Schwartz On Mandates and Single Payer

Brian Schwartz has just written the following OpEd on the problems with health care reform as envisioned by Colorado Governor Ritter and the 208 Commission:

Ritter's health care cure would prove more crippling to Coloradans

November 21, 2007
By Brian Schwartz

Colorado Governor Bill Ritter does not want does not want health care reforms that "throw more money at a problem without addressing the root causes of the crisis." Unfortunately, the state's 208 Commission does exactly that.

The Commission's favored proposals address the "crisis of the uninsured" by simplistically making it a crime not to have insurance. These involve two politically-controlled compulsory insurance schemes: a "single payer" system or an "individual mandate."

"Single payer" is a government-controlled monopoly where, as Canadian Chief Justice Beverly McLachlin wrote, "access to a waiting list is not access to health care." For a chilling picture of this, visit FreeMarketCure.com for video interviews with Canadian patients and reports on how, under "single payer," patients die waiting for care.

The individual mandate is essentially single-payer in disguise. Strict regulations on legal insurance plans severely limit competition, so insurance companies are effectively government contractors for politically-defined insurance.

A rationale for such compulsory insurance is to make the uninsured "responsible" by not allowing them to shift costs to the insured through higher insurance premiums. To address this, the Commission has proposed $1.1 billion in taxes for subsidized insurance and Medicaid expansion. This will cost $400 per privately-insured Colorado resident. Yet, the Commission's website shows the relevant cost shift from the uninsured to be around $200 million, or just $85 per privately-insured resident.

Compulsory insurance is unethical regardless of cost. Government should protect us from aggressors, but compulsory insurance is aggression. You'd face fines and ultimately prison for peacefully refusing to purchase politically-defined insurance.

Politicians love compulsory insurance because lobbyists will throw money at them in hopes of having their services covered. As P.J. O'Rourke observes, "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators."

Indeed, politicians already succumb to special interests by forcing insurance plans to cover many benefits that you may not need. These mandates increase your premium costs by 21 to 54 percent. They reduce wages and are responsible for up to twenty-five percent of the uninsured.

Instead of expanding politically-controlled medicine, the Colorado Legislature should expand eligibility for "mandate-lite" policies and phase out mandated benefits. It should promote the Health Care Choice Act, which would allow you to buy insurance from companies in states with less damaging regulations.

Reform should also remedy the insurance-friendly tax code. Because the tax code exempts employer-provided health insurance, you're essentially stuck with your employer's high-cost, non-portable choices. Hence, insurance companies need not please you; they know that losing you as a customer requires changing jobs.

Tax-exempt insurance coddles insurers by encouraging you to waste money on more expensive coverage than you need, rather than keeping that money for yourself. Why save $100 on a more economic policy when after taxes you're only left with around $45? You might as well keep the costly insurance, though you probably won't utilize the high premiums and you could be saving.

This penalty on saving has resulted in our demanding prepaid medical care instead of real insurance. Since medical care appears almost free at the point of service, patients over-consume with little attention to cost, and providers need not compete on price. Providers need not satisfy you - as you are not a customer, your insurance company is. Yet, several studies have shown that patients with higher cost-sharing spend much less than those with prepaid plans - with negligible difference in health outcomes. They also seek more preventative care and motivate physicians to improve customer service.

To champion fairness and affordable quality medical care, legislators should support a tax code that treats out-of-pocket medical expenses and insurance equally, regardless of who pays insurance premiums. Phasing out the employer tax exemption and lowering taxes commensurately can achieve this.

Making all medical expenses and insurance tax-exempt may be more politically feasible. For example, allow anyone to open a tax-deductible Health Savings Account, regardless of one's insurance plan. Allowing us to purchase insurance with HSA deposits would free us from our employer's insurance, empower consumers, and encourage competition.

The 208 Commission foolishly supports Medicaid expansion. As shown in FAIR, my free-market proposal at WhoOwnsYou.org, Medicaid fails to meet the Commission's criteria of increased access, personal responsibility, financial stability, and fairness. Instead of unfairly competing with insurance companies with Soviet-style government-controlled insurance, Medicaid could at least mimic Food Stamps by providing insurance vouchers.

This would be an improvement, but it's still unjust. For every dollar expropriated from you to fund Medicaid, private charities lose a potential donation. Tax credits for donations to medical charities would partially level the playing field. The threat of lost revenue would motivate Medicaid administrators to be effective, and taxpayers would have more freedom to fund charities they deem worthy.

Government controls cripple medical care. Effective reform requires phasing out destructive controls and programs, not creating more of them. Paraphrasing Colorado activist Robert LeFevre, government-controlled medicine is a "disease masquerading as its own cure."

Brian T. Schwartz is an optical engineer and freelance policy analyst in Boulder. This is a revised and expanded version of an article published in the Rocky Mountain News. His website is wakalix.com.

Crunch Time In Massachusetts

The Massachusetts health plan, which relies heavily on harsh mandates on individuals to purchase insurance and employers to offer such insurance, is running into more financial trouble.

Because the state requires that the mandatory insurance coverage include numerous items that patients don't want (and would therefore not be viable in a free market), these policies are unnecessarily expensive. Then, in order to make the mandates politically palatable to the poor, the state is subsidizing their costs. So this system does nothing to alleviate the "cost-shifting" from the paying patients to the non-paying patients, it merely channels it through the state government. As a result, the November 18, 2007 Boston Globe reports that it will cost the state millions of dollars:

Success could put health plan in the red

Enrollment in the state's new subsidized health plan is growing so quickly that the state could face a funding gap as large as $147 million by the end of the fiscal year, according to a state projection.

...But the state would have to find ways to pay the insurance bills for so many more people. Options include appropriating more money, using funds allocated to care for those without insurance, or cutting extra payments to certain hospitals that were included in the law mandating insurance.

Based on the experiences in other states and other countries, price controls and rationing are only a small step away.

Furthermore, the Massachusetts plan depends on the ordinary, healthy people being willing to subsidize the system by purchasing plans that they neither need nor want. And those ordinary citizens are refusing to do so, according to the November 9, 2007 Boston Business Journal:

Thousands balk at health law sign-up mandate

With just seven weeks left until 2008, tens of thousands of Massachusetts residents -- up to 100,000 or more by some estimates -- have yet to sign up for insurance plans created as part of the state's historic health care reform law.

This has left insurers falling far short of expectations for signing up new customers, as countless people -- intentionally or otherwise -- come perilously close to risking fines and escalating penalties if they don't obtain insurance by the end of the year...

When a government violates the rights of individuals, insurers, and providers to contract amongst themselves free of government interference for their mutual benefit, these economic problems are the inevitable result.

Colorado should not adopt a plan based on health care insurance mandates that is already failing in Massachusetts.

Dr. James Schroeder on Medicaid

The November 18, 2007 Grand Junction Daily Sentinel printed the following LTE by Dr. James Schroeder:

Expanding Medicaid eligibility will mean fewer docs accept it

The dilemma faced by Dr. Glen Dean and his patients as outlined in the Nov. 11 article, “Tied up in red tape,” is nearly universal for those of us who provide medical care for children. Unfortunately, too many policymakers seem unwilling to accept some simple facts.

Rep. Buescher is quoted as saying, “If we expand eligibility without working on the reimbursement rates, any proposal is ineffective.” At the same time, he and his colleagues in the Legislature are considering several proposals that call for expanding Medicaid or the state Child Health Plan Plus, known as CHP+.

Apply some simple math. If you think the price tag for health-care reform is steep as currently projected, consider how much it costs when lawmakers think they can promise expanded coverage and increased physician reimbursement.

The truth of the matter is that expanding coverage will not ensure improved access. Rest assured that expanding Medicaid will result in a decrease in doctors who accept Medicaid.

Rather than expanding the current Medicaid and CHP+ system in Colorado, we should seriously look at fundamentally restructuring the nature of charity health care.

Instead of perpetuating Medicaid as a state-run charity with an iron-fisted lock on the charity market, we should encourage doctors to provide charity care outside of the Medicaid framework, allowing them to openly compete with Medicaid.

Eligibility for these private charity services could be determined on a need basis and incentives could be provided in the form of tax credits for providers who philosophically choose to provide specified services. In addition, individual donors who prefer to give money to a tangible local entity by choice rather than by coercion to an inefficient governmental bureaucracy could receive tax credits.

How many times must we hear that “the current system is broken,” so “let’s expand it”? That is purely nonsensical. I urge citizens to contact their state representatives today and tell them they oppose expanded government mismanagement of your health care.

JAMES SCHROEDER
Grand Junction

Hats For Everyone!

A Texas ER physician/blogger has reposted this classic article by Dianne Durante and Salvator Durante on the supposed "right" to health care:

Hats: A “right” for every American!

Dianne L. Durante and Salvator J. Durante

Let’s say we all agree that hats are worth having, or even a necessity, and that all Americans have a right to them. We pass a law stating that the government will pay for everyone’s hats, through taxpayer dollars.

