produced goods and services — subject to the laws of supply and demand, and requiring resources and labor that come with opportunity costs. Therein lies the problem.
Medical insurance has come to mean getting something for free. The receiver of a service need not ask how it is financed. It’s just taken care of. (Passive voice intentional.) Yes, somebody gets paid, and the money comes from somewhere. That’s okay, as long as it doesn’t come from the covered party. (What would be the point of having insurance?) Don’t bother us with such matters. Let us believe it’s free. Let the insurer figure out the rest. But he’d better keep that coverage going. And don’t hassle us by not paying all bills eagerly and unquestioningly. That’s what he’s there for. Just reassure us that whatever services we consume will be taken care of. We don’t want to know the details. What’s that? The government is promising to cap our out-of-pocket expenses, require coverage for preexisting illness and free preventative care, and extend the same deal to absolutely everyone? And this will have no negative consequences whatever, such as limits on what we can buy or enlargement of the budget deficit or higher taxes for the middle class — but it will actually save money? Oh thank you, government!
This irresponsible mindset, which is similar to a not-very-inquisitive child’s, is what at least two generations of government intervention in health care — and the welfare state in general — have produced in the American people. Thus the welfare state retards moral and intellectual development. We expect the State — our surrogate parent — to make it all right. The demagogues we call politicians are happy to feed this attitude because it provides occasions for the expansion and exercise of raw power while seeming, like Santa Claus, to give away free goods. Of such things long political careers are made.
Something for Nothing
The healthcare “reform” juggernaut seems to be on an irresistible course. The 1,990-page (!) bill (pdf) released by the House leadership yesterday is just the latest variation on the corrupt something-for-nothing theme. The details obscure the big picture. A modest public option instead of a robust public option? Blah blah blah blah blah. The government-run insurance “alternative” was always more signal than substance. Why do you need a government “competitor” if the government will be dictating every detail of the private insurance business under any circumstances? What motivates the public option, I submit, is sheer hatred of private, for-profit business in the medical industry. Of course, we don’t have purely private, for-profit insurance companies — every state government runs a regulated, protectionist insurance cartel. (That’s why the feds exempted the insurance industry from antitrust; it was a favor to the state regulators.) But the public-option advocates would oppose truly free-market insurance companies. Their true preference is a government monopoly — which is why it is so funny to hear them praise “choice and competition.” That’s the last thing they want, but they know that the American people won’t accept their single-payer scheme. Anyone who really wanted choice and competition would at least support legalizing interstate insurance sales. The silence about that is deafening.
Most people get their insurance through their employer, so they won’t have the option of the public option anyway. One of the biggest sources of trouble in the healthcare system is employer-purchased insurance — it cuts the consumer out of decision-making. Yet this bill, and all the others, strengthen that perverse system. Some reform. Despite the squawking, the insurance companies love the idea of forcing people to buy their products. The corporate state thrives.
Like an uninquisitive child, most people seem willing to believe politicians when they promise to subsidize and compel the use of medical “insurance” while reducing prices without controlling choices. And while they’re at it, they’ll cut the budget deficit and boost economic growth. One shouldn’t have to be an economist to smell a scam. Exactly how is that supposed to work? They’ll get the money out of Medicare — without degrading the service — and they’ll tax millionaires, while fining employers who don’t provide insurance and those of us who don’t buy it. Since the American people aren’t rolling on the floor laughing their you-know-whats off, I can only conclude that the government’s schools have so dumbed them down that they have no trouble swallowing this patent nonsense.
A final word about the nearly 2,000-page bill. Others have said it, but it needs to be repeated. No one will be able to understand all the implications and consequences of a government attempt to design 15 percent of the U.S. economy. Heck, few will read — and grasp– the bill in its entirety. (You also have to read all the statutes that are amended by the bill.) Enacting laws that no one comprehends, and that turn over yet-to-be defined powers to others, wouldn’t seem to satisfy the criteria of self-government, the consent of the governed, the rule of law, or any of the other political myths we live by. I don’t how any theory of political obligation rooted in popular sovereignty that could regard this bill as morally binding when it becomes “law.” The process mocks the philosophy expressed in the Declaration of Independence. It insults the intelligence. It disgraces everything decent about this country.
Comment by Atherton-Bloxham on 30 October 2009:
As usual, well written thorough summary of a subject too many are trying to complicate.
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[...] The Freeman | Ideas On Liberty » The Welfare State Corrupts Absolutely. Another great writeup on the health “insurance” garbage being spewed by our fabulous leadership. [/sarcasm] [...]
