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On the Road to Nationalized Health Care

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 Why 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 Study).

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 disease.

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.

Concerning 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.

April 13, 2006