What happens? First of all, hat sales skyrocket. I’m not particularly fond of hats, but if I can get them for free or below cost, why not?

Lesson One: there is no limit to demand, if those who get the product or use it, are not paying directly, or in some way they can see. This is unavoidable. The freeloaders will try to get all they can, and most of the rest of us will want something to show for our tax dollars.

If such a law passed, most hatmakers would be delirious with joy. Everyone wants hats! They expand their shops and produce as many hats as they can.

What happens next? The average price of hats shoots through the roof... Why?

There are two reasons. First, of the hats now being sold, the more expensive ones — the ones only a few people could afford before — will now be in much greater demand, since the individual hat-buyer no longer has to pay from his own limited resources. If the latest style is a platinum-plated beret, anyone who wants one will now get it. The other reason for the rising prices is competition: specifically, lack of it. New products, such as the first camcorders or the first compact disc players, are usually expensive. Prices drop because more people want to make money from a product: they try to come up with cheaper and more efficient ways of producing it, so they can sell the product more cheaply and grab some of the market. Our unlimited government funding of hats has completely cut out the need for competition. Any hat maker can stay in the business, no matter how high his prices.

Lesson Two: prices will skyrocket if there’s no limit to how much people can spend on a product. If anyone who wants the product can buy it, price no object, there is absolutely no reason for the manufacturer to try to cut his prices, and no reason for the buyer to control how much he spends. The government, and only the government, can give people virtually unlimited amounts to spend on a product. In short, it is not the greed of the manufacturer or the consumer, but the mere fact of the government funding of hats that is making hat prices exorbitant.

Next step: the government, and hence the taxpayers, are faced with enormous hat bills. Mrs. Smith may have confined herself to one hat, but Mr. Jones wanted five, and Mrs. Imelda wanted 52 Paris originals. The government knows it can’t continually raise taxes to pay for hats. Assuming it wants to keep the hat program intact, it has two choices: restrict the number of hats any one person can buy, or restrict the price of hats. In political jargon, that means rationing or price controls.

From a politician’s point of view, stating limits on the price of hats is the obvious way to go. There are fewer hatmakers who vote than there are hat wearers, and it’s easy enough to paint the hatmakers as greedy exploiters of the hatless. So a new law is passed no hats may be sold for more than $15, even if the buyer is willing to use his own money. The immediate result will be that the best quality, most expensive hats become unavailable. No more Paris originals.

Lesson Three: You can’t make a silk purse out of a sow’s ear. Good materials and good workmanship cost money. Yes, competition among manufacturers in a free market will cut prices in the long run. However, legislating a lower price for a product is not a shortcut to cheapness. It merely makes those who were selling more expensive goods go bankrupt, before anyone has time to work on price reduction.

We could try some complicated and devious maneuvers to lessen the effect of price controls. For instance, we could slap a $5 tax on shoes and use the money for the hat program. Then we could have a maximum hat price of $15, but still pay the hatmakers $20 per hat. That would mean, of course, that some poorer people wouldn’t be able to afford shoes, and the government would end up subsidizing shoes, too. Even so, price controls on hats will have to be instituted in some form, because demand is so high.

Remember that it is government spending for hats that made the demand and the prices so high in the first place: nothing except removal of the government’s money will get the situation back under control. But let’s keep trying...

We’ve now legislated a maximum price for hats. Nevertheless, Mrs. Imelda has bought another 35 hats, and the rest of us are still trying to get our taxes’ worth of hats. Not surprisingly, the amount that taxpayers are shelling out for hats hasn’t significantly decreased, despite our price controls. The next step? Well, of course, restrict the number of hats each person can buy: ration them.

Now what happens? A lot of hatmakers go out of business. They can’t sell hats for more than the maximum price, and they can’t make up for the loss in income through selling more hats. Bureaucrats demand forms in triplicate and slap fines on them at every turn. The best hatmakers soon leave the field in disgust. We are now facing a decreasing supply of hats, if not an actual shortage, because there are far fewer manufacturers. But hats are a necessity, aren’t they?

Now, we will have to pass a law forcing hatmakers to remain in business whether they can make a profit or not. However, even a government order can’t make a business run for long at a deficit, whether it’s a hatmaker, a child’s lemonade stand, or a bank. The hatmakers will go out of business, one by one.

The government will have to step in and make hats. Given the quality of most government products, you can imagine what kind of hats we’ll get. And given the efficiency of most government manufacturing operations, we won’t be surprised if we’re told we can each have one hat, in our choice of four styles, every other year.

Lesson Four: What the government pays for, the government has to control. Government funding of hats led to government control of hat prices, hatmakers, and finally everyone who is even remotely connected to hats. The only cure would be to end government funding of hats.

What began as a seemingly praiseworthy law — to provide all Americans with hats — has ended up driving the hatmakers we know and trust out of business, and given us government-produced hats of considerably inferior quality and very limited numbers. This result is absolute, inevitable, and non-negotiable: none of the economic rules above can be avoided, and they can only be temporarily circumvented by allowing the government to interfere in yet more private business.

Comparing hats to medicine or to pharmaceuticals may seem even less appropriate than comparing apples to oranges, but the same economic principles apply.

For more information about government intervention in medicine, write to Objectivist Health Care Professionals Network, P.O. Box 4315, South Colby, WA 98384-0315.

Competition Or Slavery?

The Happy Hospitalist writes about competition (or the lack thereof) in the US medical system (emphasis mine):

The Price Of A Pen

Go to your neighborhood Walmart and walk straight to the pen isle. That's correct. The pen isle.

Now just stand there and look. Look at the number of companies that make pens. The types of pens. The sizes. The colors. The "bacteria free". The "check book proof".

The prices. Look at the various prices. A vast array. Pennies to dollars.

Every pen you could ever imagine

Why?

Competition.

Something as simple as a pen has hundreds of variations. Cheap to expensive all priced to perfection? How do I know that it's priced to perfection?

Because they are on the wall. If you, the consumer didn't buy it, it wouldn't be on the shelf for very long. You do not have pen insurance. If you like it, you will buy it.

What the heck does all this mean to health care?

There is no competition in health care. Medicare sets the rate, all other third parties follow suit. Hospitals cloak their product prices in secrecy. You the consumer don't pay. You don't care. You're insurance picks it up. The status quo has flattened the system.

Where's the competition.

Where's the innovation? Everything in this world is getting cheaper (except gasoline and subsidized agriculture) and better with more variety. Health care is not getting cheaper. And I'm hard fetched to say its getting better (for the money being spent)

Where is the drive for innovation?

Where is the 100 different pens per say?

It's bottled in the Medicare highway. Price controls create artifical limits to productivity. Success is determined by somebody else, not yourself. You are the slave of someone else. There is no sky is the limit.

Competition forces innovation on the top line and bottom line. To survive, change must occur, and quickly, or you go bankrupt. That is the American way.

That is innovation.

Not universal health insurance. It will kill innovation. It will perpetuate a status quo and create one pen instead of a 100. I can assure you of that.

HSAs Gain Popularity In Colorado

The November 6, 2007 Rocky Mountain News reports that Health Savings Accounts (HSAs) are gaining popularity in Colorado:

Some 15 percent of Colorado employers offer, or plan to offer, a health-savings account - or HSA - for next year's health care plans, more than twice as many as last year, said the Mountain States Employers Council. Nationwide, about 20 percent of companies plan to offer HSAs, according to Hewitt Associates.

"This is a way of passing more of the cost to employees, but it also allows the employee to have more control over their destiny," said John Martie, president and general manager of Anthem Blue Cross Blue Shield in Colorado.

HSAs, introduced by federal legislation in 2004, are like a 401(k) for health care. They allow employees to save for medical expenses with pretax dollars, and they're portable. The excess rolls over year after year, and employees take it with them to a new job or if they retire.

Some good news about Colorado health care!

Giuliani's numbers on prostate cancer

"My chance of surviving prostate cancer — and thank God I was cured of it — in the United States? Eighty-two percent," says Rudy Giuliani in a new radio ad. "My chances of surviving prostate cancer in England? Only 44%, under socialized medicine."

Rudy Giuliani has taken a lot of heat for saying that he would rather have American health care than British health care because he has a much better prognosis of living in America with prostate cancer than if he lived in England. He has been ridiculed for the statistics he used.

In Tuesday's (Nov. 6) Investors Business Daily Op-Ed, David Gratzer (an advisor to Mr. Giuliani) provided all the statistics and the sources necessary.

While we do not endorse Mr. Giuliani or any candidate, it is good to see that sometimes politicians can get their facts straight. And it is even better to see that these facts are being made public.

"You mean I can't pay my doc extra?"

The physician-blogger Happy Hospitalist describes the perverse economic incentives imposed by the government that are destroying primary care medicine. Here are some excerpts from his post about his wife's sister's medical options:

...But back to the original discussion. Should she go on the ranks of Medicaid while in school? I warned her that in this area, most docs will never see you. You will be bound to the ER for primary care services. I explained the economics of the situation. She offered to pay her doc more.

