Aetnacare, the Uninsured, and the Universal Insurance Trap
by Michael S. Rozeff
by Michael S. Rozeff
My first article on the latest Massachusetts health care plan focused on the measures in the plan itself, simply making plain its numerous non-free market components. An alternative readable source is here. My second article attacked the notion appearing in the Republican press that this legislation saved free markets. It also stressed the business-state fascism built into the plan.
Romneycare is actually Aetnacare. According to Dinah Brin, "Aetna Inc. (AET) has supported the concept of mandated insurance for individuals on a national level." Why would they not, when it broadens their market and brings them relatively secure access to tax-based cash flows? A spokesman for Aetna said: "Aetna believes that Massachusetts is taking an important step by developing a comprehensive statewide plan to make affordable health coverage available to 500,000 uninsured residents." This does not read like a howl of protest. The spokesman adds: "The company aims to work with Massachusetts officials in developing products focused on the large percentage of adults ages [sic] 19 to 26 who are currently uninsured."
From investment bankers and security analysts we confirm that insurance companies are beneficiaries of mandated insurance. JP Morgan in subdued terms sees it as a positive for enrollment in health care plans and something that "could meaningfully change the health insurance landscape," meaning that if other states go the route of "universal care legislation," then business for health-care insurers will be noticeably affected. A CIBC analyst says: "The measure appears to allow insurers flexibility in pricing, allows insurers to earn a profit margin and increases the pool of potential purchasers, although publicly traded companies won't see much effect."
From another source, we again confirm the beneficial impact upon health-care companies. "The health-insurance industry, which lobbied heavily on behalf of the legislation, has indicated it is willing to do its part."
"Policymakers left many of the details of implementing the new law to the regulatory process," said Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, an industry group in Washington. "We will be working with our members to help create the environment necessary for this legislation to succeed, including sufficient flexibility to develop quality products at an affordable cost."
There is simply no need to have an authoritarian political landscape in which insurance companies have an incentive to lobby the government and work with the government to offer products. There is no need to have a system that encourages price-fixing, barriers to entry, lower-quality products, less innovation, poorer service, and lower competition. There is no need for a system that separates customers from providers and grants privileged providers a captive market that they need not serve conscientiously.
Repealing the network of health care laws at the federal and state levels will in amazingly short order restore our health care system to health.
The 43 million uninsured
The Chicago Tribune loves Romneycare. It's "blazing the trail" while "trying to solve one of the most pernicious problems in health care, the fact that 45 million Americans have no insurance." The Clinton administration popularized a 43 million number. Kerry carried on with it. Now it or something near it is tattooed onto every health reporter's forehead.
Numbers like these have only one purpose: to sell something. They transfix the mind and prevent it from thinking rationally. Before the sucker knows it, he is buying. This number may or may not be accurate. But in terms of representing a problem that needs to be addressed by government compulsion, it is 100% pure baloney and hokum issued by spellbinders who wish to mesmerize and gull. Remember that in 1999, just before the Dow-Jones Industrial Average would decline from 11,908.5 to 7177.66, a series of books appeared forecasting Dow 36,000, Dow 41,000 and Dow 100,000. The Dow is (at this instant) 11,129.81.
There is nothing pernicious or wrong about not having health insurance. (See Howell for why uninsured means no catastrophe.) The vast majority of young people don't need it because if they incurred a one-time illness that hospitalized them, they could pay back the debt from future earnings. They might also receive help from family or charity. The same sort of statement holds for older people. If they have saved, as they should in order to handle such contingencies, then they can handle one-time illnesses. Of course, handling them is far easier when costs are lower as they will be in free markets for medical care. The highest priority in making medical care both accessible and less costly and alleviating its high costs is to end all government interference in these markets.
But what if a person contracts a disease that debilitates him or her for life? One can insure against this contingency with catastrophe insurance. With a $25,000 deductible, the premium may be only about $100 a year for children and adults under the age of 40. According to a Senate Republican Task Force report, 18 million young and "mainly healthy" adults between the ages of 18 and 34 and 8.5 million children under the age of 18 are uninsured. That means that 26.5 million of the 43 million uninsured have a manageable risk. Another government source says that 63% of the uninsured are of age 34 or less, giving a number of 27 million. This checks with the first calculation. This leaves another 16 million persons from age 35 and up. Most of these work and are capable of saving. Catastrophe insurance is less than $500 a year for this age bracket, again with a $25,000 deductible.
I do not mean to minimize the problems of illness when they strike. I assure you I'm personally familiar with them. I do not mean to minimize the challenges of learning about insurance and saving. Life is not a straight shot. I do not mean to minimize the struggles of poor people to better themselves. It is simply essential to counter those who toss around huge magnetic numbers in order to advance their fundamentally destructive agendas.
