Tuesday, September 15, 2009

Obama - Bearing False Witness

“We’ve got to admit that the free market has not worked perfectly when it comes to health care.”President Barack Obama, The New York Times, 6/11/09

“I know there’s been a lot of misinformation in this debate, and there are some folks out there who are frankly bearing false witness”President Barack Obama, The New York times, 8/19/09

There are many fallacious arguments (click here and here) being used by the Left to advance their dream of socialized medicine, but perhaps the most egregious and dishonest is their description of our current healthcare system as a “free market”. One is tempted to say that they are perpetuating a myth. But, in fact, it is the Left’s’ version of The Big Lie. The reason is simple: to obliterate any consideration of the only real alternative to socialized medicine.

“One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary.”

Ayn Rand, 1975

Medicare, Medicaid, SCHIP, and a whole host of state-level carbon copies are outright socialist. Nearly 50% of healthcare spending in America is government spending. Another 40% represents spending by private insurance companies under contract to third parties, not the actual healthcare consumers. It is this 40% that the president refers to as a “free market”. It is this allegedly free market sector that we will analyze, in order to determine exactly who is “bearing false witness”. Though administered by superficially private companies, this sector does not even remotely resemble a free market, for three primary reasons.

 The third-party-payer, or “employer-based”, system of health insurance is government-created.

The health insurance tax exclusion given to group purchasers such as businesses, non-profits like school boards, and labor unions … but forbidden to individuals … has made this system possible. It places a barrier between the consumer and the insurer. The insurer is beholden to the third party, via contractual arrangement, even though the employee is actually paying the premiums (Health insurance is a “fringe” benefit, which makes it part of the employee’s compensation package.) Big insurers are thus insulated from the rough and tumble, highly competitive consumer market that most industries deal with…while at the same time incentivized by third party bean counters seeking to keep costs down.

Further, the tax exclusion encourages the shifting of excessive employee wages and salaries from the direct payment, after-tax cash market into insurance products. This amounts to a huge government subsidy for the insurance industry, since it’s highly unlikely that in a free market many individuals would shovel wads of money to insurers, year after year, to pay for routine expenditures such as doctor’s visits, vision and dental procedures, standard pharmaceutical products such as blood pressure or cholesterol pills, or even somewhat pricier but still standard diagnostic procedures like mammograms, colonoscopies, or blood work-ups.

Writes Timothy P. Carney in The Examiner:

“Big government is why almost all of us get our health insurance through our employer, and not on an individual market. [Government] Wage controls from World War II forced employers to compete on benefits--such as health care. Then the tax exclusion and other laws--laws like the Employee Retirement Income Security Act of 1974 pitched, of course, as regulating insurers and protecting consumers--have favored employer-based health insurance over an individual market.

“The result: even if you feel you're getting a raw deal from your health insurer, there's not much you can do, short of leaving your job. This protects the insurers from real competition--which is why the insurers like it. ‘The last thing the health insurance industry wants," says Shadegg, "is to have to compete for every customer.’ Uncle Sam protects them from that horror.”

The insurer, in other words, doesn’t work for the patient. In a free market, an insurer is bound by the contractual agreement signed with the patient/consumer, who knows exactly what he has purchased, and who can bolt to another company at any time. Our current system strips the buyer of this all-important power that exists only in a free market. Posturing politicians like to champion the poor consumer who is alleged to be at the mercy of the insurance companies; except that it is they who put the consumer in this situation. In addition, this system establishes the insurer as an artificial middleman, resulting in huge, unnecessary administrative expenses that get blamed on a free market that doesn’t exist.

 Government mandates, nearly 2000 of them nationwide, dictate the content of health insurance policies.

Community Rating mandates force insurers to charge everyone in a given geographical area the same premiums regardless of individual risk factors such as lifestyle, age, or health history. This forces lower-risk individuals to unfairly pay higher rates to subsidize higher risk individuals, because it makes insurers ignore relevant facts of reality, up-ending a key discipline of the free market.

Guaranteed Issue mandates force insurers to issue policies to all comers, even to those with a “pre-existing” condition, high-risk lifestyles, etc. This is akin to an uninsured homeowner buying homeowner’s insurance after his house burned to the ground, then expecting the new company to pay for rebuilding. Again, insurers must ignore relevant facts and force higher premiums on other innocent customers.

Benefit mandates force coverages for specific ailments into policies regardless of whether the customer wants it, can afford it, or whether the insurer deems there to be enough of a market to justify it.

