Tuesday, June 23, 2009

Government-sponsored health care can be used to restrain liberty

"Live Free or Die" is the title of author and columnist Mark Steyn's speech at Hillsdale College, reproduced in Imprimis (April 2009), a Hillsdale publication that's free for the asking. Canadian born, now living in New Hampshire, Steyn has had firsthand experience with socialist tyranny in his home country that is rapidly becoming a part of America. Commenting on one of his run-ins with Canada's human rights commissions, Steyn points how it might seem bizarre to find the progressive left making common cause with radical Islam. One half of that alliance is pro-gay, pro-feminist secularists and the other half is homophobic, misogynist theocrats. Steyn argues what they have in common overrides their differences, namely, "Both the secular Big Government progressives and the political Islam recoil from the concept of the citizen, of the free individual entrusted to operate within his own societal space, assume his responsibilities, and exploit his potential."

I doubt whether there are many Americans who think Congress has either the right or competency to choose where they live, what clothes they wear or what cars they drive. Yet many Americans stand ready to allow Congress to decide what doctors they go to and what treatments they receive. We forget that once we have government-sponsored health care, it can be used to justify almost any restraint on liberty. That's the justification behind helmet and seatbelt laws. Britain is well along the road toward totally controlling health care. Steyn says, "Under Britain's National Health Service, for example, smokers in Manchester have been denied treatment for heart disease, and the obese in Suffolk are refused hip and knee replacements. Patricia Hewitt, the British Health Secretary, says that it's appropriate to decline treatment on the basis of 'lifestyle choices.'" Steyn adds, "Smokers and the obese may look at their gay neighbor having unprotected sex with multiple partners, and wonder why his 'lifestyle choices' get a pass while theirs don't. But that's the point: Tyranny is always whimsical."

In most of the developed world, the government has gradually taken over many of the responsibilities of adulthood from health care, child care, care of the elderly and other responsibilities formerly seen as individual or family. Nobel laureate economist Paul Krugman suggests that American conservatives preaching "family values" is hypocrisy while Europeans live it. On the continent, Krugman says, "Government regulations actually allow people to make a desirable tradeoff — to modestly lower income in return for more time with friends and family." Steyn insightfully observes, "As befits a distinguished economist, Professor Krugman failed to notice that for a continent of 'family friendly' policies, Europe is remarkably short of families. While America's fertility rate is more or less at replacement level — 2.1 — 17 European nations are at what demographers call 'lowest-low' fertility — 1.3 or less — a rate from which no society in human history has ever recovered. Germans, Spaniards, Italians and Greeks have upside-down family trees: four grandparents have two children and one grandchild." Steyn asks, "How can an economist analyze 'family friendly' policies without noticing that the upshot of these policies is that nobody has any families?" My answer to Steyn's questions is: the kind of economist that looks at the seen and ignores the unseen.

Mark Steyn provides us with a historical tidbit. "Live Free or Die," which graces New Hampshire's license plate, are the words of John Stark, New Hampshire's Revolutionary War hero. He uttered those words decades after the War when he was 81 years old, the complete sentence being: "Live free or die: Death is not the worst of evils." Steyn says these words should not be interpreted "as a battle cry: We'll win this thing or die trying, die an honorable death. But in fact it's something far less dramatic: It's a bald statement of the reality of our lives in the prosperous West. You can live as free men, but, if you choose not to, your society will die."


"For all our sakes, stop calling it insurance. It isn’t, and thinking of it as insurance has got us into a heap of trouble"

With the political left agitating about the need for a massive overhaul of the manner in which our health care is handled. The preferred approach on the left has always been a national single payer plan. Their promotion of this idea dates back to the days of LBJ and the Great Society. Ted Kennedy has been after nationalization of all health care matters now for almost half a century, and it seems that he won’t die until he sees it achieved. The last major iteration in the cycle, often referred to as Hilary-care was derailed when a significant portion of the medical professions objected to their forced into government service with criminal penalties for anyone treating a patient privately. This time around the government health system machine has opted for stealth. Instead of an instant takeover they are proposing a plan that will, at minimum take a few years to crowd private health care systems out of the market. Stealth seems more likely to succeed because the intended targets appear unable to appreciate the peril, and have become oblivious to the long-term effects of a government takeover, to themselves and their patients.