Ah, there in lies the problem. I explained quite clearly that Medicare/Medicaid does not allow "balanced billing". Even if the patient chooses to pay more, it is illegal for her to charge more. It is also illegal to charge a cash paying customer a fee less than Medicare pays, if that docs accepts Medicare. In other words, Medicare would want that smaller fee. So, they won't pay more and you can't charge less. How absurd.

She was surprised that it is illegal to pay the difference between what we charge and what insurance collects. Here is a potential Medicaid patient willing to pay her fair share, and the system won't allow it. Why? I have no idea why. Both patient and doctor win. Patient gets access, Doctor gets their fair fee.

She talked about using chiropractor services, about how they offered to "work with her" as an uninsured client. This is capitalism. This is how it should be. Right now, we can't "work with her". It's either in or out. If she's in the Medicaid system, nobody will see her. If she's out, we can't charge her less than the Medicare fee schedule or it's considered fraud. Even though the cash only model allows for lower costs because billing/collections/ resource utilization is lower.

This socialistic model is killing primary care.

By forbidding patients and doctors from contracting for medical services at a price agreeable to all parties, the government is violating individual rights and harming everyone. (Via KevinMD.)

Why your doctor won't email or video chat you

Dr. Jay Parkinson explains why many doctors won't use e-mail to communicate with their patients:

When I first went live with my practice on September 24th, 2007, I received plenty of criticism regarding patient privacy and security. Many people questioned my compliance with HIPAA, a federal law the vast majority of physicians and institutions in America have to abide by in order to protect patients’ private health information (PHI). PHI is defined as any situation where there is an identifying factor (such as name or SSN) associated with a diagnosis. For example, John Smith is telling me about his seasonal allergy symptoms via AIM. Under HIPAA, if I were IM’ing with a patient using an unsecure chat application, like AIM, I could face thousands of dollars in fines. If I revealed this health information with criminal intent, I could face up to $250,000 in fines and 10 years in prison.

If I signed contracts with insurance companies and/or Medicare and submitted online claims to these companies I would have to abide by HIPAA. My entire practice would be illegal. I could not email, IM, text, or video chat anyone using the ubiquitous most popular communication apps (like AIM, gmail, etc.) without breaking federal law. They are not encrypted and considered not secure. I would be fined out of existence and, if argued in court, I could even face years of jail time.

If any of you are wondering why your own doctor doesn’t communicate with you using email, IM, and other ways that simply make sense in today’s world, wonder no further. They break federal law with every email and IM since the vast majority of physicians have contracts with insurance companies or Medicare.

...Because I do not take health insurance, I am free from HIPAA regulations and therefore I can conveniently communicate with you in ways that simply and plainly just make sense in today’s world. People have criticized me, a solo physician who will likely have about 1,000 patients in my practice, about security and privacy (FYI...all of my patient medical records are encrypted, password protected twice on my laptop and backed up daily to a secure, encrypted remote server). Those who question me seem horribly concerned about my patients’ privacy. Meanwhile, those of you who do have health insurance with the major insurance companies, please beware. Your name, SSN, and medical information are stored along with hundreds of thousands, if not millions, of other people in enormous databases at your mega-insurance company. The people responsible for that CD they’re using to transport maybe 196,000 people’s PHI aren’t doing such a good job. I guarantee I won’t have to provide 12 months of free Equifax to you if you are my patient. Go with the big guys and kiss your privacy goodbye. I personally use Apple’s encryption technology called Firevault. According to Apple, it could take as long as 149 trillion years to crack my password using a computer that could attempt it every second.

(Via KevinMD.)

Canadians Would Act In Their Rational Self-Interest

Although Canadians pay lip service to the egalitarian ideals of their socialized medical system, when push comes to shove, many Canadians will quite naturally act in their self-interest in order to get the best medical care for themselves and their loved ones. Despite the official rationing and waiting lists, Canadians say they would be willing to do what it takes to "jump the queue". Here are some excerpts from a recent article in the 10/26/07 National Post:

Canadians willing to jump health-care queues: study

When push comes to shove, many people would seriously consider pulling strings to jump a health-care queue, suggests a survey of Toronto residents.

And 16% of the 101 people responding to the Toronto telephone survey said they had already contacted a friend in the medical system in an effort to get moved up a waiting list.

...About 29% said they would consider giving a gift or donation to get ahead and 36% agreed that patients should be allowed to pay extra to get quicker access.

...In one scenario, the respondents were asked if they would speak to a neighbour who is a secretary at an MRI clinic if it meant getting moved up a list instead of waiting three months. About 71% said they would likely or definitely take the step.

Another scenario asked the respondent if they would give their surgeon tickets to basketball and hockey games if it meant getting hip replacement surgery faster. Thirty per cent said they would likely or definitely do that.

A third scenario asked if the respondent was willing to pay a $20 "emergency fee" to see a dermatologist about an unattractive but apparently harmless rash instead of waiting three months. Just over half said they would.

And 56% said they would likely or definitely let a doctor who owes them a favour move them up a waiting list for cataract surgery.

...Ann Heester, clinical ethicist at the Ottawa Hospital, said she's not surprised by the results of the survey. ..."The fact that people would jump the queue is all about desperation," she said. "People makes decisions based on their own needs."

Canadians are rightly frustrated by a system in which the government forbids them from spending their own honestly-earned money on goods and services for a voluntarily agreed-upon price with medical service providers, for their mutual benefit. When government force is used to prevent people from pursuing their rational self-interest, it no surprise that the result is unnecessary suffering and death.

True But Misleading Health Care Statistics

The November 4, 2007 New York Times reports on three commonly cited "true but misleading statements about health care that politicians and pundits love to use to frighten the public":

STATEMENT 1) The United States has lower life expectancy and higher infant mortality than Canada, which has national health insurance.

STATEMENT 2) Some 47 million Americans do not have health insurance.

STATEMENT 3) Health costs are eating up an ever increasing share of American incomes.

These statements are frequently cited to justify increased government control of medicine, but the article explains why this is fallacious.

(If the NY Times link doesn't work, here's a mirror of the article at the International Herald Tribune.)

Coverage Is Not Health Care

A California breast cancer surgeon working in a rural area explains how her practice was destroyed by government run health care. Here are some excerpts:

Currently, Medicaid expenditure per enrollee is nearly $7,000 per year. This high cost “health plan” gives recipients access to long wait times for fewer doctors, guaranteeing little ability to make healthcare decisions for themselves and their families. Arbitrary decisions made by government employees—nearly 6,000 in California alone—overrule recommendations made by doctors and nurses sitting beside their patients in exam rooms across the state.

Medicaid’s astonishing administrative costs compound the problem. According to 2005 data from the Center for Medicare and Medicaid Services, over 31% of every dollar spent by Medicaid did nothing to provide medical treatment.

...I sustained a personal and professional loss when I was forced to stop providing services as the only breast cancer surgery specialist in a 70-mile radius in central California who still accepted Medi-Cal. I could no longer afford the $10,000-$15,000 monthly hemorrhage related to reimbursement so low it would be cheaper to close my office doors.

My own loss is nothing compared with what the women who will be diagnosed with breast cancer in my community will face. “Coverage” with a government-funded “insurance plan” for them offers no coverage, after all.

(Via Health Care BS.)

Congress Needs More Smokers

Do it for the kids!



(Via Howard Roerig.)

The Price Tag of Universal Health Care

In this recent OpEd from October 28, 2007, the Rocky Mountain News asks if the price tag for universal health care in Colorado may be too high:

Tough sell for health-care panel

Is the Colorado Blue Ribbon Commission on Health Care Reform going to lay an egg in January, when by law it must offer its recommendations to the legislature?

It's too early to say, but prospects for the commission's success dimmed somewhat the other day when the price tag was announced for the panel's own proposal - we'll call it Plan Five because the commission will submit four others, too, written by outside groups.

Plan Five's cost: between $1.4 billion and $2.1 billion a year, according to the Virginia-based Lewin Group.

Let's put those figures into perspective.

Two years ago, after a bruising campaign in which millions were spent to promote it, Referendum C passed in a statewide vote by the relatively narrow margin of 53 to 47. Yet as most of you no doubt recall, Ref C did not raise taxes; it only asked the public to give up their tax refunds. And it was not advertised as costing $1.4 billion or more per year. The total cost for Ref C was then projected to be $3.7 billion over five years (a figure that has since gone up).

Meanwhile, Ref C enjoyed far broader support than any health-care tax hike is likely to attract. Although the Republican Party was split on Ref C, the fiscally conservative Republican governor, Bill Owens, supported it and campaigned widely on its behalf. So did Hank Brown, the former Republican U.S. senator noted for his opposition to extravagant government spending, who by then had moved to head the University of Colorado.

Much of the business and civic establishment - not to mention all of the Democratic Party, most of academia and a large majority of commentators in the press - also supported Ref C.

And one final note: Ref C was sold in an atmosphere of budgetary crisis. If they didn't pass the measure, voters were warned, they would doom higher education and virtually every other program not protected in the state constitution or by federal mandate.