It is said that these mandates are necessary to forbid companies from “unfairly discriminating” against higher-risk customers or potential customers by charging higher rates or making policies unavailable or conditional. But once again, they are a rebellion against reality, and they force up premiums. Further, they violate the rights of insurers, who are human beings with the same unalienable rights to their own lives, independent judgements, and pursuit of their own goals as everyone else under American principles of equality before the law. Insurers have every moral right to exclude pre-existing conditions, to adjust prices according to specific risk factors (the facts of reality), or to refuse to sell their product (to discriminate). No one has an inherent right to any particular insurance product, on any particular terms, at any particular price, if no one chooses to produce or offer it…regardless of “need” or personal circumstances. Likewise, the insurer has no inherent right to sell policies that no one chooses to buy. There is only a right to seek a voluntary contractual agreement to mutual benefit…a trade…and a right to a government that enforces that contract. Just as Rowe v. Wade recognized that abortion is a private matter between a woman and her doctor, so the same logic applies to all of medicine. In this case, health insurance is a private matter between the individual (or his group representative) and his insurance company. The state has no right to interfere, except in matters of fraud, breech of contract, or to mediate honest disputes through the courts or some other objective venue.

By assuming the power to dictate private contractual arrangements, legislatures have become the targets of special interests seeking to gain control of the mandate mechanism to force the costs of their clients’ specific ailments on everyone else, just as their clients are victims of previous mandates. Mandates are nothing more than wealth redistribution masquerading as “insurance”.

 State-imposed restraint-of-trade laws forbid a national health insurance from developing.

Big insurers love this one. Just as the third-party-payer system protects them from having to compete in the individual market, so state trade barriers shield in-state companies from out-of-state competition. At the same time, consumers are “protected” from increased choices. Further, the coercive, controlling power of the politicians and their pressure groups are also protected.

The Big Lie being put over on Americans to force full socialized medicine on us is that our current system constitutes a “free market”. Sadly, a large contingent of the alleged pro-capitalist Right helps to foster this lie. In fact, the allegedly “free” part is a quasi-private, government created and protected cartel of health insurance companies controlled by government. It’s an unholy alliance between big government and big insurance. Writes Carney:

“Insurance companies lobby for big-government regulations, subsidies, [additional] mandates, and tax-code distortions that funnel them money, keep out competition, and stultify innovation. These policies preserve the employer-based health-care system that mocks the idea of free-market competition. Then they cry "unfair competition" when government threatens to encroach on their government-protected monopolies.

“But they're not just lobbying against a government option. Today, health insurers are lobbying to force you and me to buy their product or face a tax hike (the individual mandate).

“They are lobbying to force entrepreneurs to buy insurance for employees (the employer mandate). They are lobbying for more subsidies paid for by us taxpayers. In short, they are lobbying against regular people and against the free market.”

A free market leaves patients, providers, consumers, and insurers free to contract voluntarily with each other to mutual advantage, based upon the principle of individual rights, without the kind of massive government coercion noted above. The absence of physical force is the hallmark of a free market. That is what the “free” in free market means. An insurer is bound by the contractual agreement signed with the patient, who knows exactly what he has purchased. The government’s only job, but an important one, is to protect against fraud and breech of contract, and to mediate legitimate contractual disputes…i.e., to protect the individual rights of all participants.

Fighting for a free market does not mean defending the status quo or the current insurance industry. Although most Americans are still relatively happy with their coverage, the system, with its soaring costs and increasing number of horror stories concerning denial for expected coverage, is steadily breaking down. The status quo is clearly unsustainable. But today’s problems in medicine represent a failure, not of freedom, but of statist government intervention. And like the proverbial fireman who starts fires so he can be the first one on the scene to “save” persons and property, our politicians are now proposing to complete the government takeover of American healthcare in order to “rescue” us from the deteriorating system they themselves created!

The free market that Obama pretends to see is a mirage, like the Wizard in the land of Oz. Peel back the curtain and you will see the controlling hand of government. The socialists want you to “pay no attention to that man behind the curtain”, lest we discover the real source of the seeming “power” of the “private” insurance companies. By demonizing the Big Insurance that they themselves created, while declaring that some non-existent freedom has failed, they hope to push a confused and reluctant people into direct government control.

Our government-crippled insurance market has turned private insurers into conduits for government coercion. This is not indicative of a free market, but is in the nature of fascism … i.e., socialism through the back door. “Why need we trouble to socialize banks and factories? We socialize human beings,” said Adolf Hitler. And socialize human beings is just what the quasi-private insurance market does. Through the myriad of government controls and regulations such as those cited above, our “free market” sector is a covert carbon copy of the overtly socialized public sector: it, too, forces everyone to pay for everyone else’s healthcare.

“The greatest trick that supporters of socialized medicine ever played was to convince the American people we don’t already have it”, writes Brian Schwartz. For the past 75 years, we have been moving toward full socialized medicine piece by imperceptible piece, just as Ronald Reagan predicted. Obama’s “change” is no such thing. His “reform” is no such thing. He is an empty suit, simply cashing in on failed collectivist ideas and the long-established trend in America of incremental socialism. He is just maintaining the status quo, seeking to take that final step … or at least another giant step … along the same road.

There has indeed “been a lot of misinformation in this debate”. Any honest and objective healthcare reform debate must begin with an examination of how we got to this point. The problems in American healthcare have grown in lock step with the growth of government intervention over the past 75 years. But honesty is not the Left’s modus operandi. It has been the president himself, his party, and his supporters that are the main culprits who are “bearing false witness”.

No comments: