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Wednesday, September 30, 2009

Light in the Digital Age: Media Panel

I joined a media panel September 24 at Tattered Cover in downtown Denver. There were a few sparks. I sat right next to fellow panelist Greg Moore, which was a great position to heap abuse on the Denver Post (which Moore edits). One guy treated the question period as his personal monologue time and finally was asked to leave with security.

Yet the panelists also shared much common ground, and the discussion was interesting. Here I recount much of it. (Due to the fact that I sat on the panel, I was unable to capture any photographs or video of the event.)

The event was sponsored by the Colorado Freedom of Information Coalition and moderated Thomas Kelley. The other panelists were Wendy Norris, founding editor of the Colorado Independent; Dominic Graziano, editor of the campus Metropolitan; and Adrienne Russell, a professor at the University of Denver.

The title of the event was ominous: "Darkness in the Digital Age: Has the Advent of Citizen Journalism, the Blogosphere, and the Demise of Newspapers Made Us Less Well-Informed?" When Kelley asked us for our comments beforehand, I send back a note, "I do not see 'darkness' in the digital age, but more light. The average person can much more easily obtain quality news and views than ever before in human history."

In case you're wondering how I came to sit on a panel with the likes of Greg Moore, here's what Kelley said in his introduction: "Finally we have Ari Armstrong, a writer of several prolific and eloquent blogs, some say veering toward the right. I find him to be thoughtful." This elicited a chuckle. So I was the token conservative (even though, as I later noted, I'm not really a conservative). At any rate I was delighted to be invited, and Kelley ran an informative and well-attended event.

Prior to the event, Kelley sent out some questions to set the tone for the evening:

1. What will become of the newspaper business model in the next five to ten years? Is there any hope for advertising as a means of supporting original reporting? Is public or non-profit subsidization the answer?

2. Is what we see on the internet from sources other than mainstream media really journalism? Are we entering a "post-journalism" era? If the industry of independent reporting is dying, where are the bloggers and the cable commentators going to get their content?

3. What do we need to keep the public service component (by that I mean digging out information on all subjects of public interest and reporting it according to a code of ethics that requires disinterest) of the newspaper business alive?

4. What is the cultural effect of a post-journalism era? Are we becoming more partisan, less broadly educated, and more exposed to un-debunked bogus information?

By luck of the draw, I spoke first. Following are my (slightly redacted) comments. In a follow-up post I'll continue with the comments of other panelists.

One of the questions that was asked of us in e-mail prior to the event had to do with what's going to happen now -- it's kind of a "woe is us" scenario -- what's happening now that many newspapers are going out of business. I think the title is "Darkness in the Digital Age." ... To me, I see a lot of lightness in the digital age. So that's kind of the theme that I want to focus on.

To me, there's been no better time, ever, to be a consumer of journalism. Today I read articles from the Los Angeles Times, Washington Post, Denver Post, Denver Daily, Westword, Colorado Independent, and I could probably name a dozen others if I'd kept track of that during the day.

At the click of a button you can read the best quality journalism in the world, which you simply couldn't do before [the interent]. I remember years ago, stringing a telephone line to my computer, and that was pre-internet. So now we have more opportunity than ever as consumers of news.

But then of course there's the problem of if you're a professional journalist. I guess we're shipping some more of ours off to Canada these days, from the old [Rocky Mountain News] positions. So there are definitely some transitional problems here.

I'm sure other people here know more about the industry. But I just wanted to mention a few examples of how other publications are solving these problems.

So the Wall Street Journal has in fact gone to paid, online subscriptions, and then they make their editorial content available for free.

The weeklies, Westword and Boulder Weekly, seem to be doing pretty well with a combination of online ads and print ads. But they have less printing costs, obviously. And the Westword has cut back, obviously, too.

Other things like NPR, Face the State on the right, Progress Now on the left (which does some journalism), operate by philanthropy. And this is great. So I tend to be free-market oriented, but to me voluntary charity, philanthropy, is a perfectly legitimate part of the free market.

I just looked up the Christian Science Monitor. They're going from a print publication to a strictly online publication. But they do have a subsciption-based weekly publication, and they also will charge you for a "Daily News Briefing" for $5.75 per month. So I don't know if that's going to work for them, but there are certainly people who are trying to find the balance between philanthropy, online advertising, print advertising [and subscriptions].

I'm going to jump now to one of these points that was mentioned prior to us coming on, which is: What's going to happen if the flow of journalism stops going from established newspapers to bloggers? I want to say that that whole premise is basically false.

There's not a one-way flow of information. There's a two-way flow of information. Now it's true that a lot of bloggers tend to focus on commentary, which means they're integrating news facts that they're reading around them, such as Mike Littwin might do at the Denver Post or the editorial staff might do. So it's a similar function.

But that's not the only function. Just like Mike Littwin might do original journalism, original investigative work, so bloggers might do the same thing. And often the journalism flow is coming back to the newspapers. So I'm just going to give a few examples here.

Last year, Katy Human of the Denver Post wrote an article about health insurance, and about the effects of children and health insurance, and the effects of not having any. And she mentioned these studies that prove her point. Well, the studies sounded a little bit fishy to me, so I sent her an e-mail and said, hey, why don't you send me what the list of your studies is. And she hemmed and hawed, and finally I sent an e-mail to David Kopel and Jason Salzman, because at the time they were the media critics at the [Rocky Mountain News], and finally she was persuaded to hand over her studies.

But then David Kopel wrote up a follow up for the Rocky, pointing out that none of the studies supported her point.

So this is an example I thought of bloggers and people on the editorial side sending feedback to the journalism side of the news.

I'll just give one more example. The Denver Post published an op-ed by a guy named T. R. Reid (again on the health policy issue, since that's what's hot). [Read my critique.] And he completely misstated international comparisons on waiting times for elective surgeries. Now I know this because I looked it up. I did the research, I looked at the original sources, and I found the real stats. He simply misstated them. And he also omitted stats on emergency visits and specialists. Unfortunately, the Denver Post chose not to run my letter correcting that piece. But nevertheless the flow of journalism goes both ways.

I wanted to quickly run through a few examples of some real journalism being done by bloggers. And I also contribute to a group of vaguely right-wing, conservative bloggers called the People's Press Collective. So I want to mention several examples.

If you want to hear what people are saying at some of these rallies -- the tax rallies, Tea Party rallies -- there's really no other place to look, if you want extended interviews with the actual participants, than my web page. [Listen to interviews from 4/15, 7/4, 7/28, 8/6, and 9/12.] Because I got my video camera, interviewed them extensively, and had a lot of them published online. The Denver Post maybe quoted one or two people in very short snippets (and that's just the nature of the medium). So that's one example of positive journalism.

When an economists named Thomas Woods came to Colorado to speak about his new book on economics, I looked up some of his older articles in which he blasted abolitionists and was praising antebellum culture. So I thought that was a little odd. I thought that was worth looking up as a journalistic enterprise.

Earlier this year, in response to a CNN report, I conducted my own "Low-Carb Food Stamp Diet." Now this was more proactive, obviously -- I was part of the story. But I thought it was a fun way to illustrate some of the facts surrounding the story.

In 2007, I solicited and published a letter from Mark Udall about the separation of church and state, which I thought was a pivotal issue in that election.

So you heard about the vandalism at the Denver Democratic Headquarters. Thankfully Denver police caught the [alleged] perpetrator, the name of Schwenkler. One of my friends, Michael Sandoval, did some searching online and found that this character had been paid by a left-wing organization to do Democratic campaign work. So this was an important break in a big story.

I'll just give one more. A guy named Todd Shepherd, who actually works for the Independence Institute, recently found that Jared Polis, the congressman up in the Boulder area, was investing in medical tourism, meaning companies that specialize in taking people to other countries to get medical treatment. Which I thought was an interesting detail given the current national debates.

My main point here is that journalism works both ways. Independents and bloggers can feed back journalism to newspapers, and they can do their own original investigative reporting. And this is a great thing. So, while it stinks if you were an employee of the Rocky Mountain News (and I don't know if the Post is looking at any layoffs, hopefully not), in the world of independent writing and blogging, there's been an explosion of great content.

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Monday, September 28, 2009

Fifty Ways to Leave Obama

The following article originally was published in the September 28, 2009, edition of Grand Junction's Free Press.

Fifty Ways to Leave Obama

by Linn and Ari Armstrong

"I'd like to help you in your struggle to be free / There must be fifty ways to leave your lover." -- Paul Simon

If you're a leftist Democrat, you may have started to question your love affair with Barack Obama.