Comment by Rick on 30 October 2009:
Mancur Olson, who wrote The Rise and Decline of Nations, dispelled the notion of the problem of a democracy being the tyranny of the majority. Case in point a country where the majority of Americans do not favor government takeover of our healthcare, 17% of the economy. The greater likelihood is that narrowly focused, well organized minorities will assert their interests over the interests of the majority. The popular fiction is that the liberal interests are motivated and enlightened, where they are just as likely to be shallow and clueless about the long term ramifications of this action. The party who stands to gain from this is the political one who can postpone the day of reckoning of their profligate spending by adding more cash to the fire. The caveat its that they would have to curtail their habits once they have accessed this huge additional source of funds and the afforded breathing room. The far greater probability is that will continue on their way doing what they have always done and hastening us to a collapse, which should occur once interest rates start to rise and the carrying costs of the current debt become unsustainable. China and India will not be able do justify throwing more good money after bad and loaning funds to cover the debt. Once that happens, the only out is printing money at an even faster rate. We’ve already expanded the supply of dollars by 120% in the last couple of years. Its only been the banks willingness to sit on those that have kept us from the brink already. Once this kicks off, the FED will scramble to raise the interest rates fast enough to suck the huge quantity of extra dollars back in. What do you imagine will happen to our fragile economy with an interest rate of greater than 20% on everything borrowed? And if they don’t do that, then the value of the dollar heads to the basement. Just the number of dollars in circulation now guarantees that value of our current savings will fall by at least 60%.
Want to buy some magic beans?
Comment by Dr. Steve on 30 October 2009:
Thanks Rick, you are just providing more incentive for expanded mental health care mandated coverage as we all slip into depression!
But at least it will be free, right?
Comment by Chris on 30 October 2009:
As my family has always taught me-
“There’s no such thing as a free lunch.”
I may only be 18, but even I can see the corruption in this “God-send” bill. Somebody, somewhere along the line will be paying for it; the American citizen.
Fantastic read!
Comment by Dennis on 30 October 2009:
My congressman just sent out a newsletter to let his constituents know that we can count on him to fight a national health care bill yet keep Medicare intact. Dr. Steve is slipping into depression and newsletters like this are raising my blood pressure.
Comment by Marie on 31 October 2009:
Well said Rick. It is unfortunate that most of the population are too ignorant to realized the pain this will bring to this great nation.
Comment by Chuck on 31 October 2009:
$5 per hour over a career yields 1.5 MILLION DOLLARS at retirement. My latest employer offers a choice between medical insurance or $5 per hour in your paycheck. Will I have a choice with Obamacare?
My wife and I raised 4 kids and never collected a penny of insurance. We got plenty of medical care without insurance. Coverage and medical care are not the same thing.
When I’ve received medical care I almost always got a discount for paying my own bills, since the overhead is zero.
I’ve heard doctors complain about the uninsured, but I haven’t heard of any of them denying care to the uninsured. The largest hospital in the state takes all comers, and last year issued collection notices to over 30,000 patients who did not pay. The question is not whether they get care, the question is whether they should suffer the discomfort of being asked to pay for what they received.
Comment by D. Saul Weiner on 31 October 2009:
Trick or treat? Clearly, the former. The Welfare state (and it is all welfare, when it comes right down to it) is a magical realm, no?
Comment by Dennis K. on 31 October 2009:
Point by point rebuttal:
1. Medical care is not a free good found in nature.
i. Rebuttal – groups of animals share food and safety in herds.
2. Medical insurance has come to mean something for free.
i. Rebuttal – this paragraph is not simply against health insurance for the public safety and well being, but even against health insurance in general and does not relate to our current health care debate.
3. Irresponsible mindset created by welfare state.
i. Rebuttal – American Abortion rates are significantly MORE THAN TWICE the rate of abortions in France. The author seems to say that only coercive systems that push women into abortion, such as the US is right now, is the only “responsible” thing. In America, we have passive coercion into abortion and to not be responsible for a baby. In Communist China, they have active coercion into abortion. The public option in France is the passive, not coercive, pro-life system. Our own pro-life community has not yet realized they are backing the wrong political movement to realize their goals.
4. The public Option is motivated by hatred of the Private Health insurance.
i. Maybe. But they deserve it.
ii. By having a public option to compete with the private sector, if the private sector is motivated to improve, then the well deserved hatred may dissipate. Anti-government folk recently hate the post office for political reasons. But because they offer a fair deal on package and mail delivery, by coincidence?, their nearest competitors UPS and Fedex also offer a fair deal.
4. Interstate sales used to “protect” local insurance cartels. “silence is deafening?” Well the reason that there is radio silence on the topic is that the insurance companies that try to do the right thing will be penalized under that system when their competitors move to South Dakota with the credit card companies.
i. This article complains about the same thing that is actually maintaining the small amount of competition that we have left in the insurance industry. Is Mr. Richman also going to defend how the credit card industry is centralized around South Dakota so that our local Attorney Generals cannot protect us from their abuses?
ii. So ironically, when local insurance companies are destroyed by the Republican proposal to allow insurance sales across state lines, and when there is a race to the bottom feeder state that prostitutes its attorney general like South Dakota, then people will demand a public option, but only after there is much more suffering at the hands of corporations like there is in the Credit Card industry. When a credit card company does not respond to a customer, they may end up a paying a higher rate or a fee or something. That is bad enough. But if insurance companies are reduced to that level we all will suffer mightily.
