Monday, July 13, 2009

The Choice is Profits or Guns, Freedom or Tyranny

Two recent letters published in the NJ Star-Ledger on June 25, 2009 highlight an issue crucial to a free society.

Michael G. Busche writes (Insurance companies scared):

Here's the proposition that health insurance agencies are trying to sell to the Congress and us voters: You don't want a government bureaucrat deciding what medical procedures are appropriate and what they should cost. It's much better to have a profit-driven health insurance company executive do it instead.

They're out to convince us that a corporate bureaucrat whose future depends on how much money he makes for his company will treat us better that a government bureaucrat who doesn't have that pressure

And Rita Reisman writes (Health reform needed):

I participate in an annual marathon walk to help people who are un- or under-insured get the care and treatment they need for that disease. Why is this massive fundraiser and all the other massive fundraisers necessary in a country we are so proud to proclaim is the greatest on the face of the earth?

We need [a strong public health option] that is available nationwide to everyone who wants decent health insurance. We need to make all these disease-oriented fundraiser marathons a thing of the past.

A dangerous fallacy underlies the reasoning of both letter-writers, and that of most Americans and political leaders.

Michael G. Busche and Rita Reisman miss a crucial distinction between government and the private sector…between political and economic power. The government and the government alone has a legal monopoly on the use of physical force. This is its nature, as distinct from private individuals and organizations. This is necessary to its proper role as protector of individual rights from domestic criminals and foreign enemies, as explicitly defined in the Declaration of Independence. But this unique attribute is what necessitates a constitution, the sole purpose of which is to limit the government’s legal power of physical force from being turned against the very citizens whose rights it is its solemn duty to protect.

In an essay entitled The Dollar and the Gun, Harry Binswanger writes:

The fallacy is equivocation—the equivocation between economic power and political power.

“Political power” refers to the power of government. Only a government can make laws—i.e., rules of social conduct backed up by physical force.

A non-governmental organization can make rules, pass resolutions, etc., but these are not laws precisely because they cannot be enforced on those who choose not to deal with that organization. The penalty for breaking the rules of e.g., a fraternal organization is expulsion from the association. The penalty for breaking the law is fines, imprisonment, and ultimately, death. The symbol of political power is a gun.

A proper government points that gun only at those who violate individual rights, to answer the physical force they have initiated, but it is a gun nonetheless.

Economic power, on the other hand, is the ability to produce material values and offer them for sale. E.g., the power of Big Oil is the power to discover, drill and bring to market a large amount of oil. Economic power lies in assets—i.e., the factors of production, the inventory and the cash possessed by businesses. The symbol of economic power is the dollar.

Put another way, a “government bureaucrat” has a gun, a “profit-driven health insurance company executive” does not. “A corporate bureaucrat whose future depends on how much money he makes for his company” will indeed treat us better than “a government bureaucrat who doesn't have that pressure”. A private company’s revenues (and thus profits) depend on the voluntary consent of its contractual customers. A government bureaucrat gets his revenues by taxation…i.e., by force. A profit-driven private company depends on the satisfaction of its customers, who can move to a competing company at any time. A government bureaucrat collects, and holds, its “customers” by force. A private company cannot grow and prosper long-term by doing bad things to its customers. A government bean-counting bureaucrat can do what he pleases regardless of the needs or desires of the individual lives his decisions hold in his hands, because he “doesn’t have that pressure”. A government bureaucrat doesn’t work for a “profit-driven health insurance company”, so has no need to worry about “how much money he makes”. A dictator never does. He has a gun. (Never mind “insurance companies…lobbying Congress”, or any other special interest lobbyists. It is only Congress…i.e., government power…that can legally impose that which they are lobbying for. Political pressure groups don’t exist under Capitalism, only under a mixed economy.)

What of the seeming “power” of private insurance company bureaucrats over our healthcare? That is a result of our government-imposed, tax-distortion created third-party-payer system of health insurance. Perversely, the insurance company works not for the consumer of healthcare, but for a third party (employer, union, etc.). When it seeks to deny coverage for some expense, it is trying to promote the interests of the third party (its contractual customer), not the consumer who didn’t purchase the policy. The insurer’s profits depend upon a satisfied customer. But unlike the freer sectors of the economy, that is not the consumer. It is the third party that is paying the premiums. It is the third party that can bolt. It is the third party that needs to be satisfied. In a free market, the consumer and the customer are one and the same, as it should be. Without government interference…i.e., in a free market…the consumer of healthcare would buy his insurance directly from a dynamic, competitive, entrepreneurial industry free to tailor policy choices to market realities. The “power” of the insurer would be only that which is granted by the consumer/customer, by way of a voluntary contract entered into by both parties by mutual agreement to mutual advantage.

A further crucial point relates to the government’s nature as an impartial, objective arbiter of contractual disputes. All parties to a contractual agreement are subject to laws against fraud and breach of contract. The civil courts mediate honest disputes, and the criminal courts prosecute offenders. There is no such contractual protection for consumers under government-run programs. The rules can be changed at any time, by bureaucratic or political fiat. Take, for example, Social Security. No one has any actual rights under SS, only privileges granted by government. Taxes could be raised and benefits can be cut or eliminated at any time.