The bottom line is that there are millions upon millions of Americans who do not want full-scale health insurance. They certainly do not want to be compelled into buying it in order to line the pockets of health insurers and to relieve the financial strains upon other regulated players in the health care game.
The universal insurance trap
There are those who believe that everything that they desire or think good should be the birthright of every other American or every other human being on earth (they would say "the planet.") The list of such required and/or taxpayer-supplied items will probably someday include a cell phone and paid telephone service. For how can anyone safely travel without instantaneous availability of emergency communication with others? Perhaps it will include "free" public transportation on free public roads to guaranteed jobs. How else can human beings survive without these necessities? You see, everything in life that might be good for you or even essential for you is something you should have given to you. You should not have to work and deal with other human beings to get what you want. You should not be exposed to such indignities as work, trade, toil, and sweat. Working 18 hours a day is out of the question. It's cruel. It's unfair. Life should not ever be unfair. Humans are above all that. Nor should you ever be exposed to the struggles and vicissitudes of life. You should not experience setbacks or misfortunes, and if you do then other people should bail you out. You should never have to compete. And paying a price for something you want is hardly fair. Your path should be easy. You should not have to think ahead, plan, worry, or save. You should not have responsibility for your life. You are a human being, and you deserve all the blessings of life by your humanity alone. Happiness is your birthright. Not to have all the essentials of the day now, right this minute, is inhuman.
And you should have insurance, every kind there is, health insurance, life insurance, unemployment insurance, and old age insurance. Everyone should have insurance, these people believe. It should be universal. If all do not have insurance, then surely something is wrong. There is a "pernicious" problem if anyone remains uninsured, so bad that the state must make them have insurance.
I do not know what label encompasses this peculiar set of beliefs. It views society as unsatisfactory unless it guarantees every person universal health care. This is a dream of equality of condition and outcome, where those who have must share with those who do not have, for whatever reason either is in these positions. There is no room in such thinking for personal choice, work, struggle, freedom, accomplishment, sacrifice, development, planning, intelligence, setbacks, dignity, or experience. It seems a very materialistic philosophy with little or no room for the spiritual. There is no room in it for most of what makes us human.
Life is risky. Life is uncertain. Life is hard, but it is also gratifying even through its travails. We could not survive if that were not so. Mitigating the perils of the unknown future is the natural work of free people acting freely. We do this so naturally that the process is invisible to us and out of consciousness. A safety net of friends provides insurance. A broad education provides insurance against loss of a particular kind of job. A church provides aid and comfort in bad times. Saving is a form of insurance against future contingencies. Children provide insurance against the infirmities of old age. Migration mitigates unforeseen climate changes or economic changes. Developing skills one can fall back on is insurance against job loss. A solid house is proof against wind and rain. A computer backup insures against a crash. Put options insure against stock price declines. These instances can be multiplied indefinitely. These are the things that free people invent and do that can never be matched or even thought of by bureaucrats.
Compulsory universal insurance is no panacea for anything. It destroys. Compulsion halts life's flow of freedom. Compulsion lays a paralyzing hand upon the shoulders of innovation. Compulsion impedes the discovery of ways to shift risk, lower risk, and handle bad outcomes when they occur. Compulsion halts progress dead in its tracks. Compulsion is the deadening hand of the state, as in compulsory schooling. After compulsory health insurance come compulsory diets, compulsory exercise, compulsory work, compulsory family size, compulsory abortion, compulsory IDs, compulsory small vehicles, compulsory ethanol, etc. What do all state compulsions do except impede and destroy life?
I am against compulsory insurance of all kinds: health, auto, unemployment, old age, life, liability, home, flood, disability, or any of a hundred other perils. I take this to be the libertarian position. See Phillips for elaboration. Compulsory insurance is anti-freedom, anti-rights, and anti-libertarian. Compulsory insurance is compulsion, aggression, or offensive coercion.
Voluntary insurance is the way to go. That means getting rid of all state regulation of insurance companies, because the market for insurance is not currently a free market.
Insurance schemes, really the fake appearance of real insurance, are one of the state's main devices to bait the population. But the state insures nothing — it anti-insures. It undermines free markets, family, church, education, medicine, peace, transportation, communication, speech, and everything else it touches.
Don't misunderstand. The state does not stand alone by itself as an outside evil organization that fastens itself upon the virtuous population while we are not looking. The state is power ready to be used by many of our fellow citizens to lord it over yet other citizens. Search LRC for AMA and you will find a dozen articles about the American Medical Association and its role in the health care mess. Search out the roles of a dozen other organizations that represent nurses, hospitals, retired persons, drug companies, insurance companies, etc. if you wish to understand who wants to use state power and for what purposes. But without the state's presence, the ability of one group to exploit another group legally — with the approval and punishments of the courts standing behind them — would be vastly diminished.
April 15, 2006
Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.
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