Meanwhile, everyone addressing the issue appears to have no idea what is wrong with the system as it is presently managed. It is the perception of insurance that is at the heart of the issue. Insurance, properly understood does not mesh with health in the vast majority of situations because insurance is linked inextricably with risk, while health care is in many ways more a matter of regular maintenance.

Ask any insurance professional what a policy covers and they will tell you risk of loss, and that loss is catastrophic and unexpected. Take for example, if another driver who isn’t paying attention hits your car. (Reminder, don’t drive and read IntellectualConservative at the same time.) It is unexpected, catastrophic, and causes a loss. Insurance will pay for collision damage, but it will not pay for regular oil changes, replacement tires or belts and hoses when they wear out. It certainly wouldn’t pay for the new motor mounts I needed last year after about 250,000 miles.

By the same logic, insurance should pay for when you fall and break your leg, or suffer a heart attack, or come down with some other severe illness. It should not pay for anything reasonably necessary as regular maintenance on the human body such as vaccinations, annual checkups, and confirmation that you have come down with a cold or the flu. Unfortunately, this is exactly what the average person believes health “insurance” is for. They want it to pay for the equivalent of oil changes and new tires, and this is one of the major reasons why health payment plans are frequently so expensive. It is the equivalent of having a zero deductable on your car or homeowners insurance.

A government, universal, plan covering all health needs will not be cheaper than what the today’s health coverage companies provide. It will certainly be more expensive, which is precisely why such a plan leads in unavoidable rationing. First, in order to cut costs the amount paid to professionals such as doctors, nurses, technicians and so on for the work they do will have to be reduced. However, this will be insufficient, as the amount of work in an “everything covered” plan, which the folks on Capitol Hill envision will lead to increased demand. If you think the people going to emergency rooms for a case of the sniffles are a problem, think how many other minor ailments will become a case for the doctor when there is no cost to the patient. Demand will skyrocket, while the supply of professionals will fall due to the low level of compensation. Or, if the level of compensation is kept high, then the cost to the public will be past the stratosphere before we know it. There is no way on earth that the tax paying public can afford it. The result is either a bankrupt system, or a system, which rations care, and/or provides a low level of quality and service. Probably both.

One other aspect of the current American system that makes it so expensive is accounted for by the high quality of service available. Every hospital wants to have the latest and most effective treatments ready at their location. They don’t want to take second place to anyone. The difficulty with this is that new technology; particularly extremely new technology is expensive. Consider what it costs today for a flat panel television compared to ten years ago. This, combined with the pace of technological development, creates a massive need for continuing capital investment and drives up the cost of doing business in the medical field. Anyone who wants to cut costs can do so by reducing the rate at which innovative technology and new medications are introduced, but this will also reduce the level of quality overall, and likely prevent effective cures from being used.

Finally, there is the problem of the cost of new medications. This has become progressively higher over time as the difficulty of finding effective medications, working on the molecular level increases. Add in the regulatory costs, premarket testing, and it is no wonder that new medications are so expensive. Someone has to pay these costs and the one who gets stuck is the patient, or the person who pays the bills.

Is there an answer? Yes, but it is not one that a lot of people will like. First, they have to give up the idea of “free health care.” They must take responsibility for their own needs, and be willing to pay for them, at least up to a point. Second, health plans should be freed from government regulations that specify what they can and cannot provide. Plan subscribers should be able to pick from a variety of different compensation options, which can fit their individual needs and budgets. Those who are chronic illness victims are the only ones who should be eligible for government assistance in this, which should be in the amount of a subsidy that they get to use any way they wish.

Finally, to deal with the problem posed by people who get tax free medical coverage through their employers, give people who don’t have that benefit a tax credit (that’s credit, not deduction) for the amount they have to pay for health coverage, and for all our sakes, stop calling it insurance. It isn’t, and thinking of it as insurance has got us into a heap of trouble.


