When the Majority of Health Care is Government-Funded

I wish I could say that I believed the Blue Dog Democrats will stand firm on health care reform issues. But I am afraid that the party-line vote in the House Energy and Commerce Committee on Friday night is a preview of what we will see in the final House and Senate votes on health care reform in September.

As I contemplate the bill my heart fills with sorrow. Where are the righteous legislators who should be defending against such a breach of freedom and logic? Have we fallen so far into ignorance and selfishness as to have elected a body who will allow this legislation to pass?

Medicare and Medicaid enrollment already stand at nearly 100 million, about one third of our nation's population. (45 million and 42 million respectively) In many regions (like where I live), Medicare and Medicaid patients already make up the majority of health care visits. With the addition of the government public insurance option and government subsidies of private plans, government control of the health care industry will increase.

As health care providers are painfully aware, the national legislature controls reimbursement rates to physicians for visits from Medicare and Medicaid patients. In perhaps the majority of cases (especially in non-rural designated areas), government reimbursement for care rendered to these patients does not cover the cost of the care. In other words, health care providers lose money every time they see a government patient.

Economically speaking, the legislature has established price controls for over one third of all health care visits. Doctors make up their losses by overcharging their other patients. Thus, patients who pay with cash or through a private insurance plan lose money twice: once when they are overcharged for their visits to compensate for government patients and a second time when their taxes cover the bill for these patients.

We can see that Uncle Sam has already torn a sizable hole in the pocket of self-paying, self-sufficient Americans by forcing them to fund the care of 1/3 of the population. How much more will he siphon from their bank accounts with the addition of the government public insurance option and subsidies to pay for the insurance of millions of more Americans?

We can see that additional government funding of health care will be a major problem. The problem is made much worse when we consider other goodies (check out this link) that have been included in the House Version of the Bill. This bill, laced with measures that strip freedom and human dignity and provisions for future federal power grabs, is a collection of sophisticated price controls. As we have discussed in the past and well understand, such measures must fail, regardless of their sophistication.

I cannot emphasize enough how disastrous the bill will be if passed. American health care survives today even with the existing burden of heavy price control. But the bill is too much. It will not "fix" health care. It will cause the health care industry to grind to a halt, necessitating further government takeover. Please let your legislators know about your feelings on this issue.

Rusty Scalpel

Where Can Virtue be Found?

A while back I found myself in a classroom listening to a self proclaimed “independent” spokesman. He represented the political arm of a religious-affiliated hospital located in an underserved area of a major city. The man was giving a lecture on how he thought medical care should be delivered. He proceeded to present his liberal agenda starting off by laying a philosophical framework which he claimed to be centered, ironically, on the very principle it lacked – virtue.

The man was very well versed in speech, even using ancient philosophers as examples. He stated the framers of the constitution were absolutely wrong because they did not include healthcare as a right (see Rusty Scalpel article - definition of a right - Healthcare is not a right) and that the only way society could be virtuous is if it provided for the healthcare of everyone. He then proceeded to say that one person in society cannot provide all the goods and services for himself (i.e. the farmer has a social responsibility to the doctor and vice-versa.) In the end he claimed the only way to properly take care of the healthcare needs of the society is to have a government mandate.

A government mandate in its simplest form is force. In “The Adventures of Jonathan Gullible” Ken Schoolland pointed out that a government mandate or law is like an "Invisible Gun." If an individual resists complying with the government mandate the ultimate punishment is imprisonment or death. It is invisible because few individuals resist and realize the final punishment.

During the lecture I was reminded of an economic concept which is poorly understood - spontaneous order. (See video below) The lecturer believed that the only way people will act “virtuously” is through government coercion. However reality seems to counter this notion. Every day individuals come together, voluntarily, and make decisions for themselves that in turn benefit society. Adam Smith, the father of economics, referred to this phenomenon as the “Invisible Hand” that would lift society to an optimal state.

It should be asked - Where is virtue derived from? Where can virtue be found? To start, it must be understood that virtue can only exist when there is free choice. Thus an individual’s actions can only be virtuous when preformed voluntarily. Forcing one man to “give” to another is not only immoral- it frustrates the very principle of virtue.

It is very popular to blame the free-market capitalism for the state of healthcare. However realizing that healthcare is the most regulated industry, we can see that free-market capitalism is not failing but only the reverse - the long history government interventionalism is failing. To conclude - virtue in society can only exist by promoting, not limiting free choice, thus encouraging the morally superior “Invisible Hand” instead of frustrating virtue by the immoral and all too often impractical consequences of the “Invisible Gun.”

CATO

Holding Their Feet to the Fire

Among the disturbing proposals for health care overhaul legislation is the so-called "public insurance option." The idea is to form a state-owned health insurance company that will compete with the currently existing insurance companies. How exactly the program would be administered and run is an idea in flux, but it's purpose is clear.

“If the private insurance companies have to compete with a public option, it will keep them honest and it will help keep their prices down,” President Obama said in a speech last week.

Senator Baucus, chairman of the Senate Finance committee was reluctant to call the new company public or state-owned but was likewise clear as to its purpose: “It’s not going to be public, we won’t call it public, but it will be tough enough to keep insurance companies’ feet to the fire.”

Keep them honest? Keep their feet to the fire? The President and Senator make thinly veiled accusations: 1. Health insurance companies are dishonest. 2. Insurance companies somehow need to be pressured, coerced or punished.

What does President Obama feel the insurance industry has been dishonest about? What law have they broken? If they have used fraudulent practices, it is his duty as chief executive officer in this country to see that they are prosecuted. Have they broken anti-trust laws? If so, it is his duty to see they are prosecuted. Likewise, what has the insurance industry done that requires having their feet held to the fire? Shouldn't whatever action or inaction that justifies government intervention be legally prosecutable? Why doesn't the senator suggest a prosecution?

From hearing and reading much discussion on health care reform, I could make a guess at the crimes alluded to. I believe that they might be the crimes of being expensive and of having exclusion criteria. Insurance companies are guilty of offering policies that cost too much and of having exclusion criteria that limit which customers are eligible for those policies.

Before we condemn the entire insurance industry as being greedy and immoral, let's review why prices are high and why there are exclusion criteria for plans. I say let's review because I believe we already know the reasons. Despite our knowledge we have branded the insurance industry as the enemy. We falsely brand the industry as criminal and strip market rights for our own personal gain. What a sad state for our democracy.

The high prices for health insurance are a direct function of the price of health care itself. Health insurance costs the going rate of health care, plus a little bit. The cost of maternity insurance is the cost of a delivery, plus a little bit for administration, losses, and the risk of emergency procedures. The cost of catastrophic insurance is the average cost of health care due to catastrophes among the policy holders, plus a little bit for administration, employee salaries, etc. The cost of any health insurance from any company that plans on staying around long enough to pay policy holder benefits must be the cost of the health care, plus a little bit.

The high prices for health insurance are also a direct function of regulation of the market. Each time a state legislature mandates that insurance companies cover this or that illness, insurance premiums must go up to compensate for new expenses. Every time a state legislature mandates coverage to see this or that specialist or to receive this or that test, the price of premiums must go up to compensate.

As for exclusion criteria, we know how difficult it is for those who do not qualify for certain insurance programs. But we also know that insurance companies maintain these criteria in order to keep the price of premiums low enough for the general populace to afford. Any plan to enforce removal of exclusion criteria may be noble, but is not based in reality. A plan without exclusion criteria is a plan that most people will not be able to afford.

Health insurance is a business. It is not a charity. There are many wonderful private charities and programs available to help those who cannot afford health care, but the insurance industry is not one of them. This is not a crime. Insurance companies must make a profit so their employees can take money home to feed their families. There may have been criminal acts committed within the industry. There may have been unethical behavior. These should be prosecuted. But the cost of health insurance is no crime. The existence of exclusion criteria is no crime.

When we understand the nature of health insurance and how its price is determined, we begin to see that the institution of a national health insurance plan does little to solve today's health care problems. The best any free and true health insurance company can charge is the true cost of health care, plus a little. The only way a national plan can compete with free market is for it to be non-profit earning. It must become a charity. In order to do so, it will require financial support. And so our tax dollars will go to support a failing insurance company, just as they now go to support failing banks and auto companies.

How will insurance companies owned and run by American citizens compete with such a national company? They can't. They cannot drop their prices enough to compete with a "company" that doesn't care about profit margins or the bottom line. Their customers will slowly trickle to the national insurance policy and one by one they will go out of business. As Americans, we will have the privilege to use our tax dollars to put our fellow countrymen out of business. It won't matter if the government did not initially take over the entire industry, because government will have successfully run its citizens out of the market.

Rusty Scalpel

Andrew Lloyd Webber and Ayn Rand on Mob Politics and Targetted Taxation

We live in a time of world-wide economic difficulty, a time when everyone is cutting spending, tightening their belts and budgets, and preparing for some lean times. That is, everyone except for the world governments. They, some some reason, have ballooning budgets and unchecked ambition for expansion. (President Obama promised 3% of the national GDP for development of science technologies today. He forgets that social security and other national obligations of debt already eclipse the GLOBAL gross domestic product.) So where is the funding for these programs to come from, with money so scarce among the citizenry? For politicians who have won office on the vote of the poor, the answer comes easily: tax the wealthy.

But what happens when a majority of voters chooses to strip the rights of the few? What happens when we begin to single out members of society to carry a country's financial burdens? Can a country sustain itself with such policies? Can we escape a recession with such legislative looting?

Andrew Lloyd Webber, the British broadway behemoth, spoke out today against a new 50% income tax on in an editorial in the London Daily Mail. Great Britain has upped their 40% income tax with a 50% income tax on anyone earning over 150,000 pounds. Here's what he had to say:

"The opinion polls have uttered. The country loves the new 50 per cent top rate of income tax. Soak the rich. Smash the bankers. So Government spin doctors are in second heaven...

The next few years are going to be horrendous in the UK. The last thing we need is a Somali pirate-style raid on the few wealth creators who still dare to navigate Britain's gale-force waters...

I write this article because I fear the inevitable exodus of the talent that can dig us out of the hole we find ourselves in. It is inevitable, given that other countries are bidding for entrepreneurs. The Government must modify its proposals...

So I ask the Government to reconsider what it is doing. More than ever before we need to keep high-flying professionals in the UK. We can't, as we have done in the past, dump on them through penal personal taxation."

Andrew Lloyd Webber's points out that not only is such taxation unfair, it is ineffective. Industry leaders and highly-trained professionals, or "High-flyers" as he put it, are not going to stay in a country where they are enslaved. They will take their talents and the jobs and revenue they would generate elsewhere. Individuals who would generously "take one for the team" when done voluntarily may not feel so generous if they feel they are being robbed at gunpoint. They can afford plane tickets and they will leave.

His point is eloquently reinforced by an email titled "Who is John Galt?" sent to me today:

"We all hear about the need to protect patients' so-called "right" to health care. But we don't hear about protecting the rights of the doctors or the doctor-patient relationship. This issue is eloquently summarized by Dr. Thomas Hendricks, one of the characters in Ayn Rand's novel, Atlas Shrugged:

'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?'

We need to protect the rights of doctors and patients to trade on a free market to mutual benefit. Otherwise we will see more and more doctors silently shrugging off the burdens of being controlled by collectivists."

We've seen historically what happens when a nation tries to enslave portions of its population. The population rebels, especially when the population is already a motivated and hard-working demographic. Look at the American Revolution. When Britain tried to impose taxation without proper representation on its hard-working entrepreunerial colonists, those colonists rebelled. Great Britain lost the incredible wealth and talent that developed from this continent by its targetted taxations. This sort of rebellion and exodus is likely to occur in any democracy where a majority mob vote determines to strip the rights of the minority.

Not only is targetted taxation a formula for economic failure, but it is a sign of a failing democracy. A democracy is a meaningless institution without guranteed rights. When rights are eroded for any portion of population, they are eroded for all. Those who find themselves in power with the majority in one moment are liable to find themselves isolated and enslaved as a minority in the next moment. We cannot expect the good favor of the Creator, or durability as a republic if we trample those rights that we once held to be God-given.

Rusty Scalpel

A Conservative Approach to Universal Health Care

I believe that most Americans believe that all Americans should have access to health care. We believe that in times of necessity, every American should be able to receive health care despite personal economic difficulty. We can all agree that we would not have a single one of our American brothers or sisters suffer when prudent use of medical care could alleviate that suffering. In this I believe we all stand united.

The division of thought perhaps lies in how relief ought to be administered. A part of our population, often referred to as liberals, generally believe that government programs should be put into place to relieve the suffering of the medically uncared. They believe that adequate funds could be taken from the population to provide for basic medical care for the entire populace.

Another part of our population generally disagree with such government-run programs. These are those who are called conservative and the growing population of those called libertarians. There are many reasons they may oppose such programs and among those are the following:

1) They simply oppose big government. They may oppose growth of government beyond traditional constitutional bounds for constitutional reasons.

2) They see government-administered programs as ineffective. They believe that increased taxation actually results in a decrease in tax revenue. They believe that the collected funds are ineffectively administered. They believe that many government programs foster dependence on the system and prevent the development of productive citizens and progressing human beings.

3) They resent government intrusions into personal liberty. They believe that growth of the government comes at the expense of personal liberties. Government programs hit pocketbooks and limit Americans' utilization of personal funds. Government programs often lead to regulations that limit personal choice. They believe that the preservation of liberty is more important than overall economic strength and that liberty should not be sacrificed for any other goal.

4) They recognize that governmental assistance to the needy does not result in the same spiritual or moral growth as personal assistance to the needy. They see no moral progression in being taxed to help the poor. They see little patriotism in having a pocket unwillingly picked. The funds that they might otherwise dedicate to the good of their fellowmen are taken from them. In addition, the substitution of government checks for loving service and assistance from neighbors and friends considerably blunts the moral growth that could take place in those on the recipient end of charitable action. Those who believe in this way believe that there is no institutional salvation for America without the individual salvation of American citizens.

For those who share this mindset and who cherish personal freedoms, might I suggest a potent means of combating the incoming wave of American socialism. Let's use our freedoms to decrease the need for increased social programs now.

What need can there be for liberal social programs if we use our still-present freedom to alleviate the suffering of our fellow Americans? What driving force would there be behind socializing health care if all Americans had adequate access to basic primary care?

As we look beyond ourselves, we will see solutions to the "health care crisis" that require the exercise, not the sacrifice of personal liberty. How striking it would be if we could demonstrate examples of entire communities where the utilization of innovation and personal freedom lead to a complete independence from federal funding for health care. What a statement we would make if without tax impositions we achieved a society where there is no poor among us.

All Americans, compassionate conservatives and bleeding-heart liberals alike, desire the good of their fellow Americans. As conservatives, and especially as physicians, let's use our own agency to benefit our fellow men. Let us show how our to exalt our liberties and what a great loss America will suffer if these liberties are taken away.

Rusty Scalpel