On the Road to Nationalized Health Care

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The American
march toward democratic socialism continues. On July 1, 2007, every
Massachusetts resident over the age of 18, must obtain health insurance
or face fines. The new law garnered most of its support from the
overwhelming Democratic majority in the state legislature, but was
signed into law by Republican Governor Mitt Romney.

The pattern
rarely changes. First, publicity grows about some social ill, real
or imagined. Experts appear on CNN and Fox News decrying the present
situation; pundits, activists and now, bloggers demand action. Politicians
propose a massive new bureaucratic program to fix the problem. Moderates
and so-called Conservatives, exploiting an opportunity to stand
up for the shrinking number of Americans who still oppose these
socialist ideas, call for a market-based solution or some sort of
compromise. Usually, a compromise is, in fact, reached. What this
means is that government regulations are simply increased — the
private system, however handicapped, struggles along. The cycle
completes itself when, predictably, increased government involvement
brings on the next crisis.

The origins
of the current health care crisis can be traced back decades, but
in the 2004 election, the issue gained a preeminence it had not
had since President Clinton's attempted nationalization of the industry
in the early 90's. During the campaign, Senator John Kerry lamented
the fact that 43 million Americans were uninsured and proposed a
$700 billion program to rectify the problem. The proposal involved
massive subsidies and a labyrinth of new regulations to attempt
to control rising costs. With Kerry's defeat, his specific plan
became effectively irrelevant, but the media crusade continued and
the cycle kept turning. Indeed, a compromise has been reached in
Massachusetts, where Republican presidential hopeful, Mitt Romney,
has successfully instituted individual mandates for health insurance.

Of course,
the health care crisis that this new government intervention seeks
to remedy was caused by government in the first place. Licensing
laws limit competition; services that could easily be performed
by nurses at lower costs must be performed at higher costs by a
government-approved doctor. Many states prohibit you from seeing
a doctor licensed in another state, even if he is a specialist that
would be better able to treat you. In addition, fees are raised
due to costs involved with complying with regulations. As frequently
reported on the news, the cost of malpractice insurance has skyrocketed,
further increasing costs. This is, in part, because courts generally
refuse to accept contractual agreements in which patients waive
their right to sue in return for a lower price. Indeed, physicians
can be sued for simply turning down treatment of a patient. In addition,
instead of allowing some type of charitable system to develop, the
government simply forces hospitals to treat patients, regardless
of their ability to pay, thereby passing the costs on to other patients
and taxpayers (since over 30% of health care transactions involve
Medicare or Medicaid). Further, government subsidies keep researchers
busy on projects chosen by politicians, who chose programs on the
added basis of political expediency (see the late Harry Browne's
Government Doesn’t Work

Insurance specifically,
has been hampered in numerous ways. No individual can deduct medical
expenses from her income taxes (if she is self-employed, she can
deduct a small amount), but an employer can deduct all the costs.
Therefore, your employer will simply pay you less and provide you
with health insurance instead. This removes the cost from the consumer
and decreases the incentive to economize. Many states have insurance
mandates, which force insurance companies to cover certain services
despite the preference of the consumer. Specific examples include
psychiatric care, birth control, teeth whitening, abortions, toupees,
chiropractic services, cosmetic surgery, alcohol and drug rehabilitation,
sex therapy, acupuncture, and marriage counseling. You are forbidden
by law to purchase a cheaper policy which does not include some
of these things, because the government knows best. And according
to the National Study for
Policy Analysis
, in Massachusetts, health insurance must include
coverage for obtaining deposits from sperm banks. Moreover, the
1995 compromise bill passed in lieu of adopting "HillaryCare"
prohibits companies from denying coverage to someone with a pre-existing
condition; forces companies to continue to offer the same coverage
to an individual that was originally obtained through his employer
as part of a collective deal after he quits; and includes a list
of benefits that every policy must include. All of these requirements
drastically impair insurance companies' ability to make money, thereby
driving up costs for everyone. Predictably, fewer young and healthy
adults seek coverage — it is too expensive to justify the possible
benefits. To remedy this problem Massachusetts politicians have
come up with the bright new idea of making health insurance compulsory.

Liberals see
this as a step toward universal health care and insist that now
that the population will be forcibly insured, everyone will generally
have access to more preventive care, which will drive health care
costs down. In addition, we will be fulfilling our social responsibility
by insuring that the poor will now have more and better access to
care (see Michael Tanner's recently released Cato Policy

This view
however, rests on the assumption that there is a clear line between
health and illness; that any doctor can accurately define the characteristics
of health and of illness; and that illness in not susceptible to
any psychological influences. Of course, these assumptions are false.
There is no exact point were health ends and sickness begins and
the individuals health is highly influenced by psychological factors.
Indeed, Ludwig von Mises, in his work, Socialism:
An Economic and Sociological Analysis
, writes that

By weakening
or completely destroying the will to be well and able to work,
social insurance creates illness and inability to work; it produces
the habit of complaining — which is in itself a neurosis — and
neuroses of other kinds. In short, it is an institution which
tends to encourage disease, not to say accidents, and to intensify
considerably the physical and psychic results of accidents and
illnesses. As a social institution it makes a people sick bodily
and mentally or at least helps to multiply, lengthen, and intensify

He adds, "The
destructionist aspect of accident and health insurance lies above
all in the fact that such institutions promote accidents and illness,
hinder recovery, and very often create, or at any rate intensify
and lengthen, the functional disorders which follow illness or accident."
Two important factors in getting well are the will to get back up
and work and the desire to minimize the length of stay (and thereby
the cost) of a hospital visit or the like. Mandatory health insurance
destroys these two natural incentives.

a different aspect of the debate, some more conservative economists
have embraced the idea as a solution to the "free-rider problem,"
where the financially secure are forced to pay for the uninsured
person's bills through higher costs and higher taxes. But doctor
and hospitals should not be force to treat those who cannot pay
in the first place. Grocery stores (food stamps and welfare aside)
are not forced to feed the starving, and if they were food prices
would indeed go up for everyone. Instead charities take care of
the problem. And they do it more efficiently than a government program
would ever be able to. The same should apply to doctors — charitable
clinics should deal with most of the underprivileged. And any doctor
who wishes to treat anyone regardless of their ability to pay would
certainly be free to, but, because of the market pressures of competition,
he would be forced to find especially efficient ways to do this
or he would face the possibility of losing more financially secure
patients to a cheaper competitor.

The new Massachusetts
law is simply another step in the direction of a completely nationalized
health care system. Some opponents are afraid that his law has admitted
the principle that the government has the right to intervene in
the nation's health problems. They fail to realize that that principle
was admitted long ago with the emergence of Medicare and Medicaid.

Anyone who
wants to be able to select the insurance policy that is best for
himself and his family, to deal with the doctor of his choice, and
to have access to new, life-saving drugs and methods must not only
oppose the expansion of government at every turn, but also must
fight for the drastic reduction of government. The abolition of
the FDA, Medicare, Medicaid, insurance mandates and of government
social engineering through the income tax is the only way to free
the health care system from the chains of subsidization and regulation
that have hampered its ability to cure the ill and save the weak
to the best of its ability. There can be no compromise, for one
road leads to sickness and death and the other to an ever-increasing
standard of living for all races, all classes, and both sexes.

13, 2006

Phillips [send him mail]
studies history and economics at the George Washington University.

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