Wyden's Third Way

The Oregon senator questions the wisdom of a government health insurance plan

'People don't want the government in the driver's seat . . . They don't want the decisions (about their treatment) made in Capitol hearing rooms with a bunch of legislators in dark suits." So says Oregon Sen. Ron Wyden of the Healthy Americans Act, his plan for compromise in the polarized politics of healthcare reform.

Mr. Wyden, slouched amiably on his office sofa with his long legs on the coffee table, looks awfully relaxed for a man in the middle of the battle over health-care reform. On the day before our meeting, the political calculus shifted: The Congressional Budget Office predicted that the bill from the Senate Finance Committee would increase the federal budget deficit by $1.6 trillion over the next 10 years. Worse for Democrats, the astronomical price tag would still leave millions of people uninsured.

The news changed the views of some who had begun to see a bigger government role in medicine as inevitable. It also shifted attention to less-radical approaches, like the one Mr. Wyden is co-sponsoring with Utah Republican Bob Bennett.

"The country has bailout fatigue," Mr. Wyden explains. "The Congressional Budget Office said our proposal was budget neutral in the short term and that it would essentially start bending the cost curve downward in the third year."

The plans favored by Massachusetts Sen. Ted Kennedy or President Barack Obama rely on a "public option" in which government insurance would supposedly "compete" with private insurers, a move many see as leading to a single-payer system. By contrast, the Wyden-Bennett Healthy Americans Act relies on the private insurance market while imposing a series of regulations to squeeze savings from the private sector. It also requires individuals to buy coverage for themselves, the controversial "individual mandate."

The idea, Mr. Wyden says, is to harness the Democratic desire to get everyone covered to the Republican interest in markets and consumer choice. "Everything I've been up to with this coalition is designed to make reconciliation irrelevant," he explains, referring to a political maneuver whereby Democrats might try to force through health reform on a bare majority of 51 votes rather than the filibuster-proof 60 votes normally required.

"People can't be tricked into fixing health care." If you want to bring the country together, he continues, you have to aim for 70 votes and the kind of bipartisan strength that the Healthy Americans Act has with 14 senators sponsoring the bill. "If you . . . just pound it through on a partisan vote, you don't have that kind of consensus. You have people practically as soon as the ink is dry looking to have it repealed."

Mr. Wyden knows he is walking a wobbly tightrope between the factions. At Oregon town-hall meetings six years ago, he remembers, "you'd have a bunch of people get up and talk about single payer, and a lot of applause." He claps to demonstrate. Then someone else would say, "We don't want that, we had a cousin who lived in Canada, they had to come to the U.S. to get treated because they couldn't get good care. And then both of these groups would look sullenly at each other."

When he first approached Bob Bennett in early 2007 about a compromise plan based on the kind of coverage members of Congress get, he got a similarly unenthused response. Mr. Wyden puts on a deep, croaky Bob Bennett voice and repeats words that Mr. Bennett would later use to characterize his reaction: "I told Ron Wyden I'd look at his proposal." Smiling, Mr. Wyden says, "As Senator Bennett describes it, that's the closest thing you get in the United States Senate to a 'no.'"

Mr. Bennett ultimately came around to the idea, but a lot of Republicans remained dubious. "People kind of looked at him like it was all a kind of big socialist plot. And he basically said, get over it, they've got a point."

"Both parties have come a long way," says Mr. Wyden. "The most conservative Republicans accept the idea that they didn't accept in '93, that you've got to cover everybody to organize the market," he says. "If you don't . . . there's too much cost-shifting, not enough prevention." And some Democrats are seeing the wisdom of a market system where people will benefit if they make wise selections about their care.

Mr. Wyden takes a long view: "Ever since the 1940s, we essentially disconnected individuals from being involved in health care. It's all about third parties, and they pay all the bills and individuals don't have the opportunities for the choices. In fact, millions of people who are lucky enough to have employer coverage don't get any choice."

Which brings us back to dealing with the price tag of reform. Mr. Wyden is in the hot seat because his plan would convert the current tax exclusion for health benefits into a tax deduction for individuals to make insurance more portable. But taxing health benefits was pilloried on the campaign trail by Barack Obama, and the opponents have kept after it. "I think the way to go," Mr. Wyden says, "is with a generous deduction that sends a market-oriented message." He says that means that, if you shop carefully for your health care, you're going to get your taxes cut.