Such breadth of support simply isn't in the cards for Plan Five or any other proposal needing an annual infusion of more than $1 billion, and no such sum is available without a tax hike approved by voters.

"Now it's time to see if you can drive down costs in some way," John Sheils, senior vice president of the Lewin Group, told the commission.

Yes, that would be nice, especially since the law passed last year creating the commission gave it two mandates: "To expand health-care coverage and to decrease health-care costs for Colorado residents."

So far, the focus seems mainly on the first half of that charge.

The commission did devote itself to cost-cutting at a recent meeting, but the effort basically amounted to tinkering with the plan. We'd be very surprised if the price tag declined significantly without a wholesale rethinking of how health care is delivered and paid for, and how to alter the incentives that motivate consumers and providers alike. Yet if that's not in the cards, it's hard to see how the state is going to afford such an ambitious initiative - or, perhaps to put the matter more precisely, how the state will find the will to pay for it.

As we've seen repeatedly in other US states and other countries, a government mandated plan simply cannot provide health care that is (1) universal, (2) high-quality, (3) easily accessible, and (4) inexpensive, because it bypasses the free market mechanisms that make this possible. Instead, all government plans end up compromising on one or more of these criteria. In Massachusetts, they've compromised on "universal". Canada compromises on quality and easy access. Colorado should not imitate these failed models.

Competition Improves Health Care

The Seattle Post-Intelligencer reports that prices for prescription drugs are falling (after adjusted for inflation), due to market competition:

Competition improves health care

Lo and behold, competition works -- even in health care.

The Labor Department recently reported that the inflation rate for prescription drugs dropped to 1 percent over the past year. That's a 30-year low, well below inflation, and a salve for consumers used to price increases.

It's also no accident. Two big things changed in prescription drugs last year. One is a surge in the use of generics. The other is a fierce retail war among Wal-Mart, Publix and other retail-pharmacy giants, each seeking a bigger share of the market.

...Remember this, what real competition looks like, the next time you hear about "market failures" in health care.

...The decline in drug prices shows that when things go right in health care -- when competitive markets are allowed to function -- prices respond favorably for consumers, just as they do in other sectors of the economy. So while politicians and pundits in Washington dream up the next grandiose health care reform, smart consumers know that the most effective health care solutions may be right around the corner at their local retailer.

Hillman on Mandates

The October 26, 2007 Denver Post has printed the following OpEd by former Colorado State Senator Mark Hillman on the problems with insurance mandates:

Consumers deserve choice in health care
By Mark Hillman

"Everybody talks about the weather, but nobody ever does anything about it." - Mark Twain

You might say the same goes for health care. Politicians are constantly tinkering, making promises they can't deliver, and usually creating a bigger mess than the one they promised to fix.

Ironically, despite the abysmal record of lawmakers and bureaucrats to produce lower prices or create greater choice, the public still clamors for government to "do something." Perhaps the more logical outcry should be: "undo something."

The newest solution du jour is mandated universal coverage — i.e., requiring everyone to buy health insurance and/or requiring all employers to buy it for their employees.

At first, this sounds rather reasonable. State law already mandates insurance for all vehicles licensed in Colorado. Extending the same principle to health insurance would promote personal responsibility, right? After all, we are told that those of us who buy insurance are constantly paying for those who aren't insured and cannot pay.

Reality, human nature ignored

On the other hand, there's reality and human nature — two factors conveniently ignored by so many who always want to legislate the rest of us into their utopian mold.

The first reality is that another law won't produce universal coverage any more than traffic laws eliminate speeding. Even with mandatory automobile insurance coverage, at least 12 percent of vehicles on the road are still uninsured. By contrast, the health uninsured rate is only a slightly higher 16 percent without a similar law.

The next reality is that the auto insurance mandate is fairly simple. State law requires only two types of auto coverage — liability and uninsured motorist — and a minimum of $50,000 coverage for each category. Other than that, we can decide what to buy and how much to pay. We won't be so lucky with health insurance.

Once lawmakers require everyone to purchase insurance, they won't be satisfied to simply mandate $500,000 or even $1 million of coverage. That's because special interests perennially lobby the legislature to require you to buy things you don't need, don't want or can't afford.

Colorado law already requires most health plans to cover at least 16 specific items. Let me put that another way: know-it-all politicians don't think we are smart enough to make our own health care choices, so rather than give us options, they order us to buy what they think we need.

Women who plan to never have children or who are beyond childbearing years must buy maternity coverage. They also, inexplicably, must pay for prostate screening. People who don't drink must purchase coverage for alcoholism. And despite the added cost of mental health coverage, everyone who buys insurance must purchase it.

For many, these mandatory extras make health insurance unaffordable, thereby exacerbating the so-called "crisis of the uninsured."

Strange bedfellows?

If lawmakers didn't spend so much time bashing insurance companies, you might think they were in cahoots. How else do you explain the absurd decree that we must buy insurance for preventive measures, such as mammography or prostate screening?

No one questions the wisdom of these screenings. However, requiring you to finance them through insurance, when you could more easily and less expensively pay for them yourself, doesn't demonstrate lawmakers' compassion so much as their economic illiteracy.

Moreover, any legislator who actually trusts people to decide for themselves and votes against mandatory coverage is usually rewarded with dishonest campaign attacks claiming that he or she opposes coverage for breast cancer, birth defects, diabetes and such.

The end result is that you and I are no longer allowed to choose the insurance coverage that best fits our needs, and insurance companies can't respond to what we want.

Instead, lawmakers and lobbyists control the health care market, as they have increasingly for the past 40 years; then they react in amazement when the product is something you and I either do not want or cannot afford.

Mark Hillman is a wheat farmer in Burlington and a former state senator. Contact him at www.markhillman.com

Gorman on Medicaid

Linda Gorman, Health Care Policy Center Director at the Independence Institute, has written the following OpEd on Medicaid:

It's Official: Medicaid Managed Care Does Not Save Money

The reform plan drawn up by Colorado's Blue Ribbon Commission on Health Care Reform plans to enroll 50 percent of Medicaid recipients in managed care. Given the history of Medicaid managed care in Colorado, this is an odd recommendation.

Back in the dark ages of Clinton Care 1.0, heath care policy gurus asserted that managed care would save enormous sums. State governments salivated. To sweeten the pot for switchers, the Robert Wood Johnson Foundation and other acolytes of managed care encouraged the notion that Medicaid HMOs could provide better, more coordinated care, at rates that were 95 percent of fee-for-service costs. The usual economic models predicted big savings. Projects were funded. Federal waivers were pursued. Medicaid clients were herded into capitated health plans, and all parties proclaimed the dawning of a new era in health care.

In the heady days of 2002 and 2003 Colorado Medicaid enrolled 50 percent of Medicaid clients in one of five Medicaid HMO plans. Kaiser and United Health pulled out in November 2002. In 2003, two others left. Four of the five original plans sued the state for inadequate payments. They won $77,810,395 in additional payments, along with legislation requiring actuarially sound calculations of capitation rates.

Enrollment in Medicaid HMOs fell. Even though clients in the Denver metro area were automatically enrolled in managed care unless they actively chose fee-for-service, by September 2006 fewer than 10 percent of Medicaid clients were enrolled in risk-based managed care.

In June 2007, Denver Health Medicaid Choice, the remaining Medicaid HMO, informed the state that it would withdraw unless capitation rates were increased to 100 percent of the fee-for-service rates. The state applied for the emergency supplemental appropriation required to fund the increase.

After years of testing, the state has found that Medicaid HMO plans are at least as costly as traditional fee-for-service. They may even cost more. In its December 2006 Joint Budget Committee hearings, the Colorado Department of Health Care Policy and Financing wrote that "Although managed care organizations should experience savings over fee-for-service due to their improved ability to reduce unnecessary hospitalizations, emergency room visits, and other overutilization, there are also extensive administrative costs for care management, utilization management, providing networking to ensure access, and other processes such as bill paying and risk management."

The state could elect to give taxpayers a break and simply make the same payment for the same care regardless of delivery method. People who use the care would simply pick the kind of care they like. They might prefer a private physician to an HMO. In Medicare, where people do have a choice between HMOs and fee-for-service, the data show that healthier people tend to enroll in HMOs. Those most likely to leave HMOs are those in poorer health.

The fact that managed care should cost less but doesn't poses a problem for influential people who have spent their entire professional lives being trained in the managed care creed. Many of them prefer to believe that failure results from too little money and not enough regulation. Undeterred by failure, they want to repeat the Medicaid managed care experiment with more regulation and more tax money.

To attract managed care providers, the Department proposes increasing Medicaid HMO payment rates to 100 percent of fee-for-service payments and adding a 5 percent payment for administrative costs. If these measure fail, it is even investigating the possibility of setting up and running its own Medicaid HMO. The idea is that if it runs its own HMO, it will enjoy lower costs for purchasing and administration. In some particularly florid prose, the Department says that a state run HMO would allow the state to achieve "the efficiency of centralization," a transcendental state that has eluded every other government-run, centralized health care system in the English speaking world.

