Sunday, June 21, 2009

Eliminate Government Health Care

It seems whenever I point out the obvious flaws in socialized medicine--flaws terrible enough to eschew it forevermore rather than consider it once again (as both Republicans and Democrats are doing)--someone asks a variation of the question:

"Well, then what do you suggest as a policy to resolve the current crisis?"

The unfortunate truth is that most people who pose this question are not interested in even considering my answer; they simply retreat to it because they haven't a ready or viable defense for socialism.

There is nothing unique about what I think should be this government's health care policy. I cannot lay proprietary claim to the ideas behind my creed. To put it tersely, I think that the government should back off--back way off.

Professor Hans-Hermann Hoppe recommends four easy steps in this article from The Free Market. Click on either of the link to read more of his rationale.

1. Eliminate all licensing requirements for medical schools, hospitals, pharmacies, and medical doctors and other health care personnel. Their supply would almost instantly increase, prices would fall, and a greater variety of health care services would appear on the market.

2. Eliminate all government restrictions on the production and sale of pharmaceutical products and medical devices. This means no more Food and Drug Administration, which presently hinders innovation and increases costs.

3. Deregulate the health insurance industry. Private enterprise can offer insurance against events over whose outcome the insured possesses no control. One cannot insure oneself against suicide or bankruptcy, for example, because it is in one's own hands to bring these events about.

4. Eliminate all subsidies to the sick or unhealthy. Subsidies create more of whatever is being subsidized. Subsidies for the ill and diseased breed illness and disease, and promote carelessness, indigence, and dependency. If we eliminate them, we would strengthen the will to live healthy lives and to work for a living. In the first instance, that means abolishing Medicare and Medicaid.

Notice the action verbs that begin each of Hoppe's recommendations. Eliminate appears three times, and deregulate (meaning to eliminate regulation). That's because, as economist Stefan Karlsson points out ,
the real shortcomings that [the U.S. health care industry] does have are not the effect of its free market elements, but to various regulations and factors unrelated to the health care system.
In fact, as Karlsson and others point out, is the socialism already inherent in the U.S. system that is the root of the problem. Currently, the government is funding nearly if not half of all medical spending in this country, "spending more per capita than any other OECD country, including those with socialist, government-funded healthcare." (click on the link to look at the graph).

So, rather than doing more of the same--if you really wish for substantive change, that is--we should try something truly different. As Hoppe suggests, let's eliminate and deregulate the things that are the very source of the "crisis."

By the way, I think that the term "crisis" is inappropriately used to identify the problem(s) with health care in the United States. A crisis would be that there are no doctors, treatments, or medicines. That costs for doctors, treatments, and medicines are too high for many is not a crisis. At best it's a predicament, and only for those who cannot affort medical goods and services. Read Hoppe's article and do a little checking around yourself, and you'll see that the cost problem is not the health care industry's fault. It's the government that needs to change.

Here's a bit of an afterthought--far too often an afterthought for most people--Government health care is unconstitutional.

I know. Who cares about the constitution anymore?

I do. (I do...I do...I do...)--that's the sound of the echo in this lonely room.


  1. mike kaz10:54 AM

    I do!

  2. The problems we see with healthcare are largely government created. Prof Hoppe's points of contention don't seem to get at the crux the problem most care about - increasing health care costs. For now, I'll leave other issues (like the FDA) aside to focus on the problems with (1) current insurance structure and (2) government incentives.

    At present, most insured persons in the US are covered by their employers. This is largely due to the federal government's brilliant decision to allow employers to provide health insurance as a tax exempt benefit, BUT require individuals purchasing health insurance (or spending on health care) to buy it using after-tax income. This effectively subsidizes employer health care and hence (anyone who took Econ 101 can tell you) too much is spent on employer health care with respect to other goods (in terms of what would maximize utility).

    The way health insurance policies are (largely) structured - in part because of gov't requirements - doesn't make much sense in the way we typically think of insurance. We don't buy car insurance to cover gasoline costs or oil changes. So why do we expect health insurance to cover physicals or dental cleanings? Insurance is designed as a means of reducing the risk of individuals against catastrophy through aggrigation. Implementing a relatively high deductables prevents people from making insurance claims frivolously and frequently - this lowering the cost of the insurance. We need to move back to this model of insurance via deregulation of what health insurance MUST cover to make insurance affordable. Small, regular costs could be covered out of pocket. However, more reform regarding WHO provides the insurance is still necessary.

    Because of the "moral hazard" disconnect between the party providing the insurance (largely employers) and the party claiming insurance (the employees) too much is money is presently being spent on health insurance. We need to eliminate this subsidy on employer health care (read: it's tax exempt status) so that privately purchased (and hence funded) health insurance can compete on a level playing field.

    Changing just two aspects of the health insurance system would greatly improve coverage and contain costs: (1) Incentivise privately purchased insurance by ending the subsisdy on employer coverage, (2) Change our ideology of what health insurance should cover, i.e. high deductable coverage (making the neccesary deregulation to allow it). Note: Giving tax free status to private health care spending would also incentivise private insurance, but would still cause too much to be spent on health care.

    For more specificity, see Milton Friedman's article in the Hoover Digest:


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