Secularists of the left probably noticed that Obama has ramped up George W. Bush's program of faith-based welfare, trampling the wall between church and state. Civil libertarians may scratch their heads at Obama's fervor to extend the PATRIOT Act, and he has hardly been a friend to gay rights.

Pacifists can't be happy that the military remains in Iraq while the war in Afghanistan flares. Anti-corporate Democrats may wonder why Obama advocates so many billions of dollars for corporate welfare and proposes that the federal government force citizens to buy (politically controlled) products from the insurance industry.

If you're an honest leftie, Obama's administration has got to seem in many ways like George W. Bush's third term.

Obviously conservatives dislike Obama's anti-energy policies and his plans to increase controls of medicine.

Thankfully, as Obama's inaugural honeymoon comes to an end, there's a new book out that offers fifty ways to leave Obama.

The book's authors, however, are so codependent on the Chosen One that they write as though Obama walks on water -- when he's not changing it to wine. Thus, they titled their book, "50 Ways You Can Help Obama Change America."

But if you get past the title, you will find that the book is mostly about civic participation. Thus, it might be moderately useful regardless of your political goals. Ironically, the book may prove most useful for those fighting Obama's policies.

The book is written by Michael Huttner and Jason Salzman. Readers may recall that your younger author Ari and Huttner have had a couple of run-ins in the past. Last year, Huttner tried to go after the Independence Institute's Jon Caldara for saying "bitch slap" on the radio. Caldara was "demeaning women," Huttner proclaimed. Unfortunately for Huttner, left-wing comments on his own web page used the same phrase, Ari pointed out.

Earlier this year, Huttner went after Michelle Malkin when some random yokel with a sign posed for a photo with Malkin at a rally. The sign inappropriately compared Obama with Nazis. Huttner also blasted gubernatorial hopeful Josh Penry for speaking at the rally, even though neither he nor Malkin had anything to do with the sign.

Again Ari pointed out that many leftists inappropriately compared Bush to Nazis, including posters to Huttner's own web page.

The lesson in all of this is to adapt Huttner's political advice with some common sense, lest, like Huttner, you end up looking like a mean-spirited hypocrite.

Though we often disagree with Salzman, we find him to be a more measured and thoughtful activist, and he graciously sent Ari a review copy of the book.

In its policy advice, the book is utterly worthless. For example, on medical policy, the book with apparently straight text cites union statistics on the uninsured and bankruptcy -- figures that have been blown out of the water by serious analysts. So just skip the entire first part of the book.

We were initially fearful that you can "help Obama" if you "plant your own garden" or "quit smoking." Neither of us smokes, and Ari and his wife planted 48 tomato plants this year.

But then we realized that Huttner and Salzman must be growing something special in their gardens if they take their own advice here seriously. "Eating food that's grown nearby eliminates pollution," these authors tell us. That's nonsense: growing a garden requires production of soil, seeds, tools, etc.

Notably, production and distribution of the book also generates pollution, but strangely we found no advice for publishing only ebooks, not paper ones.

Huttner and Salzman also claim to endorse "supporting small farmers." But doesn't growing your own food mean you're not supporting small farmers?

The key point the book misses is that, if you grow your own food, you don't have to pay taxes on your labor or the produce, and that is surely not helping Obama's (or Governor Ritter's) tax-and-spend agenda.

So let's move on to the serious advice. "Attend a leadership training." We agree! Some of our friends attend Liberty Toastmasters, People's Press Collective technology training, and the Leadership Program of the Rockies. Contact legislators and testify at hearings.

"Get news that's truly fair and balanced." For instance, read and, along with this column

"Stage or attend a rally, media event, or protest." while the left obviously hates it when free-market advocates take to the streets, we fully endorse peaceful, civil protest.

We've followed a lot of the book's advice in fighting Obama's agenda of political controls. We urge you to do the same.

"Slip out the back, Jack / Make a new plan, Stan... Just drop off the key, Lee / And get yourself free."

Linn Armstrong is a local political activist and firearms instructor with the Grand Valley Training Club. His son, Ari, edits from the Denver area.