Meanwhile, the Consumer Directed Attendant Support program, Colorado's innovative experiment with consumer directed care, frees clients from Medicaid centralization, giving them a budget and letting them keep 50 percent of any money they save. In turn, their ingenuity saves the state about 20 percent a year. In the private sector, innovative companies are having similar results when they reduce centralized management by marrying tax free health savings accounts with high deductible health insurance.

Unfortunately, real savings by real people cut little ice with those who think that 50 percent of all Medicaid clients should, for some unknown reason, be in Medicaid HMOs. That the state is demonstrably unfit to run an HMO doesn't matter.

The goal has been set, "the efficiency of centralization" awaits, and real costs are of little real importance when true believers spend other people's money. Look for a massive rollout of results from esoteric theoretical models. These results will prove that state run health facilities will produce big theoretical savings. In practice, the real world is unlikely to oblige.

Armstrong Responds to Beauprez

Ari Armstrong has written a detailed response to Bob Beauprez's recent advocacy of insurance mandates. Here is an extended excerpt:

Beauprez's many confusions and distortions call for a more detailed reply.

Beauprez's comparisons to auto insurance and homeowners insurance do not hold. The reason that "motorists are required to have auto insurance" if they wish to use government-run roads (even though many do not obey that law) is that the roads are socialized. It is telling that Beauprez holds up a socialized industry as the standard for medicine. Yet people are not forced to buy auto insurance if they do not use government-run roads. Beauprez wants to force everyone to buy health insurance.

If a lender requires the borrower to purchase homeowners insurance as a condition of the loan, that is properly a matter of voluntary contract, not political controls. But Beauprez is not talking about any sort of voluntary agreement with respect to health insurance: he is talking about legislating new political controls that force everyone to buy health insurance.

Beauprez continues:

Of the 15-17% of the population that is uninsured, the U.S. Census Bureau reports that 56% are 18-34 year old young adults. It is impossible to know for certain, but many of these are no doubt uninsured by choice. Believing they are either permanently healthy, bullet proof, or both, they choose to spend their money on other things than health insurance. If they do get really sick or injured they know that they can go to any emergency room and get treatment whether they can pay or not because of federal law known as Emergency Medical Treatment and Active Labor Act (EMTALA). Some are certainly uninsured because they cannot afford the cost of insurance, but most could afford at least a portion of a monthly premium.

The reality is that when someone doesn't have insurance the cost of their health care is shifted to those that do in higher premiums, and to taxpayers who fund government programs. Cost shifting from the growing number of uninsured to the insured is a huge reality. The biggest challenge hospitals face is to adjust prices to insurance companies for paying customers to cover losses for services to non-paying uninsured patients they are required by law to treat. That invariably is reflected in higher insurance premiums.

It is simply not true that "when someone doesn't have insurance the cost of their health care is shifted to those that do in higher premiums, and to taxpayers who fund government programs."

Beauprez insults my wife and me, who were uninsured for several years. During that time, we paid for routine medical care out of pocket. Not once did we ask any other party to pay for our medical care. Yet Beauprez unjustly insinuates that we were freeloaders.

Why were we uninsured? Was it because, as Beauprez claims, we thought we "are either permanently healthy, bullet proof, or both?" No, Bob, it was not because we were stupid or deluded. I don't need some failed politician to inform me of my motives, thank you very much.

The reason that we chose not to purchase health insurance at that time was that employer-paid insurance was a horrible deal for us. Because of government controls, such insurance acts to transfer wealth away from healthier workers to those with higher costs. We were having a hard enough time paying bills without financing other people's health care to boot.

We made a calculated decision not to purchase health insurance. We looked at our realistic health risks given our age and state of health, took steps to independently maintain our health, planned to buy health care out of pocket, and considered how to handle possible (but unlikely) high-cost treatments.

In other words, our motive was the exact opposite of what Beauprez alleges. We were not trying to push our health-care costs onto others. Instead, we were paying our own way while refusing to finance the health care of others.

Here's how politicians have turned employer-paid insurance into a wealth-transfer scheme. Politicians have entrenched high-cost, non-portable, employer-paid health insurance through federal tax distortions. Because of the tax distortion, such insurance serves as pre-paid medical care, not actual insurance to cover unexpected, high-cost treatment. Our hope with term life insurance, auto insurance, and home insurance is to never need to make a claim. We happily pay our routine auto and home expenses out of pocket. Why, then, do most people expect health insurance to cover all or nearly all of their health costs? It is because of the tax distortion. That's fundamentally why health insurance is so bloody expensive.

And, of course, when practically every purchase of medical care goes through insurance, that adds a lot of processing costs.

When insurance acts as pre-paid medicine, it transfers wealth to insurance companies and to those who often visit the doctor (whether the visits are needed or not). It costs everyone who visits the doctor only occasionally.

Politicians have also required that employer-paid insurance accept all comers, regardless of health, within tightly controlled rates. That's the equivalent of forcing a life-insurance company to charge the same rate for the same policy for a healthy 25 year old and an 80 year old with cancer. What happens is that some people put off buying insurance until they get sick. This increases the rates for everyone (as Beauprez suggests).

In addition, politicians have added all sorts of additional controls that act to transfer health-insurance dollars to members of special interests. In a comment beneath Beauprez's article, Brian T. Schwartz writes:

The rationale for compulsory insurance is the "cost shift from uncompensated care" provided to the under- and uninsured, "which makes private insurance more expensive."

Yet, Health Affairs reports that such uncompensated care is "only 2.8 percent of total personal health care spending." ...

Indeed, politicians have already succumbed to special interests by forcing insurance plans to cover many benefits that you may not need. These mandated benefits laws increase your premiums by 21 to 54 percent. (Council for Affordable Health Insurance, www.tinyurl.com/32ozs6)

So is the result of mandated health insurance to reduce "cost shifting?" On one hand, some people who would otherwise shift their costs onto others would be forced to instead purchase insurance. (However, those most likely to shift their costs onto others are also the ones most likely to avoid the mandate.) But on the other hand, insurance mandates increase "cost shifting" by forcing those with low medical costs to subsidize those with high medical costs. Notably, if some people pay only "a portion of a monthly premium," as Beauprez suggests, then that means somebody else must pick up the rest of the tab.

One result it to screw young, working families, at the very point in their lives when they're trying to pay off debts, keep up on bills, start families, and buy homes.

The only just way to reduce "cost shifting" is to remove the political controls that cause it. Beauprez's plan is to "solve" the cost-shifting caused by political controls by adding new political controls that will expand cost-shifting.

Beauprez also claims, "Insured are far more likely to avail themselves of preventative care, get treatment earlier, and avoid serious acuity and expense."

Beauprez's claim is false. When my wife and I were uninsured, we knew that if we didn't take care of ourselves, we'd face higher expenses down the road. We made sure that we ate healthy foods, exercised, avoided unnecessary risks, and checked up on our health. Now that we have high-deductible insurance that we hope never to need, our incentives are basically the same. On the other hand, when people are "insured" for everything, they have less incentive to minimize their long-term health costs.

Again, the problem is political force that allows the uninsured to demand medical care at the expense of others. The proper solution is to repeal those controls, not impose new controls that force people to buy insurance.

Some of Beauprez's proposals (none of which are original to him) are fine, such as reducing the tax distortion that has entrenched employer-paid insurance. But his call for mandatory health insurance overwhelms anything positive he might have to say. "Both Ways Bob" simply does not understand the nature of individual rights, the meaning of free markets, or the proper purpose of government.

It is typical for such conservatives as Beauprez to follow a call for more political force, more state interference in the market, with a sentence like this:

"Any objective observer with even minimal experience with our free market system understands that private competition with limited government interference works."

ARI: Atlas Shrugged and Today's Healthcare Controversy

The Ayn Rand Institute has issued an excellent press release on the relevance of Atlas Shrugged to the current health care debate:

Atlas Shrugged and Today's Healthcare Controversy
October 16, 2007

Irvine, CA--This month is the 50th anniversary of the publication of Atlas Shrugged, Ayn Rand's novel about a group of high achievers who rebel against a society that shackles and condemns them. Yaron Brook, executive director of the Ayn Rand Institute, heralded the book's relevance to today's cultural-political debate. "While Atlas is 50 years old, it contains many timeless truths that are just as relevant today as they were when it was first published.