5. The real agenda of the public option is not to have competition, but to eventually have a single payer system.
i. That is true of some supporters of the public option. Not me, but I am not against a single payer system also. By giving a public option we are actually giving the private insurance corporations another undeserved chance. Work up to the level of a fair deal, and the customers will stay with you.
ii. The public option is actually a compromise between those who want to eliminate corporate abuse, and those who think that corporations can be rehabilitated. After the public option, it will be the corporations and their customers who decide what will happen next. Some CEOs may not respond to the therapy. If they don’t they will kill their company. Some corporations with bad corporate government will probably not make it though. And that will be good for everyone.
6. Public option will not be available for those who already have insurance through their employer.
i. The public option will have to compete each year with your HR department just like all the other companies do. If your deal is already better, and stays better, then you will be in the minority who will be better off without a public option anyway.
7. Although there is not a well thought out thesis to that paragraph, the general point is that taxes may go up. Well, okay. They will. But they will not go up as fast as corporate premiums. Also, the current socialist system, broken down into a corporate feudal caste system, uses premiums that are form of taxation without representation. We learned during the financial crisis that not even wealthy investors, (wouldn’t it be nice to be a wealthy investor?) not even they had representation in the boardrooms of the corporations. The CEOs of the corporations tanked everything on a gamble without any input from rich people. If rich people can’t get representation in the boardroom, then what chance do the rest of us have?
i. Ironically, those who are organizing against a public health option are the the same ones who organize against labor unions that are the only small source of representation one can have in a corporation. Not even rich people have representation in a corporation.
ii. If the public option stopped covering life threatening conditions, and pre-existing conditions, then we have representation to make it work well. In the corporations, there is no user leverage except to quit and go to another insurance company, and that is in reality, no representation at all.
8. The bill is large, almost 2000 pages. Well, that is why we have committees. And, there are large bills all the time that slip though that nobody could possibly read. However, this whole debate is being watched carefully, much more carefully than the no-bid military contracts that sent money away from our troops and into foreign slave-holders. The only resistance is ideological.
My counter point would be that the public option is like an ex-wife who dates a man who never hits her and causes her to go the hospital all bruised up. The ex-husband could either see the error of his ways, or insists he was right all along to abuse his ex-wife. The public option is the last chance for private insurance to turn itself around. Otherwise, the next choice is clearly a single payer system.
Comment by Wilt Alston on 31 October 2009:
Great piece, Sheldon. I particularly liked the opening paragraph. That people–mostly those who haven’t a real clue about economics and human action–continue to posit health care as a “right” is the best point at which to being this discussion. (It seems though, that despite your logical explanation, the necessarily negative nature of rights still escapes a few!) That you or I WISH people had adequate health insurance or WANT everyone to have access to affordable health care is irrelevant to the issue at hand. I cannot morally be made liable for that which you (or anyone else) wants or wishes. Doing so requires that you (or your representative) be morally authorized to take from me that which is mine. Now, if I want to share it, like say, animals sharing food in herds, and I do so voluntarily, great. But if you decide that you must take it from me, then you are a common thief and your cause cannot be made noble on the basis of the ostensible recipient of your thievery.
Comment by Peter Warren on 31 October 2009:
Please respond to Dennis K.’s comments, especially what he claims will happen if insurance companies are allowed to sell policies across state lines. Thanx
Comment by Adam on 1 November 2009:
Dennis what about the already failed attempts of similar public options? Also what about obama forcing people to buy insurance from these corrupt insurance companies? That is what he is doing by forcing people to get some form of health coverage.
Comment by John and Dagny Galt on 1 November 2009:
There are healthcare professionals who have walked away already and there are those currently doing so…and more who are preparing to walk away.
When they walk away that puts those left in more of a state of overload. Those overloaded will then decide that they too…will walk away.
Then the situation gets uglier when the gunvernment demands and dictates that healthcare professionals remain on the job regardless of their own free will and voluntary action in the marketplace.
Think there won’t someday be a bounty on the heads of outlaw healthcare professionals working outside of the dictates of the regime?
Think again…hahaha.
Get your copy of Tom Baugh’s new book Starving The Monkeys before it is banned and Tom is whisked off to Gitmo or Syria!
Sincerely,
John and Dagny Galt
Atlas Shrugged, Owners Manual For The Universe!(tm)
http://www.starvingthemonkeys.com/
http://voluntaryist.com/fundamentals/introduction.php
.
