December 13, 2017

The Culture of Entitlement in Medicine

medicare-logoSenator Rand Paul has introduced an alternative bill to what he calls, “Obamacare Lite,” a.k.a. the American Health Care Act, introduced by House Speaker Paul Ryan. Paul’s criticism of Ryan’s bill was mild compared to Rep. Thomas Massie’s. Massie called Ryan’s bill a “stinking pile of garbage.”

While Paul’s plan is more free-market oriented than Ryan’s, no plan is addressing the one elephant in the room that must be slain before anything resembling a free market in health care can emerge: entitlements.

While Medicare and Medicaid’s effect on the federal budget is generally acknowledged, seldom mentioned is the percentage of overall health care spending that is tax-subsidized and the effect that has on prices. A study by the Georgia Institute of Technology found that of over $2.5 trillion in total U.S. health care spending in 2014, Medicare, Medicaid and “Other Public Insurance” accounted for 44% of it. By comparison, spending by private insurance companies accounted for only 33%, with out-of-pocket spending a mere 13%. Most of the remaining 10% was attributed to “other payers.”

In other words, almost half of all health care purchases in the United States occur free from the two strongest price-limiting market forces: the freedom not to purchase and finite demand.

Yes, the patients have a choice of which medical services they utilize. But they don’t buy them; taxpayers do. And the taxpayers don’t have a choice. And “demand” means not only the desire, but the ability to purchase a product at a given price. I may want to purchase a Rolls Royce. But if I don’t have enough money, I don’t represent demand for a Rolls Royce.

Price is determined by the intersection of supply and demand. By adding over $1 trillion to total funds available for health care spending, government health care programs significantly increase demand. When demand significantly increases, supply and other factors being equal, prices go up. It’s Economics 101.

If half of all automobiles were purchased by government programs, the price of automobiles would behave just as health care prices do now. And politicians and other “experts” would be wringing their hands over how to solve the automobile crisis and ensure everyone has the opportunity to exercise their fundamental right to drive to work.

Anyone who points out these rather uncontroversial economic realities can expect to be answered with, “What? You want to let my grandmother just die because she can’t afford health care? Do you believe only rich people should be treated for sickness and injuries and everyone else should just be left to suffer?”

Invariably, opponents of these programs take the bait and respond as if government health care programs were solely entitlements for consumers. They’re not. They’re much more entitlements for providers, who believe they are entitled to fees their markets won’t bear.

Having worked in a past life with physicians, hospitals and other providers for over a decade, I had a unique opportunity to understand their thinking (Disclosure: much of this time was spent in management positions at two of those “evil” HMOs). And while there are many exceptions to what I’m about to say, there are two things I found to be true about most physicians. One, they are among the most generous and compassionate people in society. Two, they share academia’s absolute contempt for the free market.

This results in a kind of Jekyll/Hyde aspect to their approach to reimbursement. On one hand, a physician who encounters a patient with no verifiable ability to pay will nevertheless care for that patient, if the need is serious, without hesitation. Physicians and hospitals provide a considerable amount of care every year for which they are not paid, without complaint.

Yet the moment there is a payment avenue, that same physician suddenly loses not only his compassion, but all connection with reality. Many were the times when a physician would say to me words to the effect of, “I’m entitled to higher compensation in return for the years of training I completed and the money I spent acquiring it.”

No, doc, you’re not. It is true that your skills are scarce and will fetch a higher price on the market than skills less scarce. But you’re only entitled to what others have agreed to pay you, like everybody else.

This culture of entitlement extends throughout the health care industry. How many times have you spoken with the billing manager for a hospital or medical practice who makes some form of this passive-aggressive complaint: “Our billed charges for this procedure are $835.00, but your insurance only pays $520.”

I’ve taken to responding, “Yes, I know how you feel. My billed charges to my employer are $1,000.00 per hour, but my paycheck is only for what he agreed to pay me.”

I’m not suggesting physicians’ salaries necessarily must be cut to restore price reality to medicine. A free market may give them a haircut; it may not. But there are many costs other than the physician’s salary in delivering health care  and there is no real pressure on improving efficiency in any of them.

As just one example, think about how many times you provide your health insurance information to your doctor’s office. They get it from you on the phone before even agreeing to make an appointment. Then, you have to write it on a paper form when you get to the office, sometimes more than once, on more than one form. Why? They’ve already captured that info on the phone. It’s in their billing system. Who’s reading, filing and otherwise processing the paper form(s) and why?

Many medical practices run the way they did in the 1950s for one reason: they don’t have to change. Half their revenues are guaranteed, at any price, by a customer base that can’t say no. Grocery stores, which provide products far more vital to human survival than medical care, operate on razor thin margins. Their prices behave normally, when adjusted for inflation. No one seems curious about why that is.

From time to time, proposals are made to try to phase out Medicare and Medicaid, the assumption being that there can be no major market disruption. That’s just another manifestation of the strange notion that medical care is in some sacred and holy category that more important goods and services don’t occupy.

While there are plenty of government interventions on the supply side that artificially inflate health care prices, the most effective way to normalize pricing would be to abolish Medicare and Medicaid tomorrow. That would cut demand for those services immediately by over $1 trillion per year. With a significant decrease in demand comes a significant decrease in prices.

And guess what? There would still be doctors, hospitals, pharmaceutical companies and other providers who want and need to deliver care and make profits. Only they’d have to adjust their business models to deliver their products at prices their customers could afford. This may sound scary, but industries have demonstrated their resilience to disruption over and over throughout history. And we’re talking about one composed of people at the far right of the bell curve. All experience says the turmoil would be far briefer and less harmful than the hysterical predictions we can expect from those benefiting from the current system.

Abolishing these programs won’t cut off granny. It will cut off McKesson, Merck and a lot of very wealthy physicians (who’d still be wealthy afterwards) from the government till. We’d all be treated much more like customers by the people whose medical services we purchase and health insurance premiums would plummet.

Proposals like Senator Paul’s will produce positive results on the margin, but until the entitlements are abolished, they won’t succeed in restoring normalcy to the health care market.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

What is Your Fair Share?

“For were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish means for the protection of the rest…”

– Thomas Paine, Common Sense (1776)

There were not many surprises in President Obama’s 2012 state of the union address on Tuesday. He touted what he claims are the accomplishments of his administration and pushed his left-leaning economic agenda. For the president, all economic growth has its roots in some sort of government intervention, including “help financing a new plant, equipment, or training for new workers,” giving “community colleges the resources they need to become community career centers,” or trying to “spur energy innovation with new incentives.” Of course, further expanding a government that already spends about 50% more than it collects in taxes can only be accomplished one way – by collecting a lot more taxes.

To this end, the president resorted to the perennial liberal/progressive mantra that everyone “pay their fair share.” Obama used this term three times during the speech in regard to taxes. As even many of the Republican presidential candidates seem to buy into it, the president was also unable to resist the urge to promote the latest left-wing myth that millionaires like Mitt Romney pay less in taxes than their secretaries. This is complete nonsense, of course, but it is effective in eliciting the appropriate outrage from people who don’t stop to do either some simple math or even a little critical thinking.

For the president, there doesn’t seem to be a ceiling on what anyone’s fair share might be. However, he does have a clearly defined floor. “If you make more than $1 million a year, you should not pay less than 30 percent in taxes.” Exactly why that number is “fair” or even the millionaire’s “share” is somewhat difficult to determine. Neither does Obama answer the question that should logically follow. If you make under $1 million per year, what is your fair share in taxes?

Now, in any other situation where a group of people agrees to pool its money to buy something, this is a very easy question to answer. If you and three friends decide to go in on a large pizza, each of you will pay 1/4 of the cost. Assuming it is a typical pie, it will be cut into eight pieces and each of you will eat two. Thus, everyone has received an equal amount of the pizza and each has paid his fair share of the cost.

Of course, before anyone determines your fair share of the cost, you would be asked if you want pizza in the first place. In all such arrangements between human beings, other than government, you have a choice of whether you want to buy or not. Perhaps you’d like to eat something else. Perhaps you’re not hungry. You can always allow the other three to buy pizza and provide for your own meal yourself.

Not so with government. Not only can the other three take a vote and force you to buy part of this pizza, but they add insult to injury by proclaiming that their vote represented your consent to buy it. With this dubious consent in hand, they then decide what your fair share of the cost of the pizza will be, regardless of how the slices are distributed. If you have acquired too much wealth, even honestly, then you might find yourself paying for 3/4 of the pizza and only getting one slice in return. Once voluntary consent is eliminated and force is put in its place, it becomes difficult to use words like “fair” and “equitable” without committing grave offenses against the language.

Putting that aside for the moment, let’s assume that 315 million people have actually all agreed to constitute a government and pool their money to pay for its services. Before determining what anyone’s fair share of the cost would be, we first have to determine what services the government can offer. It would not make any sense for the government to offer services that only benefit one or two people, because all 315 million are paying. No, the only legitimate services that the government could offer would be those that contributed to the “general welfare.”

This widely abused term is not anywhere near as mysterious as it is made out to be. Promoting the general welfare is offering only those services that benefit every member of society equally. For example, if the government devotes resources to a military establishment to protect the nation’s borders, it is promoting the general welfare. Regardless of how effective the service might be, every member of society within the borders is benefitting equally from it. From the Wall Street financier to the general contractor to the grocery clerk to the homeless man, all are receiving equal protection from foreign invaders. Thus, a defensive military establishment is a service that promotes the general welfare and therefore could be offered fairly under such an arrangement.

Similarly, a system of law enforcement and courts would also promote the general welfare. If the person or property of one member of society were invaded by another, then employees of this agency would investigate the incident, determine if a tort or crime had been committed, and make a determination on what penalty or restitution should be paid by the defendant. This, too, would benefit all members of the society equally. Whether you were a Wall Street financier whose partner had embezzled millions or a taxi driver whose modest home had been burglarized, you are equally protected by laws against theft.

Notice also that the cost of providing these services is the same for each member of society. Obviously, it costs no more for an army to defend the financier from an invading army than it does to defend the taxi driver. The army defends against the invader for all within the borders at one cost. Similarly, it costs no more to provide a police officer, a judge, a jury, etc. for the financier than it does for the taxi driver. The only exception is defense attorney, which is provided for a defendant who cannot afford one, but this is a minute percentage of the entire cost.

In short, any defense of life, liberty, and property, whether from foreign invasion or aggression by another member of society, is a service that benefits the general welfare. It benefits all members of society equally and costs relatively the same to provide to all members of society.

Let us now consider some services that the government offers that do not promote the general welfare. Healthcare is obviously one. First, all members of society do not benefit equally when the govenrment provides healthcare. For example, Medicare only benefits people over 65 yeras of age and disabled people under 65. Not only does the program not benefit all members of society equally, but it actually does not benefit those paying for it at all, while those receiving the benefits (those over 65 and the disabled) do not pay at all. Recall the pizza example. Imagine if you had to pay for a whole pizza that your three friends ate, and then had to pay additional monies to provide for your own meal. Medicare, Medicaid, or other government programs for specific groups are really no different.

In addition, government medical care can never cost the same to provide to all members of society, as security services do. Some people will be sicker than others, either through misfortune or their own lifestyle choices. Some will need surgeries or chemotherapy or other expensive care. Some will need relatively little care. It is not an exaggeration to say that there may be 315 million different costs to provide healthcare to 315 million different people.

Education is another service that does not promote the general welfare. When the govenrment provides education, it is of absolutely no benefit to anyone that is not in school or does not have children in school. Neither does it benefit parents who homeschool their children or enroll them in private schools or childless adults who all must pay for government education. Some of the people who benefit do pay part of the expense, but obviously this does not constitute “fairness.” It is no different than if four friends all paid for 1/4 of the pizza, but two of them ate it all. Certainly, the other two had no “fair share” for any of the pizza at all. As with healthcare, the cost of education is also going to be different for different people. An education in medicine has a different cost than an education in engineering or art.

In looking at the federal government’s budget, one can see that the overwhelming majority of the money spent is not spent for the general welfare. Almost all of it is collected from one group of people and spent for the benefit of others. The only services provided by the federal government that truly promote the general welfare are those that concern defense of the borders and defense of person and property related to interstate commerce. At the state level, only defense of person and property within the state promotes the general welfare. All other services represent a forced redistribution of wealth from one person or group to another. When anyone other than the government engages in a “forced redistribution of wealth,” we call it “armed robbery.”

It should also be noted that even the “Defense” portion of the federal budget largely does not promote the general welfare. Only that portion necessary to defend U.S. citizens from aggression by foreign nations does. Those expenditures related to defending people in other countries or which are unnecessary for security not only do not promote the general welfare, they do not benefit anyone within the United States at all – except for those military contractors and financiers that are fortunate enough to profit from these activities.

There is also frequent confusion about government services commonly referred to as “infrastructure.” It is argued by some that if the government builds a road that is accessible to everyone, it promotes the general welfare. However, this argument does not hold up to scrutiny. If federal money is used to build a light rail system in Florida, it is going to benefit people who live or travel frequently in Florida much more than people who do not. Certainly, a citizen in California or Montana is unlikely to ever even see that railroad, much less benefit from it equally. Who would not agree that his fair share of this railroad is zero?

Even at the local level, a road or a bridge does not benefit every member of society equally. The local businessman whose products are more cheaply transported is going to benefit far more than the occasional traveler that might use the road for convenience. Yet, when the government builds the road, both are forced to pay equally. Furthermore, since the businessman is running heavier vehicles over the road with much greater frequency than the occasional traveler, it costs more in maintenance to provide this service to the businessman than to others. Obviously, the road or bridge does not promote the general welfare even at the local level.

So, what is your fair share in taxes? The answer is that you owe an equal share of those services provided by the government that promote the general welfare. Those services benefit you and everyone else equally. However, examination of any government budget, at the federal, state, or local level demonstrates that these services are now a tiny fraction of overall spending. A quick look at Florida’s budget summary reveals that about 8.7% of government spending promotes the general welfare. That $4.9 million in expense should be born by every citizen of Florida equally. The other $51.4 million does not promote the general welfare and should not be provided by the government at all.

An examination of the federal government’s budget for 2012 yields similar results. Once you subtract services that do no promote the general welfare, like education, healthcare, social security, and that part of the defense budget that is devoted to purposes other than protecting U.S. citizens from foreign aggression, you are left with a tiny fraction of overall spending.

For services that promote the general welfare, there is a finite cost. It does not vary depending upon how productive you are, so your fair share of that cost certainly can’t be a percentage of your income. Logically, the way to determine your fair share is to divide the total cost of services that promote the general welfare by the total population. If you have no dependents, then the quotient is your fair share. If you have dependents, then you simply multiply that quotient by the sum of your dependents and you. When you do the math, you’ll find that your fair share in taxes is a very small amount. As Thomas Paine pointed out, it is that tiny portion of your property necessary “to furnish means for the protection of the rest.” It would be easily paid by even a person of modest income. It would not require an income tax, as history before 1913 demonstrates.

For those services that the government provides to other people, your fair share is zero. However, the government routinely forces some people to pay more than their fair share and allows others to pay nothing at all. It generally collects the most in taxes from people who receive the least in benefits, which is the predictable result of offering services that do not promote the general welfare. Now, President Obama wants some people to pay even more. He and the Congress have the power, but that does not make it right. And please, President Obama, don’t insult our intelligence by calling it “fair.”

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

>A Familiar Strategy?

>Where the people fear the government you have tyranny. Where the government fears the people you have liberty. [1]

– John Basil Barnhill (1914)

Americans should be experiencing “déjà vu all over again” as Congress prepares for another weekend incursion into their rights via another two-thousand page bill that must be voted on before anyone has had a chance to read it. This time, it is H.R. 3962 “To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.” The next law that should be passed is that legislators and bureaucrats shall not be allowed to work on weekends.

That working Americans will rise early on Monday to begin another week with less protections of their rights and more of their property stolen is not all that should seem familiar. If anyone can remember as far back as the Bush administration (this new regime has been so bad that I am afraid people have forgotten most of the outrages of the last), a very similar dynamic played out. The very first bailout – of the banking industry – met with resistance similar to that against the proposed government takeover of the health care industry. The first attempt to pass the TARP bill failed.

For those watching the statements made by their representatives while opposing that bill, one thing should have been obvious. Those representatives feared their constituents. It was in their eyes and in their voices as they explained their opposition. I do not mean that they feared violence. They feared for their jobs and they feared whatever other consequences there might have been if they deliberately defied the wishes of those thousands of voters who had angrily called their offices. For a moment, our government worked as it was designed to work. The people spoke and their representatives heeded their wishes, however reluctantly.

Then, the uproar died down. President Bush emerged from his long, unnatural silence during the financial crisis and gave a speech designed to put that fear back into the hearts of the citizens, where our government prefers that it permanently reside. If the banking bailout wasn’t passed, Americans could lose their homes, their jobs, or their retirement savings. Financial Armageddon awaited if the bankers were not saved – for it is really the bankers that provide those things to everyone. Henry Paulson and Ben Bernanke joined the chorus to help paint the terrifying picture of unspeakable horrors that awaited us if we did not give almost $800 billion to the Treasury Secretary to be redistributed to his friends on Wall Street.

It is unclear if Americans really believed the government or if they just ran out of energy to protest. Either way, the bill passed the second time it came up for a vote. Those same representatives who only days before were too afraid to pass it were now somehow emboldened and it sailed through with barely a whimper from the victims. What was different the second time around?

Hopefully, Americans took notice of the fact that their representatives do not possess the courage to pass a bill that they actively oppose, even if that opposition amounts to nothing more than angry phone calls. It is difficult to ascertain what reassured those congressmen enough to vote for the bill the second time. Perhaps the calls to their offices changed after the government’s scare campaign intensified. Perhaps some of the people who had called before the first vote called back and told those congressmen that they had changed their minds.

However, there is another possibility that is infinitely more disturbing. Perhaps by the time of the second vote, the pressure had died down out of sheer inertia. After all, there is probably some limit to just how long Americans can make calls, march in protests, or write letters while trying to do their jobs, raise their families, and live their lives. If I were trying to develop a strategy to pass a bill that most Americans oppose, I would consciously plan for exactly what happened during the banking bailout bill in 2008. I would let them scream, let them march, let them carry signs and write letters, and even let the bill fail to pass. And once the citizenry was sufficiently exhausted or had turned their attention to something else, I would put it up for another vote.

Personally, I would be surprised if this were truly a conscious strategy by most of our representatives, although I am sure that the dynamic has not escaped the notice of the most devious of the professional political crowd. However, whether intentional or not, this is exactly what happened with the banking bailout and it is exactly what is about to happen with so-called “health care reform.” All summer long, Americans called their representatives, marched in the streets, and even showed up in the capitol city itself in numbers far too large to support the claim that it was some sort of Republican PR campaign. At one point, the idea of a government-run public option was all but pronounced dead on non-arrival by media outlets, whether conservative or liberal in their bias. It has found new life.

The American Revolutiony War was by no means encouraging for the Americans for the great majority of the time that it was being fought. The Americans lost almost every battle, constantly outclassed by the greatest military force in the history of the world at that time. However, there was one advantage that the Americans had over the British – they were relentless. No matter how many battles they lost (and they lost most of them), the American army would not go away. After being repeatedly schooled by superior British generals at New York, Brandywine, and elsewhere, Washington showed up at Monmouth and fought the British to a standstill. In the end, it was he and the Americans that emerged as the victors.

This weekend, the British are back. However, this time they are not wearing red coats but instead masquerading as representatives of the people. They are bringing with them the same tyranny that they did in the 18th century – unjust taxes, illegitimate government power, and violations of the rights of every individual American. It is imperative that Americans once again refuse to go away. Millions have sacrificed time, money that they could ill afford to spend, and days, weeks, and months of their lives to write, call, march, and shout with all of their might against the destruction of our liberty that this government has accelerated with increasing brazenness over the past few years (under presidents from both major parties). It all goes for naught if our representatives learn that they need only wait for us to exhaust our energy before ignoring our wishes and trampling upon our rights as they please.

There is a disturbing sound in the air – silence. There is a feeling that the outrage has subsided and that the coast is clear for another weekend theft of our liberty and property. Let us not let last summer’s tremendous demonstration of the American spirit go to waste. If you opposed this bill the first time, if you traveled to Washington, spent money you didn’t have, took time away from your job or family to be sure that your voice was heard, it will have all been for nothing if they pass this bill this weekend.

Now is the time for Americans to be relentless. Call your representatives and let them know that what happened in New Jersey and Virginia a few days ago has nothing to do with Republicans or Democrats – it is the fate of all incumbent politicians, from any party, that abandon their duty to protect the rights of the people. From now until Saturday evening, we must shout louder, march longer, and get angrier than we have ever been before. Do not underestimate the power that you wield and do not let this government monster outlast you. As we said over two hundred years ago to a government that had marched against our liberty, let us shout to our representatives as loudly and for as long as it takes – this far shall you go and no farther.

[1] Barnhill, John Basil (1914). “Indictment of Socialism No. 3” (PDF). Barnhill-Tichenor Debate on Socialism. Saint Louis, Missouri: National Rip-Saw Publishing. pp. p. 34. Retrieved on 2008-10-16.

Politicians Talking Gibberish About Health Care

Joint_blog_close_PS-0774Every minute of every day, Americans are subjected to politicians and media pundits talking gibberish. There really is no other word for it, whether the particular subject is economics, foreign policy, or even climatology. However, the gibberish that is getting the most attention right now concerns health care “reform.” President Obama is leading the Democrats with the familiar socialist model that has failed in every industrialized nation in which it has been tried. The Republicans are answering with gibberish of their own. You have to especially admire the Republicans, because they are not only fomenting nonsense from a discredited, minority position, but are actually trying to suck up to voters by selling their version of government-run, loot-funded health care as a “free market solution.” Only the party of George W. Bush could be capable of gibberish like this.

To truly appreciate how bizarre the arguments are, let’s break down what our ruling class is really saying. Sometimes the music bed, the interruptions by the self-absorbed interviewer, or even the graphics leading into next segment can obscure the gibberishness of some of their assertions.

Let us start by examining the position of the Democrats. They assert that every human being has a right to health care, and that it is the government’s job to provide for those who cannot afford it. There are three key terms here: right, health care, and provide. Let’s define the first two.

Right: that which an individual is entitled to without the consent of or compensation to anyone else. For example, people have a right to life. That is, they do not need anyone’s permission, nor are they obligated to compensate anyone in order to live. It is appropriate for an individual to demand, rather than ask for, their right to life to be respected.

Health care: a service which primarily consists of the labor of health care providers. For example, a physician exerts his mind and body, utilizing his education and experience, to attempt to diagnose and treat a patient’s illness or injury. That physician’s labor is “health care.”

Let us now restate the argument made by the Democrats, using these definitions in place of the terms themselves.

“Every individual is entitled to the labor of health care providers without compensating them or obtaining their consent. It is appropriate for individuals to demand, rather than ask, that health care providers treat them for free.”

Gibberish.

To be fair, although the Democrats repeat their slogan about the “right to healthcare” ad infinitum, they do not actually propose that the government defend this “right” directly. Instead, they use their own peculiar definition of the third term previously cited, “provide.” Americans continue to be bewildered by this parlor trick, whether because they are easily confused or because it is more convenient to be fooled than not. In any case, “provide” to the government means that they will employ the method described by William Graham Sumner where A & B get together to pass a law requiring C to do something for X. So as not to miss the opportunity to describe this plainly, this really means that they are going to use the brute force of government to force some people to pay for health care for others. That is all it is, when you peel away the doubletalk, jingoism, and spin.

Moreover, it is not just your property that the government will take in order to run its program. It will also require another huge portion of your liberty as well. In a recent speech about his health care reform plans, President Obama suggested that “we” must begin encouraging healthier lifestyles, including getting our children away from computer games and back to playing outside. “We” means “the government.” Of course, when it is the government’s responsibility to pay for the health care of other people, the government now claims a right on behalf of taxpayers to see that those people keep themselves as healthy as they can in order to limit the cost. There are already government-imposed exercise programs in Japan. Americans should be aware that the same rules will apply here. One can almost hear the government “instructress” from Orwell’s 1984 screaming from the telescreen.

“Smith W.! Yes, you! Bend lower, please! You can do better than that. You’re not trying. Lower, please! That’s better, comrade.”[1]

Political gibberish often conceals rather horrifying ideas. Thankfully, we have an opposition party that is opposing these heinous proposals, correct? As the people from Hertz say, “Not exactly.”

It is true that Republicans oppose a government-run health care plan. As reported in the Wall Street Journal, the Republican summary of their “Patient’s Choice Act” argues that “ The government would run a health plan “with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.”[2] All true, but of course the so-called party of individual liberty and free markets fails to argue the main point: the government – we the people – do not have the right to forcibly take money from one person and give it to another, not even for the purposes of paying for their health care. Nowhere in any report made public nor in any interview with a spokesperson for this “opposition party” will you hear this argument. There is a good reason for that.

Of course, the Republicans will argue that their plan works through the tax system and actually let’s families “keep more of their own money” to spend on health care, but a careful read of the WSJ article reveals that the same redistribution scheme is hidden within the stale “free market” rhetoric. First, the Republican plan would eliminate the tax exemption for employers when they provide health insurance benefits to their employees. This amounts to a tax increase on employers, whether they continue to provide the benefits or whether they eliminate them and merely pay taxes on the extra net income. What would the government do with this new revenue?

“Instead, it would give an annual tax credit of $2,300 to each individual and $5,700 to each family that they could use to offset the cost of their health insurance. Low-income families would get extra money to buy into private insurance plans.” [emphasis added]

So, in an effort to appear to be protecting the property rights of their more affluent base but at the same time buy the votes of those who cannot afford health care, the Republicans will simply tax those whom they think they can get away with taxing and call their own version of wealth redistribution a “tax cut,” much like George Bush’s “tax refunds” of the past decade. Of course, there is only one word for the suggestion that you can “cut” or “refund” taxes for people who are not paying taxes.

Gibberish.

As usual, the American public is served up a carefully framed debate that attempts to appear to have two sides but doesn’t. In either case, we are getting “reform” of the health care system in the only way that any government can “provide” anything. They are going to forcibly take away the property (taxes) of one group of people and use it to provide property (health care) to another group. Lest anyone mistakes this brutal practice as “the wrong means to a compassionate end,” let us remember the only reason that politicians from either party suggest this: to buy the votes of those who believe that they will benefit from it. Since there are more who would receive benefits in the voting base of the Democratic Party, they are more open about what they are really doing. Since there are more of those who will be forced to pay in the base of the Republican Party, they try to spin their redistribution scheme as a “free market solution.” However, it is dressed up, it amounts to one thing; stealing.

