This Time It’s Different

Blithely comes one Barack Obama to Green Bay, Wisconsin to talk about reforming health care in the United States, home to the most advanced system of medical and health care in the world. Those savvy folks in Wisconsin probably have internet access so they could have reviewed the President’s imperatives on his web-site. Of course it does help Obama and the anticipated Democrat dynasty to propose the spreading of “loaves and fishes” while at a “town hall” meeting. The ever eager media frisson which accompanies such events represents lots of additional publicity to promote the fantasy of utopia.

What does the President have to say about the current situation? If you condense the statements from his web-site he basically asserts that health insurance is too expensive and more people need to be covered. In a rhetorical gesture typical for an enemy of political freedom, he disparages insurance and drug companies and implies that people and business are the victims.

It never seems to occur to this administration or any of the other advocates of “reform” to stop and ask two simple questions, the answers to which would develop reasonable approaches towards solutions. One, why does health care and insurance apparently cost so much? Two, why do so many people go without insurance? Instead of trying to answer these reasonable questions by appropriate research and analysis the assumption is that the central government must either take over the system or take the reins and just make it work better. (Consider if you will the costliness and inefficiency of the Pentagon, Amtrak, US Postal Service, and most road and bridge authorities, for example.) This time the cost and inefficiencies endemic to government operations will not occur, because apparently Barack Obama says so.

Also unaddressed by this administration is the Medicare elephant in the room. This is probably the main impetus to the desire for “reform”. The cost of this welfare program has far exceeded anything predicted by its original and later supporters and it is basically unfunded considered from an insurance standpoint. The obligations for Medicare commitments must come from transfer payments. What institution is responsible for delivering this example of performance in health care services? It is none other than the central government, the foremost representative of which now expects you to believe that this time it will be different.

Let’s suggest possible answers to the aforementioned questions. Economic analysis might well find that since the inception of Medicare in 1965 the demand for health services rose astronomically. Obviously, this would contribute to rising prices. More patients are asking for service. A possible reason is that most seniors on Medicare don’t have to pay much for their care as it is covered by a third party, the government on behalf of taxpayers. Therefore, and many a harried doctor will no doubt confirm anecdotally, patients appear at doctors’ offices for the most trivial of complaints.

The third party factor also applies to the so-called health insurance programs supplied by employers in the United States. With mandatory covered services and other government regulated aspects of these programs there is a remote connection between most patients and the actual cost of services. In fact, most of the complicated processing of claims filed by doctors on behalf of their patients is handled by claims processing specialists who act as agents in submitting the claims to insurers. The typical patient has no idea of what the cost of a particular visit might be and does not make any better choices than the senior on Medicare in terms of personal responsibility.

There may be many other aspects to answering the question but the third party payer problem is in my view, huge. A reform focus should be on ways to “internalize” the costs of medical and health care. When you are responsible for your own health care you quickly understand costs and are able to judge a reasonable deductible and a bona fide catastrophic coverage insurance policy. In other words, it should be the patient and his doctor with most of the accountability for care. This is the way it was before Medicare and before completely socialized medicine in other countries. Oddly enough during those times, in getting hospital care a patient was unlikely to face bankruptcy when presented with the bill. Since government has involved itself in health care, the “system” has deteriorated badly. Well-intentioned though the politicians may be the most humane action would be to try to find a way to deregulate health care and eventually get the government out of the business of providing any coverage to anyone. It is too complex a service and a system to be left in bureaucratic hands. Would you trust the central government to be involved in any significant way with say, the grocery store business? If you do I hope you learn how to grow your own food too.

The second question relates to the number of uninsured. I’ve heard variously that something in the order of 40 or 50 million Americans are without coverage. Let’s just say we agree that maybe 12 to 15 percent of the population does not carry insurance. Remembering that some of them show up at emergency wards of hospitals and must by law be served, I’m ready to say that many would use much more discretion if such a law did not exist. But there are other reasons people choose not to carry insurance. They choose. A young and/or reasonably healthy person can save a lot of money by opting out of carrying insurance. Or they just live on the edge. Who cares? It is their choice. Get out of their way and permit them to accept the consequences. If someone is badly hurt or sick and has no way to pay for treatment, I am also confident that almost any doctor who doesn’t have to spend fifty percent of his time filling out insurance claims or accepting less than full payment for government paid services will find a way to help a destitute patient. History is replete with such examples of charity and/or payment accepted in kind. And remember, in a society not tortured by class strife, such as in today’s mixed political economy of elites and non-elites, people are more genuinely charitable and self-responsible. The exceptions are just exceptions and not the rule.

It is insufficient for the administration and others to say that the cost of health care is too high and then to simply, and inexplicably, assign blame to greedy doctors or insurance and drug companies. Nowhere in the rhetoric of advocacy for “public plans” or socialized medicine can you find an honest approach to the problems created by the intervention of government in providing services. The institution of government is so woefully, and inescapably incapable of delivering any aspect of an economic good. The examples are all around for honest men to see. Unstated too is the immoral aspect of wealth distribution by government, which is the only way these grand schemes can be funded. It is also insufficient and perhaps dishonest to simply evade all evidence as irrelevant and to just demand, like a naïve child or spoiled brat, that Congress deliver legislation to the President by October.

©Copyright 2009 Edward Podritske

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