The typical family of four spends about $13,000 a year for their health care for the year, he says. In the Healthy Americans plan, they set the deduction at $19,000. "If you get a deduction of between $17,000 and $19,000 for a middle-class family of four . . . [that] now spends $13,000 on health care, we've got a chance to give millions of people . . . more money in their wallet because they got a chance to shop in a new system driven by informed choice and financial incentives to make those choices."

The tax aspects of the Wyden plan have nonetheless earned him the wrath of some Democrats as well as labor unions that carry fully loaded benefits plans and benefit from the current tax exemption. Some unions have even taken out ads against him in his home state of Oregon. As a powerful Democratic interest group, their objections have caused other would-be health-care reformers to capitulate. Montana Democrat and Finance Committee Chairman Max Baucus has said his own health reform plan will create a union carve-out.

Is Mr. Wyden surprised by the opposition his proposal has generated from the left? "Let's take it one at a time," he tells me. "First, there's a pretty good cross section of Democrats on this bill. Arlen Specter of course is now a Democrat." Other supporters include Debbie Stabenow, Mary Landrieu, Bill Nelson.

And Labor? Unions have every right to bargain for the best possible package, he says. "But nobody, be it a CEO or a labor [union] member ought to be getting what amounts to gold-plated coverage with the tax subsidies paid for by somebody who is a modestly compensated woman at a small business who doesn't have a health plan."

Breaking with the Democratic orthodoxy has earned him a few cold stares in other areas as well, including the plan's treatment of Medicaid and malpractice reform. The Healthy Americans Act transitions poor people out of Medicaid and will give them choices of private plans like members of Congress, he says. "We've taken a lot of flak for it . . . but Medicaid is a caste system. It is unfair to poor people and it is unfair to taxpayers." The system, he says, makes it hard for physicians to take care of the most vulnerable in society.

In a speech to the American Medical Association this week, Mr. Obama also opened the door to the possibility of malpractice reform, something Messrs. Wyden and Bennett support to help keep costs down. Democrats always blame the insurance companies, says Mr. Wyden, and Republicans always blame the trial lawyers. Insurance companies "are going to compete on the basis of price, benefit and quality," he insists. But a new system also requires "tough malpractice reforms."

The problem of spiraling costs is on display in Massachusetts, where a universal coverage plan started under former Gov. Mitt Romney, a Republican, is proving more of a cautionary tale than the inspiration Democrats would like to call it. "I've gone and met with the Massachusetts folks," Mr. Wyden says, and "cost containment is the Achilles heel."

Using government health programs to try to find savings in the short term is problematic, he says, as it leads to inevitable concerns about rationing of care. "If you try to go the government route, the danger is you will find savings that are not realized with massive new commitments, and that's a prescription for trouble."

Mr. Obama has endorsed a public option, though the commitment has lately come under renewed doubt from Democrats. Former Majority Leader Tom Daschle, who was once Mr. Obama's nominee to lead the Department of Health and Human Services, this week endorsed a compromise plan. Partnering with fellow former majority leaders Bob Dole and Howard Baker, Mr. Daschle's idea would seek a compromise on the public option, letting states establish programs with help from the federal government. North Dakota Sen. Kent Conrad has likewise questioned whether Democrats could muster enough votes for a public option.

Mr. Wyden has been meeting with the president on the issue, so is Mr. Obama committed to the public option, I wonder? Mr. Wyden won't tell, but directs me instead to review Mr. Obama's book, "The Audacity of Hope." In it, he says, "he talked about a system like what we're talking about in the Healthy Americans Act."

A single-payer solution is just not the Oregon senator's cup of tea. "I've never even understood how you would get there from here," he says. "A lot of the people who are for a public option want a single-payer system, and they haven't minced any words about it. Bless their hearts, extra points for honesty. But that's not where I am."

Mr. Wyden isn't necessarily opposed to a public option, he says, provided the caveats that it "can hold costs down and deal with the misguided incentives." So would he vote for the public option if it came to that?

"I'll look at it," he smiles. "I think I have an obligation as a legislator." Just like Bob Bennett used to say.


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