In addition to ignoring the fundamental violation of rights that is part and parcel of any government provided service, both the Republicans and Democrats seem completely unaware of the root cause of the problem: health care is only so expensive because government already provides so much of it. This is the other elephant sitting in the corner whenever politicians from either party start talking about health care reform.

Last year, total health care spending in the United States amounted to roughly $2.4 trillion dollars. Medicare and Medicaid alone accounted for over $800 billion, or 33% of that. Add the Veteran’s Administration and other smaller government health care programs, and government is directly providing almost half of all health care delivered in this country. What does this have to do with the price? Any first-year economics student can tell you.

Price is determined by the intersection of supply and demand. Demand has two components: the desire to buy a good or service and the ability to buy that good or service. Let us assume that the desire for health care services is unlimited, as it is for many other goods or services. In that case, the only factor that can limit demand for health care services is ability to pay. This is the factor that most influences the price of every other good or service provided in the marketplace, including food, clothing, and shelter, which are even more vital to human life than health care. It is the finite amount of money that the buyers have to spend which keeps the price down and makes most goods affordable to those on limited budgets.

However, when government makes something an entitlement, demand suddenly becomes unlimited. Since the government now must provide the benefit and they have the option of taxing or printing what money they need to provide it, there is no longer anything holding down the price. This is the reason that we have seen health care prices skyrocket in recent decades. They will continue to rise until all resources are consumed trying to provide them.

State and local governments have already been experiencing this for years because of the exploding cost of their shares of the Medicaid programs (half of Medicaid benefits are paid by the states, some of which require their local governments to pay a percentage as well). They cannot print their own money, so they have instead cut their police forces and other legitimate functions of government in order to divert money to the insatiable Medicaid beast. In one local county in upstate New York, 100% of the property taxes collected in that county and $40 million dollars of sales tax revenue – the county’s only other revenue source – went to pay that county’s share of the Medicaid bill for their recipients. Now, it has been reported that the majority of the TARP funds that were supposed to go to “shovel-ready infrastructure projects” are instead being earmarked for “existing state social programs.” An audit of these payments would undoubtedly reveal that the bulk will go to Medicaid.

Economic laws are like the forces of nature. They can be held off, as a levy holds off a flood, but they will eventually overwhelm any attempt to violate them. The most fundamental economic law is this: you cannot consume more than you produce without taking the difference from someone else. Government produces nothing. Therefore, any health care benefit that government provides must be funded with money taken by force from someone else. There is no political theory, mathematical equation, or black magic incantation that can change this.

However, even if we are able to put aside the moral repugnancy of this practice, we cannot do so forever. Once voluntary exchange is abolished, market forces are suspended and the price of providing health care will rise until the government is no longer able even to steal enough to pay for it. That day was only a few decades away for the existing government health care programs before the economic crisis we find ourselves in now (which was similarly caused by government for all of the same reasons). If government attempts to provide everyone with health care, the end will come much sooner.

This sheds light on a fundamental misconception that underlies all of the societal problems that American society faces today: the belief that there is a conflict between individual rights and the “needs of society.” This conflict doesn’t exist. Protecting the rights of every individual serves the needs of society. Violating those rights, for whatever purpose, destroys society. In fact, it is by violating the individual rights of its constituents that government causes nearly every societal problem we face. The high price of health care is just one example.

There is only one moral and practical answer to the high cost of health care: we must get government out of the health care business entirely. That includes rejecting new programs proposed by either major party and figuring out a humane way to get our children out of the existing entitlement system without cutting off those presently dependent upon the benefits. The only lucid argument I’ve heard so far has been put forth by former presidential candidate, Congressman Ron Paul. He suggests that we dismantle our $1 trillion per year overseas military empire and use that money to pay Medicare and Social Security benefits while our children are allowed to enter the workforce without enrolling in the system themselves.

What do you know? A politician moved his lips and something besides gibberish came out.

[1] Orwell, George 1984 Part I Ch. 3

[2] Adamy, Janet “Republicans Offer Health-Care Plan” The Wall Street Journal May 21, 2009

 

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.