Socialized medicine is bad for your health
by Linn and Ari Armstrong
The following article was originally published by Grand Junction Free Press on February 5, 2007.
The drumbeat for socialized medicine grows stronger. Hillary Clinton wants it, as do Barack Obama, Bill Ritter, and The Denver Post. Meanwhile, the Republicans offer as a "compromise" socialized-medicine light, as exemplified by President Bush's massive expansion of Medicare.
But the last thing we need is more forcible intervention in medicine. Doctors and patients need the freedom to voluntarily enter into arrangements that best suit their needs, rather than the alleged "needs" of some presumptuous politician who enforces medical decisions ultimately by men with guns.
Boulder law professor Paul Campos unintentionally reveals the absurdity of the argument for socialized medicine in his January 30 column for the Rocky Mountain News. Campos notes that "in America the government pays more for health care, per person, than any other government in the world." Just a few paragraphs later, Campos calls the problem "an example of market failure."
The truth is exactly the opposite of what Campos concludes. American medicine is suffering from government failure, not "market failure." Existing problems were created by the forcible interventions of politicians and their hordes of bureaucrats. Medicine has problems precisely to the degree that it has already been socialized. The solution is not to socialize medicine more completely -- that would only make the problems much worse. The answer is to return to liberty and respect the rights of individuals to make medical decisions free from political force.
One problem with American medicine is that health insurance is often tied to people's jobs. With life insurance, we purchase a policy as individuals directly from an insurance company, and that policy stays with us. But many people lose their health insurance if they lose their job. This destroys the ability to purchase a life-long policy in their youth, before possible health problems arise. It also creates the problem of employees buying into an employer-paid plan only when they get sick.
Is this a "market failure?" No, it is a failure of government intervention. As Dr. David Gratzer discusses in his book The Cure, in the 1940s the federal government did two things that devastated the market for individual health insurance. First, the government imposed wage controls. In response, companies compensated by offering medical benefits, which weren't counted as wages. Second, the IRS ruled that employer-paid medical benefits were not taxed, a move that strongly tied medical insurance to employment.
Bush has offered reforms to begin to reverse this problem with his medical savings accounts and his more recent proposals to reduce the tax distortions.
Another problem with American medicine is skyrocketing costs. In part, costs reflect an aging population taking advantage of the dramatic improvements in medical treatment. But many medical costs are artificially inflated, again because of government intervention.
In a genuinely free market, most people would find it in their interests to purchase insurance for high-cost emergency care and pay for routine expenses out of pocket. Similarly, we purchase auto insurance to cover accidents, not gasoline, tires, and tune-ups.
But the government-promoted employer-pay system also encourages benefits that cover routine medical care. The result is predicted by basic economics: if something is "free" for consumers, they use more of it, without regard for the real cost.
The gigantic welfare programs of Medicaid and Medicare place the poor and the elderly at the mercy of national bureaucrats, even as they subject everyone else to higher taxes. Those in the middle are doubly victimized: they are forced to pay the medical expenses of others, even as their own health costs go up because of the welfare programs.
Bush made a terrible program worse with his prescription drug benefit (Medicare Part D). As Gratzer notes, "Under current law, Medicare will consume 25 percent of federal income-tax revenues by 2030... The unfunded liability of Medicare... is $68.3 trillion, or more than five times the present GDP of the United States."
Those spending other people's money have little incentive to seek medical treatment economically. Again, people use more of something if it's "free." And the massive federal bureaucracies have largely taken over American medicine, determining which treatments are offered and how much doctors are paid for them, resulting in a nightmare of paperwork and compliance costs.
On top of this, politicians impose huge regulatory costs on drugs, then they drive up insurance costs by mandating types of coverage.
Everything that's good about American medicine -- the amazing technology, the research into new drugs and treatments, the widely available care -- is the result of what freedom is left to provide and consume medical services according to the interests and judgments of the individuals involved. Everything that's wrong with American medicine -- the distorted insurance markets, the artificially high costs, the expansive bureaucracies -- is the direct result of political force.
The disease is socialism. The cure is liberty.