"Take the realm of health care. Most Republicans and Democrats are proposing forms of socialized medicine--under euphemisms like 'universal health care,' 'national health insurance,' etc. Everyone talks about how to protect the patient's 'right' to health care--but no one talks about the rights of the doctors that create this value. This is a deadly evasion that one of the characters in Ayn Rand's novel, Dr. Thomas Hendricks, an eminent surgeon who quits the field, eloquently explains in describing his decision:

'Do you know what it takes to perform a brain operation? Do you know the kind of skill it demands, and the years of passionate, merciless, excruciating devotion that go to acquire that skill? That was what I would not place at the disposal of men whose sole qualification to rule me was their capacity to spout the fraudulent generalities that got them elected to the privilege of enforcing their wishes at the point of a gun. I would not let them dictate the purpose for which my years of study had been spent, or the conditions of my work, or my choice of patients, or the amount of my reward. I observed that in all the discussions that preceded the enslavement of medicine, men discussed everything--except the desires of the doctors. Men considered only the "welfare" of the patients, with no thought for those who were to provide it. That a doctor should have any right, desire or choice in the matter, was regarded as irrelevant selfishness; his is not to choose, they said, only "to serve." . . . I have often wondered at the smugness with which people assert their right to enslave me, to control my work, to force my will, to violate my conscience, to stifle my mind--yet what is it that they expect to depend on, when they lie on an operating table under my hands?'

"Countless outstanding doctors have already fled the field because of the sort of government coercion Dr. Hendricks describes," said Dr. Brook. "Anyone who truly cares about the state of American medicine should learn from Ayn Rand's character: we must liberate the providers of medical services and protect their right to practice medicine on their own terms and as they judge best."

### ### ###

Dr. Yaron Brook is available for interviews. To interview Dr. Brook or book him for your show, please e-mail media@aynrand.org

Insurance mandates threaten your health

The October 15, 2007 Grand Junction Free Press published the following OpEd by Ari and Linn Armstrong (also available here):

Insurance mandates threaten your health

Should politicians force you to buy health insurance? In his September 28 column, Dr. Michael Pramenko advocates an "individual mandate" for health insurance. That means that you, the individual, will be forced to buy insurance that's approved by politicians, and if you don't you will be penalized.

Insurance mandates are morally wrong because they violate the rights of individuals to control their own lives and resources. The government has no more right to force us to buy health insurance than it does to force us to buy shoes, houses, hamburgers, or Bibles.

What the government forces, the government controls. The sort of insurance that people purchase should be a matter of voluntary arrangement involving them and insurance companies. If politicians force you to buy health insurance, it will be insurance that politicians and bureaucrats design for you. Such insurance will be designed to serve special interests, not you. It comes as no surprise that unscrupulous insurance companies salivate at the thought of using politicians to force you to buy their products.

Moreover, people have the right not to buy health insurance, as they have the right not to buy home insurance and life insurance. (Drivers are required to purchase auto insurance only if they drive on government-financed roads, so the case is problematic but not comparable.) Maybe a person has saved up hundreds of thousands or millions of dollars and doesn't think insurance is necessary. Maybe an extended family or other group has agreed to fund each others' high-cost, emergency treatments. Whatever the reason, people have the right to make their own decisions and control their own lives.

It is true that on a voluntary market people don't always buy what's good for them. Some people buy fatty hamburgers instead of health food. Some people don't purchase books, which disadvantages their children. Some people don't buy a new roof before the old one starts leaking. And some people don't buy health insurance and other types of insurance even when it would be advantageous.

But do we really want to live in the sort of society in which the government forces people to buy things that politicians decide are good for them? Think about where that will lead.

Instead of trying to force people to buy health insurance, why doesn't Dr. Pramenko take a look at why health insurance is too expensive for some people to afford? We've explained the reasons previously in this column. But Dr. Pramenko has completely ignored the causes of the problem. If he tried to treat an illness without first examining the causes of the symptoms, he would be sued for malpractice. Why does he hold himself to a different standard when it comes to politics?

So we will quickly review. Through federal tax distortions, politicians have entrenched high-cost, non-portable, employer-paid insurance. Because of the tax distortion, this insurance has effectively evolved into pre-paid medical care, not true insurance to cover emergencies. Such insurance has encouraged people to consume medical care with little thought to their needs and to costs. And doctors answer to insurance companies rather than to patients. The result is that costs of medical services and insurance have skyrocketed.

Politicians also took over around half of all health-related payments, further driving up costs. Politicians forced some providers to operate even without compensation and forced insurance companies to "guarantee issue," encouraging some people to forego insurance and even care until they get sick. Politicians have further driven up costs of health insurance by mandating all sorts of benefits and subjecting medical services and insurance to a host of controls.

In short, the problem is political intervention in medicine. To "fix" this problem, Dr. Pramenko prescribes more political intervention in medicine. That's like prescribing cigarettes for lung cancer.

As Dr. Paul Hsieh writes for the blog at WeStandFirm.org, a mandate "has already been tried in Massachusetts and is generating serious problems because it does not address the fundamental cause of skyrocketing health care costs, namely the government interference in medicine."

Indeed, as Massachusetts politicians discovered, mandates generate two immediate problems. First, it's impossible to get everyone to buy insurance. The very people most likely to try to push their health costs onto others are among those least likely to follow the mandate. Second, it turns out that the poor can't afford the mandated insurance, anyway. That's why various Colorado "reformers" call for much higher taxes to further subsidize insurance and care.

Mandated insurance acts to transfer wealth away from young, healthy workers to those with higher medical costs. If Colorado imposes a mandate, that will drive away young workers and attract those with high costs. A national mandate would make it harder for younger workers to save for their own futures.

Dr. Pramenko calls for "cooperation" and "compromise." Yet a health-insurance mandate is all about political force, not cooperation. We urge Coloradans to compromise neither their health nor their liberty for this latest political scheme.

ARI: Be Healthy or Else!

The Ayn Rand Institute has issued the following opinion piece on health care policy:

Be Healthy or Else!

By Yaron Brook and Don Watkins

As part of his universal healthcare proposal, John Edwards would make doctor visits and other forms of preventive care mandatory. In a similar proposal in England, a Tory panel suggested that Britons should be forced to adopt a government-prescribed "healthy lifestyle." Britons who "cooperate" by quitting smoking or losing weight would receive Health Miles that could be used to purchase vegetables or gym memberships; those who don't would be denied certain medical treatments.

These paternalistic proposals are offered as solutions to the spiraling costs that plague our respective healthcare systems. It is unrealistic, states the Tory report, for British citizens "to expect that the state will underwrite the health implications of any lifestyle decision they choose to make."

But any proposal that expands the government's power to control our lives--to dictate to us when to go to the doctor or how many helpings of veggies we must eat--cannot be a solution to anything. Instead of debating what coercive measures we should be taking to lower "social costs," we should be questioning the healthcare systems that make our lifestyles other people's business in the first place.

Both the American and British systems, despite their differences, are fundamentally collectivist: they exist on the premise that the individual's health is not his own responsibility, but "society's." Both Britain's outright socialized medicine and America's semi-socialized blend of Medicare, Medicaid, and government-controlled, employer-sponsored health plans aim to relieve the individual of the burden of paying for his own healthcare by coercively imposing those costs on his neighbors.

When the government introduces force into the healthcare system to relieve the individual of responsibility for his own health, it is inevitably led to progressively expand its control over that system and every citizen's life.

For example, in a system in which medical care is "free" or artificially inexpensive, with someone else paying for one's healthcare, medical costs spiral out of control because individuals are encouraged to demand medical services without having to consider their real costs. When "society" foots the bill for one's health, it also encourages the unhealthy lifestyles of the short-range mentalities who don't care to think beyond the next plate of French fries. The astronomical tab that results from all of this causes collectivist politicians to condemn various easy targets (e.g., doctors, insurance companies, smokers, the obese) for taking too much of the "people's money," and then to enact a host of coercive measures to control expenses: price controls on medical services, cuts to medical benefits--or, as with the current proposals, attempts to reduce demand for medical services by forcing a "healthy lifestyle" on individuals.

Properly, your healthcare decisions and expenditures are not anyone's business but your own--any more than how much you spend on food, cars, or movies is. But under collectivized healthcare, every Twinkie you eat, doctor's visit you cancel, or lab test you wish to have run, becomes other people's right to question, regulate, and prohibit--because they are paying for it. When "society" collectively bears the costs of healthcare, the government will inevitably seek to dictate every detail of medical care and, ultimately, every detail of how you live your life.

To protect our health and our freedom, we must reject collectivized healthcare, and put an end to a system that forces us to pay for other people's medical care. We must remove government from the system and demand a free market in medicine--one in which the government's only role is to protect the individual rights of doctors, patients, hospitals, and insurance companies to deal with one another voluntarily, and where each person is responsible for his own healthcare.

Let's not allow the land of the free and the home of the brave to become a nation of dependents looking to the nanny-state to take care of us and following passively its dictates as to how we should live our lives.


Yaron Brook is the president of the Ayn Rand Institute (ARI) in Irvine, CA. Don Watkins is a writer and research coordinator at ARI. The Institute promotes Objectivism, the philosophy of Ayn Rand--author of "Atlas Shrugged" and "The Fountainhead."

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

Dental Care in the US

Ari Armstrong explains how to get good quality dental care in the US without dental insurance:

How to Access Dental Care Without Insurance

Chris J. Wiant, M.P.H., Ph.D., wrote the following comments for the October 7 Rocky Mountain News:

While 770,000 Coloradans are without health insurance, twice that number of citizens do not have dental insurance and, therefore, lack access for preventive and restorative services. They must wait until their dental problem becomes a medical emergency before they are likely to get service. ...