The “public option” advocated by Mr. Busche and Ms. Reisman is exactly the wrong solution to a problem created by government itself. It would further undermine the rule of law of a government already breaking free of the constitutional constraints that a free society depends on. The “public option” is a socialist Trojan Horse, and everyone from the village idiot on up knows it.

Special interest-driven politicians will use the government’s unique powers of physical force to promote its “public option” into a single-payer dictatorship, administered by armed bureaucrats unencumbered by the pressure to earn a profit. As Robert E. Moffit of the Heritage Foundation puts it: “Let's be honest: The idea that Congress is going to create a genuine ‘level playing field’ for competition between the newly created government health plan and private health plans is nonsense. Congress will be the rule-maker, financier, umpire and owner of a team in the ‘competition.’ ” The politicians will do whatever it takes to prop up their “public option” creation. They will use their taxing powers to keep premiums “affordable”; regulatory powers to hamper private insurers; licensing and other means to force below-market prices on providers; explicit or implied “back-room” threats of regulatory, IRS, or antitrust reprisals to “distract” private executives, etc.

Are private insurers scared? Just as scared as are any victims of an advancing dictatorship. Any American worthy of that title should be scared, too. Mr. Busche doesn’t understand that. Thomas Jefferson did. When the people fear their government, there is tyranny; when the government fears the people, there is liberty, he warned.

To claim that there can be competition between a government plan and a private company is to see no difference between an armed thug and his victims. A “public option” is legalized criminality. It is organized crime on a scale that an Al Capone could never conceive of.

The “public option” is designed to destroy private insurers, regardless of what any lying politician says to the contrary. To say otherwise is naive, to be extraordinarily polite. “How dumb do they think we are?” A “public option” not backed by government power is a contradiction, and in any event would be pointless as a means to “keep private insurers honest”. There are already 1300 private insurers. What would be the point of 1301? Once their monopoly is in place, the “non-profit” government bureaucrats will then dictate every aspect of our healthcare and lifestyles, through such euphemisms as “cost containment”, “efficiency”, “comparative effectiveness”, “preventive care”, etc. Their “customers” won’t have any other place to run.

We will have learned the difference between profits and a gun; between freedom and tyranny. The Ms. Reismans of the country will no longer “need to make all these disease-oriented fundraiser marathons”. No need to seek voluntary contributions from people of good will. We will have forfeited the very principles that had made America “a country we are so proud to proclaim is the greatest on the face of the earth.” We will have our Federal crime family able to simply take those “contributions” at gunpoint.

As I have been documenting, the “crisis” in American healthcare, if you want to call it that, is a government creation. A free market is the only moral solution. But if Michael G. Busche, Rita Reisman, and their ilk have their way, we will have only fading memories of that glorious and historically radical American phenomenon that was “a government that fears its people”, and become just another “people that fears its government”.


Anonymous said...

Frankly my health insurance plan is the biggest consumer ripoff I can think of.
My wife and I are in our 60s. We are self employed. So we go out on the open market to look for insurance and here’s the best we can find.
With Blue Shield’s PPO 4000/8000 plan my wife an I pay 10,000 dollars a year in after tax dollars
For that we get a plan with an $8000 deductible. That’s right. In order for both my wife and I to start getting a dime of help from our insurance company we first have to pay $10000 in yearly premiums plus $8000 in deductibles.
$18,000 a year!!!!
So if I want the insurance company to pay for a single X ray or allergy medications, I’ve got to pony up $18000

With benefits like that we say “to hell” with the American medical system.
No way am I about to pay that kind of money for so little in return.

So we bite the bullet and pay the insurance company …just like a small shopkeeper in Sicily pays the mafia for protection.

But instead of spending $8000 in out of pocket medical expenses, we save up all our aches, pains and just hop on a plane each November and head to the hospitals of Thailand….where the service is wonderful….at 1/10th the cost they charge .
in the US.

If something doesn’t happen to health care in America you can kiss this country goodbye. We’ll soon be spending more on health care than all the entire federal government a few years from now.

Mike Zemack said...

Norris Hall’s frustration is understandable, and he’s right that something has to give. I’m 60 and I currently pay well more than $15,000 per year for my gold-plated coverage, plus co-pays and deductables. (It’s pre-tax because it comes through a third party, my union, which is one of the many distortions in our system.)

Mr. Hall seems ready to through up his hands and accept almost any “solution” the politicians come up with…which will mean, in the end, total government control. Many Americans are at the same level of frustration.

But this would be a grave mistake. It is imperative that it be understood that the American health insurance system is government-imposed. Like the arsonist posing as a fireman, the politicians are now posing as the saviors. We have allowed them to cripple the industry with a decades-long buildup of mandates, tax distortions, interstate trade barriers, government-run “insurance” schemes, etc. We have ended up with a system of pre-paid healthcare that creates mountains of administrative expenses, empowers insurance company and government bureaucrats to impose decisions properly belonging to the people and their doctors, and drives up the cost of healthcare and insurance premiums.

Mr. Hall and others like him should not let their frustration blind them. They should educate themselves on the real causes of the current “crisis”, if you want to call it that. A good place to begin would be to read the healthcare articles under “Recommended Reading” on the left of my blog, and to visit AFCM and FIRM, as well as the healthcare posts on this blog.

Today’s problems in medicine represent a failure, not of freedom, but of statist government intervention. The government should not be rewarded with more power and control.