Pingback by The Welfare State Corrupts Absolutely « Reboot The Republic on 1 November 2009:
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Comment by Jules Levine on 1 November 2009:
for Dennnis
I am 91 years old and I don’t know how many more years G-d has alotted me. But by 2015, if ths Universal Health Bill is approved, I will be laughing so hard in my grave that the casket lid will lift off. Public Insurance companies will cease to exist, since they cannot compete with Gov’t run insurane that pays for its costs by increasing taxes in order to cover the cost of health care!
Comment by Blondie on 1 November 2009:
Dennis, “By having a public option to compete with the private sector, if the private sector is motivated to improve, then the well deserved hatred may dissipate.”
The trouble with a government-run competitor is that it has unlimited funds. Do you think if it has trouble staying afloat that it will cut costs and work on becoming more efficient? The government will simply give it more money and raise taxes. A public option has little accountability because everyone pays for it via taxation, and you can’t exactly stop paying if you’re unsatisfied unless you want to spend time in jail.
Comment by Sheldon Richman on 2 November 2009:
Until I have more time to respond, this will have to do:
Re interstate insurance sales, Dennis K. writes: “Well the reason that there is radio silence on the topic is that the insurance companies that try to do the right thing will be penalized under that system when their competitors move to South Dakota with the credit card companies…. Is Mr. Richman also going to defend how the credit card industry is centralized around South Dakota so that our local Attorney Generals cannot protect us from their abuses?”
From this, you’d think that everything we buy (except credit card services) comes from the states in which we live. On the contrary, most of what we buy, especially in the Internet age, moves in interstate commerce. Do we see the problem that Dennis K. warns of? If we prohibited cross-state sales in everything, we’d be far poorer than we are today. If fraud occurs, we are not powerless because the manufacturer is located in another state. We have recourse, and this provides an incentive for honest dealing. And if suing an out-of-state firm is difficult, that’s a flaw in the government’s inefficient legal system, not in interstate commerce.
The ultimate protection for consumers is competition, which is why we ought to be able to buy insurance policies offered in other states. One size won’t fit all; competition stimulates variety and individualized service. Dennis K. fears that all the insurance companies will locate in the one state where the laws are lenient.
That’s a very strange view of consumer activity. If that scenario were true—and if there were no legal barriers to competitive entry—wouldn’t honest companies make a bid for all those dissatisfied consumers? (Of course, consumers, not employers, should be buying their own insurance.) If protectionist laws are keeping this sort of competition from operating, then let’s repeal those laws. But deliberately shrinking markets to conform to 50 state boundaries is self-defeating. It’s responsible for much of what’s wrong today.
The credit card example is particularly off the mark. Even with our cartelized banking system, the Internet is brimming with information about which credit cards have the best terms and which banks have the best services, enabling consumers to shift from one to another whenever a better deal arises. Of course, the recent credit-card legislation will dry up a lot of that competition. By the way, while abuses undoubtedly occur, many practices called abuses are in fact not. For example, banks are accused to changing the interest rate on existing balances. But that’s not what happens. As Todd Zywicki points out in The Freeman (http://tinyurl.com/m3gxca), credit cards offer revolving credit, which means every month an unpaid balance represents a new loan. Revolving credit is an old practice, which consumers are responsible for understanding before they borrow someone else’s money. The Internet not only hosts a competitive market for credit cards; it also is a good source of consumer information.
Dennis K. labors under the misapprehension that the alternative to what the Democrats want is the status quo. Far from it. The Democrats would reinforce the status quo. (Republicans have contributed little to the debate.) Market advocates want to scrap the status quo so that economic freedom can deliver the goods and services we want.
Comment by kazoovirtuoso on 4 November 2009:
Dennis K said “groups of animals share food and safety in herds.” Well, they also run around naked and lick their *ahems*. You start, and I’ll share my food with you and let you in my herd. Gotta run, I see a gazelle.
Comment by Gerard on 4 November 2009:
I was in the toy store with my two little boys. They were eagerly eyeing the Star Wars Millennium Falcon Lego set. They wanted it so badly.
I pointed out that it was very expensive and that we really couldn’t afford a $500.00 Lego set. After a moment, their eyes lit up when they came to a solution: “We’ll ask Santa for it!”
I can forgive their childish naiveté. It was actually very cute.
But it is not cute when the same logic is used by grown adults. “We’ll ask government for it!” is not a solution.
Comment by Robert on 4 November 2009:
I heard the Russians have a saying that goes, “The free cheese is at the center of a trap.” In this case the free cheese is “free” government health insurance, and the trap is changing the relationship between government and citizen into one of master and slave. (Who would have the guts to speak out against the government when it is wrong, when some government bureaucrat could exact revenge by denying life-saving care to that person or one of his loved ones?) Such a policy inherently puts the government into a perpetual state of war against the citizens. Such a policy is best never implemented in the first place.