Sunday, April 12, 2009

How to End the "Hostage" Crisis

The lead editorial (Health care system holds us hostage) in the New Jersey Star Ledger’s April 9, 2009 addition recounts the heart-rending dilemma of Kia Moore. The Ledger writes:

The Camden mom, who has waited months to get her 20-month-old son Xavier a kidney transplant because of a squabble over insurance, said she felt as if "we're held hostage by the insurance companies, and the lawmakers are allowing that to happen."

The Ledger doesn’t explicitly say, but implies that the “squabble” is related to loss of a job. But that is really irrelevant to the fundamental debate.

“Stories such as these,” the editorial says, “are expected to soon take center stage as Congress debates President Obama's promise to reform the health care system.” People with real problems that tug at the heartstrings are always a convenient prop for statists seeking expanded government controls. The solution, according to the Star-Ledger, is to nationalize our health care industry.

I posted a strong editorial rebuttal on the Star-Ledger’s website.

Having crippled American healthcare with a steadily increasing, decades-long, stream of statist regulations, controls, and social "insurance" schemes, our government will now ride to the rescue of its own victims with a total government takeover. But no reform proposal is valid without a thorough examination of the destructive role that prior government interventions played in bringing about the problems plaguing today's healthcare system. Substituting government bureaucrats for insurance company bureaucrats will only turn us from semi-free "hostages" into actual hostages.

The solution to the problems begins with ending government interference in the insurance industry and restricting government to its proper role of enforcing laws against fraud and breech of contract, and mediating contractual disputes through the civil courts. The third-party-payer system, all insurance mandates, and all legal barriers to interstate competition among insurers should be abolished. The insurance industry of today is in essence a heavily regulated, government protected cartel, and is not indicative of what we would have in a free market. Perversely, insurance companies today work not for the consumer, but for the employer-- despite the fact that the consumer's (as the employee) own earnings pay for the policy. In a free market, insurers would compete directly for the consumer's business, and policies would be tailored to the interests of both insurer and insured, by voluntary agreement to mutual advantage. Just as with auto and homeowners insurance, job loss or change would not mean an automatic termination of anyone's health insurance coverage.

But the government's role is not to be examined. Instead, the problems it caused serve as a convenient rationalization for a massive power grab. The Editorial Board's utter disdain for individual rights and the rule of law is brazenly on display with this astonishing statement:

"Would nationalized health care destroy private insurance plans? If those plans deny people care because of cost and coverage restrictions, that's no great loss to the American people."

The employment of the power of the state to destroy a private industry is the hallmark of a dictatorship. Of course, the destruction of private health insurance has always been the aim of American welfare statists. "Insurance" schemes like Medicare, Medicaid, and SCHIP are designed to do just that, and are succeeding. The proposed Health Care Exchange will complete the job. The Star Ledger believes that living up to contractual agreements (cost and coverage restrictions) is no longer important. But the sanctity of contracts and the protection of private enterprise, which includes the customers who voluntarily patronize those businesses, are hallmarks of a society governed by the rule of objective law.

Of course, a denial of coverage based upon the terms of a prior contractual agreement (the health insurance policy) freely entered into by all of the parties is not a denial of care. The policyholder is free to pay out of pocket for treatment not included in the policy. Kia Moore’s plight is apparently related not to lack of coverage provisions in her policy, but to loss of the insurance due to job loss, something that would not have happened if not for our government-imposed third-party-payer system. In either case, a self-directed Health Savings Account would have greatly alleviated or eliminated the effects of policy limitations.

But voluntary contractual agreements that define the policy limits and enforced under the rule of law is to be replaced by government bureaucrats wielding the arbitrary power "to tackle costs and compare medical care based on how efficiently and effectively patients are treated". The immense loss of the individual's right to make his own healthcare decisions implied in that statement is breathtaking. But, according to the board, that loss of freedom is "no great loss to the American people."

Well, speak for yourselves, comrades!

Of course, the purveyors of central planning are desperate to prevent Americans from discovering the actual nature of a free market, or that a free market is the only economic system compatible with individual rights. The administration's ideological mouthpieces are dutifully attempting to shut down dialogue through such intimidation/insult-based rhetoric like referring to opponents as "fearmongers...bleating about the evils of 'socialized medicine' in Britain and Canada".

The stars are indeed aligned for real reform. Unfortunately, no real reform is indicated here...just more consolidation of control by the state. Real reform involves a recognition of the fact that today's problems in medicine represent a failure, not of freedom, but of statist government intervention. The only true reform would be to scrap those interventions and institute a free market, which means the protection of the rights of healthcare providers, consumers, patients, and insurers to contract voluntarily with each other to mutual advantage. Let providers and insurers compete directly for the business of the consumers of healthcare making self-interested decisions based upon their own needs, choices, and budgets...and the natural incentives of the free market will lead to falling costs and rising quality.

The problems in American healthcare have grown in lock step with the growth of government intervention. America currently spends some $7500 per capita per year ($30,000 per family of four and rising) on healthcare. Almost that entire amount represents third-party-payers spending other people's money. That money comes from all of us in a myriad of ways. We are "hostages" to insurance companies and HMOs because that is how the government set the racket up. Leave that money in the hands of the people that earned it through some vehicle like HSAs, and we will end the "hostage" situation.

The choice we face is not between a government-run healthcare dictatorship and the status quo, as the Editorial Board would have us believe. The choice we face is between being held hostage to government central planners, or taking control of our own healthcare in a truly free market.

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