Therefore, it is my hope that Colorado’s Blue Ribbon Commission on Health Care Reform takes seriously the need to include dental care as part of an overall strategy in fixing our health-care system in Colorado.

Wiant's assertion is false. It is simply not true that people who lack dental insurance therefore "lack access for preventive and restorative services." They have all kinds of access. Since Chris J. Wiant, M.P.H., Ph.D., is apparently ignorant of this fact, I'll describe how people may access dental care.

Step One: Locate a phone book.

Step Two: Look up "dentist" in the phone book. It's under "D."

Step Three: Using a telephone, call a dentist in the phone book.

Step Four: Make an appointment to see the dentist.

Step Five: Go to see the dentist at the appointed time.

Step Six: Pay the bill.

As an alternative to the first two steps, look on-line -- I found 2,080 dentists listed through DexKnows -- or ask friends for a referral (which is what my wife and I did).

My wife and I do not have dental insurance. Indeed, we have never used our high-deductible insurance to cover any medical cost. We pay all of our medical and dental costs out of pocket (or out of our Health Savings Account, which is an extension of our "pocket"). And we like it that way.

My wife and I have both been very proactive in seeking out (and purchasing) "preventive and restorative" dental services. For example, just within the last few weeks, I had my first cavity filled (which was tiny because I went in as soon as I noticed it), and my wife had a filling replaced. Months ago I had a cracked molar repaired. We both get regular check-ups and cleanings.

Our dentist does an outstanding job. He is worth every cent that we've ever paid him -- and much, much more. We get a spectacular value for our money with him, and I am proud to pay him for the services that he renders. Now that's "access."

We don't need Chris J. Wiant, M.P.H., Ph.D., to force us to purchase dental insurance that we neither want nor need. And that's really what he's saying here. It is now common knowledge that the 208 Commission has endorsed an "individual mandate" for Colorado, meaning that the Commission wants to force people to buy "insurance" that's approved by politicians and bureaucrats (as opposed to, say, removing the political impediments that make insurance too expensive for some people to purchase).

But Wiant is concerned with the fraction of people lacking dental insurance who have trouble with Step Six. But they don't need "insurance" (i.e., government-managed, pre-paid care that others are forced to fund) in order to have "access." Those without funds to pay for dental services can and should set up payment plans or turn to voluntary charity.

Wiant's article is indicative of what we can look for if the political takeover of medicine advances. Special interests will continually lobby to have their favored services included in the politically-enforced mix. As people "access" more of the "free" (or nearly free) services, the result will be price controls and rationing. Real "access" will be reduced.

By the way, "Chris J. Wiant, M.P.H., Ph.D., is president and CEO of the Caring for Colorado Foundation." And what manner of group is that? According to its web page:

In November of 1999, Anthem Insurance, a for-profit company, purchased Blue Cross Blue Shield of Colorado, which had non-profit status. This sale yielded proceeds of $155 million. As mandated by Colorado state law, the profit from the sale was dedicated to benefit the health of the people of Colorado. Caring for Colorado Foundation, a non-profit 501(c)(4), tax-exempt Foundation, was endowed to fulfill this responsibilty (sic).

Let us leave aside the absurdity of state laws stacked on federal tax codes micromanaging mergers. Chris J. Wiant, M.P.H., Ph.D., is, by advocating more political control of medicine, actively undermining " the health of the people of Colorado."

Dental Care in the UK

Although the socialized British National Health Service provides "universal care", the deterioration in dental care has gotten so bad that some desperate patients are resorting to pulling their own teeth:

Falling numbers of state dentists in England has led to some people taking extreme measures, including extracting their own teeth, according to a new study released Monday.

Others have used superglue to stick crowns back on, rather than stumping up for private treatment, said the study. One person spoke of carrying out 14 separate extractions on himself with pliers.

...Overall, six percent of patients had resorted to self-treatment, according to the survey of 5,000 patients in England, which found that one in five had decided against dental work because of the cost.

...Almost half of all dentists -- 45 percent -- said they no longer take NHS patients, while 41 percent said they had an "excessive" workload. Twenty-nine percent said their clinic had problems recruiting or retaining dentists.

Stossel on Free Market Medicine

Whereas government-run socialized medicine is a proven failure, John Stossel points out that in the sectors of medicine where there is a relatively free market, costs go down and quality goes up. This is no surprise, since it is the standard outcome in every other sector of the free market.

Here are some excerpts:

Medical Competition Works for Patients

...Prices have fallen and quality has risen in other medical fields where most people pay for care themselves, like cosmetic surgery. Consumer power works -- even in medicine.

When government and insurance companies are kept away from the transaction, good new things happen.

A doctor in Tennessee I talked to publishes his low prices, such as $40 for an office visit.

Most doctors would say you can't make money this way. But Dr. Robert Berry told me you can. "Last year, I made about the average of what a primary-care physician makes in this country," he said.

Berry doesn't accept insurance. That saves him money because he doesn't have to hire a staff to process insurance claims, and he never has to fight with companies to get paid.

His mostly uninsured patients save money, too. Unlike doctors trapped in the insurance maze, Berry works with his patients to find ways to save them money.

"It's coming out of their pockets. And they're afraid. They don't know how much it's going to cost. So I can tell them, 'OK, you have heartburn. Let's start out with generic Zantac, which costs around five dollars a month.'" When his patients ask about expensive prescription medicines they see advertised on television, he tells them, "They're great medicines, but why don't you try this one first and see if it works?"

Sometimes the $4 pills from Wal-Mart are just as good as the $100 ones.

Speaking of Wal-Mart, medical clinics are popping up in Wal-Mart stores and in other similar markets. The clinics offer people with simple problems like sore throats and ear infections relatively hassle-free care cheap. Almost everything costs $59 or less. And the clinics are typically open seven days a week.

... When consumers pay for medicine themselves, saving insurance for the big things, and doctors deal directly with consumers, doctors begin to compete. They start posting prices and work to keep them low.

And consumers gain more control of their health care. Instead of governments and insurance companies deciding for patients, patients decide.

Competition gives consumers more choices. And choice gives them power. Remember that when you hear a politician promise to make health case accessible and affordable through the force of government.

Dr. Jim Schroeder Speaks Out Against Socialized Medicine

Pediatric cardiologist Jim Schroeder spoke out against the 208 Commission's efforts to impose more government interference in medicine in a recent community meeting in Grand Junction. The October 12, 2007 Grand Junction Sentinel reported:

Community discusses health care reform

Dr. Jim Schroeder warned four members of a statewide health reform commission that over-involving government in doctor-patient relations could push a large number of physicians to leave the business.

“The role of government should be to get the hell out of the way and let the doctors meet with the patients,” Schroeder said, his voice wavering with emotion.

Schroeder said any attempt from policymakers to expand existing government-managed health insurance programs or to create a single-payer, government-run health insurance program could allow the state to lower how much it pays physicians for their work.

“If you’re not paid for what you’re doing … you’re not going to stay in the field,” the local pediatric cardiologist said.

Schroeder’s comments came as part of a Thursday evening forum the Senate Bill 208 Commission hosted in Grand Junction to receive feedback on its five possible health care reform proposals.

Today's Cartoon

Stossel on Health Insurance

John Stossel has written another nice piece about the problems with health insurance. As he points out, the problems are created by government policies and won't be solved by more government interference in health care. Here are some excerpts:

Our crazy health-insurance system

...We Americans got hooked on health insurance because the government did the insurance companies a favor during World War II. Wartime wage controls prohibited cash raises, so employers started giving noncash benefits, like health insurance, to attract workers. The tax code helped this along by treating employer-based health insurance more favorably than coverage you buy yourself. And state governments have made things worse by mandating coverage many people would never buy for themselves.

...We came to expect insurance to cover everything. That's the root of our problem. No one wants to pay for his own medical care. "Let the insurance company pay for it." But if companies pay, they will demand a say in what treatment is — and is not — permitted. Who can blame them?

...Imagine if your car insurance covered oil changes and gasoline. You wouldn't care how much gas you used, and you wouldn't care what it cost. Mechanics would sell you $100 oil changes. Prices would skyrocket.

That's how it works in health care. Patients don't ask how much a test or treatment will cost. They ask if their insurance covers it. They don't compare prices from different doctors and hospitals. (Prices do vary.) Why should they? They're not paying. (Although they do in hidden, indirect ways.)

In the end, we all pay more because no one seems to pay anything. It's why health insurance is not a good idea for anything but serious illnesses and accidents that could bankrupt you. For the rest, we should pay out of our savings.

Business Week OpEd Opposes Individual Mandates

The October 15, 2007 edition of Business Week includes the following opinion piece by Glen Whitman criticizing individual insurance mandates. Here are some excerpts:

"Bad Medicine For Health Care"

From Hillary Clinton and John Edwards to Mitt Romney and Arnold Schwarzenegger, politicians across the spectrum have tried or vowed to solve America's health-care woes by enacting an individual mandate--a law requiring every adult to purchase health insurance. Despite its bipartisan support, the individual mandate is bad policy, a vain attempt to command a better result while doing nothing to achieve it.

