Friday, November 21, 2008

Forcing Everyone to Buy Health Insurance Is Not the Answer; More Freedom Is

Following up on my post listing some of my previous health care posts, I found this AP article interesting (a more informed article on this topic can be found here). It is reported:
“The health insurance industry said Wednesday it will support a national health care overhaul that requires them to accept all customers, regardless of pre-existing medical conditions - but in return it wants lawmakers to mandate that everyone buy coverage.”
The reporter goes on in a rather weird vein to suggest in essence that the insurance industry’s stance is oxymoronic. Actually, this viewpoint is just plain moronic.

This is not rocket science. Let’s think about it for a moment. Exactly what would be the downside of getting government to force every American not covered by Medicare to buy your wares? You get a government mandated revenue stream. You don’t have to worry about those that want to opt out because government will coercively enforce participation.

One downside to this would be that government would then dictate precisely what kinds of products you have to offer and what kinds of prices you can charge for those products. But as the WSJ Editors explain here, this has long been the case anyway. “Because of its huge purchasing power, and because many private plans adopt its reimbursement rates, Medicare significantly shapes all health-care financing and delivery.”

More radical than the “individual mandate” — that is, forcing everyone to buy government designed health insurance whether they want it or not — say the WSJ Editors is the “public option.” This would be “a program managed by the government and modeled after Medicare” with which insurance companies would compete.

This ‘competition’ would be insidious because, unlike private insurance companies, the government would be able to offer coverage without having to make a profit or even break even. It would “be extraordinarily expensive as it slowly but relentlessly grew the government's share of health spending,” likely costing around $150 billion annually for starters.

By the time the costs increased and really started to sink in, most of the private insurance companies would already be out of the business, leaving one huge universal health care system, arrived at incrementally instead of in one fell swoop, as was the goal of the 1993 HillaryCare plan.

The individual mandate would immediately and sharply reduce individual liberty, while the public option would gradually diminish our liberty even more.

The insurance companies won’t take this lying down. The fact that they now say they will support radical health care reform simply means that they can see the writing on the wall. They will lobby like the devil to make sure that they come out OK. Maybe this will mean that we don’t end up with debt financed government competition — or at least as much of it as left leaning politicians want.

A good example?
Another odd thing about the AP article is its comment that “Analysts say Massachusetts is an example where the coverage guarantee has worked well….” Has worked well for whom?

Certainly not the taxpayers of Massachusetts, since the cost of the program has turned out to be orders of magnitude greater than originally anticipated. Not those seeking medical services that have coverage but find themselves waiting much longer, receiving lower quality care, and traveling farther because clinics and hospitals have had to close down. Not primary care physicians who have seen their patient rolls expand while seeing their profits decrease. Not young adults that are forced to buy coverage they don’t need to help subsidize others, making it difficult to start a family and make ends meet. On the other hand, the state’s insurance industry is enjoying revenues that the state’s citizens are forced to pay whether they like it or not.

The Massachusetts plan has helped resolve very little of what it aimed to resolve, all while costing hundreds of millions of dollars, invading the most personal details of peoples’ lives, treating people that can’t afford premiums as criminals, and significantly reducing individual liberty. But to some unnamed analysts cited in the AP article, this represents success. I can hardly wait to see ‘success’ of that nature implemented on a national scale.

The trouble is that once you do something like this, there is no turning back. The population becomes addicted and there’s no way to back out, as we can see with Social Security and Medicare. Even when the programs are going bankrupt we can’t rein them in. We would rather drive them into the ground, or in this case, expand the failing program to cover increasing numbers of people. We’re like junkies needing another hit.

As Ben Howell writes here, “Ceding more personal responsibility and choices to the government does not solve the problem because this decreases competition, removes incentives to stay healthy and eventually would lead to lower quality of care.” In other words, universal health care is a recipe for making matters worse than they are today.

Exactly what are the big selling points to universal health care? A popular one is that the nation’s 46 million uninsured will then be covered. William Snyder points out that this is mostly based on myth rather than fact. There are better ways to help “those who have truly fallen through the cracks” than radically messing with the health care system for everyone.

As our politicians gear up to play health care hero, we should be especially wary. There are no ‘solutions’ in matters like this; only tradeoffs. In this case, we would be trading individual liberty for a false sense of security and a promise that everyone will have access to the same lousy health care services as everyone else.

Free market answers
OK, so now that I’ve slammed the various politically motivated health care options, what would I suggest instead? I would recommend changing the incentives in the health care system. I think this article by Paul Howard succinctly explains the elements necessary to make that happen. He writes, “To unleash a new wave of entrepreneurial energy in health care, policymakers should focus on a four-point plan of action:”
  • ”A tax deduction or tax credit for everyone who purchases their own health plans …. A risk-adjusted voucher for our poorest, sickest patients ….”
  • Allow people to purchase health insurance from anywhere they want in the nation.
  • Stop prohibiting retail and ‘nurse-in-a-box’ clinics. “Rather than stifling innovation and competition to protect existing providers (like nonprofit hospitals), policymakers should throw out their old assumptions and find new ways to encourage choice and competition in health-care markets.”
  • Implement consumer choice and competitive bidding in Medicare.
What other roles should government play in health care? Howard writes, “The best thing that government can do to “fix” health care is to make it more like other, more competitive sectors of the economy by setting the basic rules for competition and transparency, policing fraud and corruption, and then getting out of the way and letting markets and consumers decide what works.”

More government is not the answer to our health care system woes. More freedom is.


Chris said...

I 100% agree with your post. My big fear is that the folks in office were put there by people who aren't likely to understand and/or agree with your points. I try to talk about this any chance I get, but it feels like Washington is hellbent on taking us down the path of universal health care.

Scott Hinrichs said...

Yes, I know. I'm sure that most of what I say on this is lost in the wind blowing strongly the other direction. But I will continue to say it and I hope that other supporters of liberty also do so. Imagine where we'll end up without voices like ours.