...As anyone who has ever driven above 55 mph knows, mandating something is not the same as making it happen. Some people will not comply: 47 states require drivers to buy liability auto insurance, yet the median percentage of uninsured drivers in those states is 12%. Granted, that number might be even higher without the mandates. The point, however, is that any amount of noncompliance reduces the efficacy of the mandate.

... To enact any mandate, legislators and bureaucrats must specify a minimum benefits package that an insurance policy must cover. Yet this package can't be defined in an apolitical way. Each medical specialty, from oncology to acupuncture, will push for its services to be included. Ditto other interest groups. In government, bloat is the rule, not the exception.

Even now, every state has a list of benefits that any health-insurance policy must cover--from contraception to psychotherapy to chiropractic to hair transplants. All states together have created nearly 1,900 mandated benefits. Of course, more generous benefits make insurance more expensive. A 2007 study estimates existing mandates boost premiums by more than 20%.

If interest groups have found it worthwhile to lobby 50 state legislatures for laws affecting only voluntarily purchased insurance policies, they will surely redouble their efforts to affect the contents of a federally mandated insurance plan. Consequently, even more people will find themselves unable to afford insurance. Others will buy insurance, but only via public subsidies. Isn't that just what the doctor didn't order?

A better approach to health reform would focus on removing mandates that drive up insurance premiums. States ought to repeal some or all of their mandated benefit laws, allowing firms to offer lower-priced catastrophic care policies to their customers. The federal government could assist by guaranteeing customers the right to buy insurance offered in any state, not just their own, enabling patients to patronize companies in states with fewer costly mandates. Indeed, removing mandates would do far more to expand health-care coverage than adding new mandates ever could.

My only additional comment is that in the final paragraph I would advocate removing "all" (rather than just "some or all") of these harmful mandated benefit laws.

(Via Marginal Revolution.)

Fran Miller on Individual Mandates

Fran Miller questions the wisdom (and the justice) of the individual mandates that the 208 Commision seems to like so much. Here are some excerpts:

According to some people, there is this group of people out there called the "un-insured" who are the root cause of rising health care costs. It is believed that their failure to buy insurance results in receiving care too little, too late and then, when they can't pay their hospital bills, the unpaid costs are shifted to you and me.

Ask the hospitals, doctors, insurance companies and government and they will say these people are basically irresponsible deadbeats who don't assume their social responsibilities and they are monkey-wrenching the whole health system. I say, Whoa! Wait a Minute, comrade! Perhaps the 208 Commission has reached its verdict too soon without considering all the facts.

...To me, the uninsured are basically our young people, your children and mine who are getting out of college, paying off their student loans, getting married, buying a car and a home and trying to move from their starter job up a couple of notches.

They are also young immigrant families who are attempting to do the same thing on a smaller scale. They are not a bunch of deadbeats who will only act in Society's best interest if mandated to buy health insurance and threatened with tax penalties.

...There is another aspect to all of this. Those young people we disparage for not buying health insurance are paying payroll and income taxes. Nearly 15% of what would essentially be take-home pay to them is carved out, up-front, to pay for Medicare and Social Security.

And, a significant portion of their income taxes goes to pay for Medicaid recipients. This young generation we are painting red is paying for the health care and retirement benefits for their elders and the poor, when they can't even afford health insurance for themselves and their kids. Talk about the cart behind the horse!

...The stakeholders for health care reform are really the young wage earners and families who are about to be targeted by the 208 Commission to have mandated health care insurance rammed down their throats. Their parents are blissfully enjoying benefits provided by their employers and their grandparents are shuffling off to Arizona and Florida for the winter, assuming their Medicare and Social Security checks are in the mail.

Is there something wrong with this picture?

The Perpetual Health Care Crisis

Jeff Goldsmith points out that the popular press has portrayed American health care as being in a state of "crisis" for 50 years.

He also makes the good point,

...that any good news about our health system (and a robust four year disinflationary cost trend is certainly good news) has become politically incorrect in a climate of Job's Daughter handwringing and crisis mongering.

So perhaps the key question to ask is, "Who benefits from having the current situation portrayed as a "crisis"? (Via KevinMD.)

Where are the doctors who accept Medicaid?

One of the plans being considered by the 208 Commission would radically expand Medicaid, and essentially fold all of the middle class into a government program that was initially intended to cover the poorest patients.

However recent experience in Utah shows, this will not solve the problem. Utah Medicaid patients can't get the care they need because the amount of money that the state pays doctors is so little that they can't afford to see Medicaid patients. But the high costs of a government-run system divorced from marketplace incentives means that the state won't pay more money. The result is that even though the patients have paper "coverage", they don't receive actual care. (States do not yet require physicians to take Medicaid patients despite losing money on each one - if they did, that would be outright slavery.)

Here are some excerpts from a recent article in the 9/17/07 Salt Lake City Tribune about Utah Medicaid:

Where are the doctors who accept Medicaid?

Sergey Sargsyan has lost 80 pounds since his symptoms began more than three months ago. He's in pain and getting weaker. Emergency room visits and surgery to remove gallstones have done little to help. Doctors say he needs a specialist.

...But finding one willing to accept Medicaid as payment has been an exercise in futility, said Susanna McPhilomy, the 77-year-old's daughter. "The first question isn't, 'How can we help you?' " she said, "but, 'What type of insurance do you have?'"

Sargsyan is not alone. Health care experts are seeing the first of what they say could become widespread lack of access to care for Medicaid patients.

...Specialists are in even shorter supply. In 2007, eight specialty groups had zero Medicaid billings: abdominal surgeon, cardiovascular surgeon, geriatrician, hand surgeon, head and neck surgeon, neuroradiologist, pediatric radiologist and therapeutic radiologist. That means patients are going to the emergency room for specialty care, said Fotheringham.

"You hope, at that point, the guy you need is on-call," he said. "And there are some doctors, such as orthopedic specialists, who won't work on-call for the simple reason they don't get paid."

Lincoln Nehring, an analyst at the Utah Health Policy Project, said he has also started to hear of Medicaid patients being pushed to emergency rooms for primary care.

Another common practice is for doctors to space their Medicaid patients, which can mean monthlong waits, said Nehring.

Note that these "monthlong waits" are defacto rationing. Why should we adopt a failed system like this as the basis for health care "reform" in Colorado? (Via KevinMD.)

David Gratzer Event In Denver

Dr. David Gratzer, physician and author of The Cure: How Capitalism Can Save American Health Care will be speaking in Denver on Thursday October 18, 2007. His talk in sponsored by the Colorado Council on Economic Education, and here is their announcement:

Can Capitalism Save American Health Care?

We are surrounded by medical miracles: polio has been eradicated; childhood leukemia is now treatable; death by cardiovascular disease has declined by two-thirds in the last fifty years. Yet while American medicine has never been better, angst over American health care has never been greater.

Why is American health care such a mess? In his path breaking book Dr. David Gratzer goes to the heart of the problem, showing that the crisis in American health care stems largely from its addiction to outmoded and discredited economic ideas.

What needs to be done? Dr. Gratzer mounts a bold and provocative argument, rejecting the conventional wisdom that socialized health care is compassionate. Instead, he prescribes a dose of capitalism.

Weighing in on the most controversial topics in health care, Dr. Gratzer makes the case that it's possible to reduce health expenses, insure millions more, and improve quality of care while not growing government or raising taxes. He is an award-wining author, essayist, and a master storyteller.

* Is a single-payer health care system really the panacea many people believe?

* We allow market mechanisms to organize five-sixths of the U.S. economy. Can markets work in the one-sixth represented by health care?

* Can we cast-off the yoke of employer-sponsored health plans and make health care truly portable?

* Can anything be done to avert the looming crises in Medicaid and Medicare?

Thursday, October 18, 2007
Kent Denver School, Anschutz Theatre
4000 East Quincy Avenue
Englewood, Colorado

Lecture:
Doors Open at 5:15 p.m.
Program Begins at 5:45
Lecture with Q & A, from 6:00 - 7:00 p.m.
Tickets, $20 per person

Patron Dinner:
7:00 - 9:00 p.m.
Tickets, $150 per person (includes lecture)

Directions: Kent Denver School is located at the intersection of Colorado Boulevard and Quincy Avenue in Englewood, Colorado.

About the Speaker

David Gratzer, a physician in Toronto, Canada, is a senior fellow at the Manhattan Institute and peer reviewer for numerous publications. Dr. Gratzer's research interests include Medicare and Medicaid, drug reimportation, and FDA reform. He is the author of the 2006 book The Cure: How Capitalism Can Save American Health Care. Dr. Gratzer is frequently invited to speak on health reform and is often quoted on health matters across North America. He has been cited in the New England Journal of Medicine, The Wall Street Journal, The Washington Post and The Los Angeles Times.

Full details here.