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Friday, September 25, 2009

Media Panel: Follow Your Passion

Last night I joined a media panel attended by Greg Moore and others. I recorded the event and took notes, so I'll have much more to say about it. Here, I wanted to reply to a question somebody asked that I did not answer last night.

A student said that a teacher of hers tried to scare her into not entering journalism. With print publications struggling, the jobs just wouldn't be available.

Greg Moore sensibly said, "If you're good, you'll get paid." He added that journalism will always be part of the culture.

Wendy Norris, formerly of the Colorado Independent, said that all students should have a "plan B." I agree with that to a point.

Here's what I would have said had time permitted.

It is true that journalism is in transition now, with various print publications struggling and with people figuring out how to make journalism pay through the internet. But this is a transitory problem. Moreover, journalism continues to thrive in many quarters, and new opportunities abound.

For many, a variety of careers is consistent with their interests and goals. In such cases, having a "plan B" makes a lot of sense.

But if you're passionate about journalism, then for God's sake be a journalist! Don't worry (primarily) about the money: follow your passion! This life is remarkably short, so don't reach the end of it with such a fundamental regret as not pursuing the career you love.

Now, there are many different paths a journalist can take. Street news or commentary? Radio, TV, photos, or text? Large corporate publication or independent?

I've met people who love music, so they pursue music. They do not all make a living making music. Some work side-jobs. But you can be a journalist, even if you struggle financially and have to work a side-job for some span of time.

In your life you will spend most of your time working in your career. One's work, one's central purpose, defines one's life. Don't be battered around, aimlessly, by the winds of the times. Define your goals and go for them, relentlessly.


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Wednesday, September 23, 2009

My Ideal Health Insurance Policy

Right now my wife and I pay $148 per month for high-deductible health insurance through Assurant. Our rate is locked in for three years.

I was just talking with an insurance broker in Boulder, and he mentioned that a three-year policy is actually unusually long. Usually one must renew every single year.

As my dad and I have discussed, various political controls have effectively outlawed long-term policies.

Of course it's difficult to predict precisely what products and services would become available on a free market. However, I have a good idea of what sort of insurance policy I'd like to buy.

Let's start with some basic facts.

1. Real insurance (as opposed to today's politically mangled health insurance) covers unexpected, high-cost treatments, not routine or expected care.

2. As one gets older, the risks of contracting a serious, high-cost disease approaches 100 percent, and this risk (on average) increases dramatically over the age of about 60. As one clever visual illustrates, one's lifetime odds of dying of heart disease are one in five, and the odds of dying of cancer are one in seven. Stroke is the third greatest risk, and then risks splinter quickly into many competing factors. See also the charts (page 5) from National Vital Statistics showing "percent surviving by age."

The upshot is that, in old age, the risk of high-cost care goes up dramatically. At that point, treatment is more or less expected, so medicine becomes increasingly less insurable. On the other hand, in one's youth and middle age, routine care is the norm and high-cost emergencies are relatively rare, which is a great scenario for insurance.

What I'd like to do, then, is purchase a term health policy with a locked in rate till I'm about 60. I'd like the deductible to start high -- around $10,000 annually -- and increase every year until it reached about $50,000. The increasing deductible should enable rates to remain low even though health risks will increase somewhat over time.

So what happens when the term health policy ends? The point is to pay a low insurance premium and then save money to pay for care when I get old. Just to take an illustrative example, if you're 35 years old and you buy term health until you're 60, that gives you 25 years to save for old-age medical expenses. Let's say a high-deductible premium costs $100 per month, whereas a "pre-paid health care" premium costs $500 per month. Let's further say you pay $100 per month four routine care. That gives you $300 per month to save, which adds up to over $200,000 at 6.5 percent interest. I think it would make sense to save somewhat more than that.

If the sort of insurance I'm describing became widespread (as could only happen if politicians stopped completely mucking up the insurance market), one consequence would be that the large majority of health expenses would be paid directly by patients. This would put patients back in control of their medical care, and it would give patients the incentive to stay healthy and look for good value for their health-related dollars. This would keep health costs under control while achieving good quality. Which is why most politicians won't even consider allowing it to happen.

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Monday, September 21, 2009

Gazette: Obama's Republican Health Plan

Today's Colorado Springs Gazette published my op-ed, "Republican plans for health care reform similar to Obamacare." (The print date is later than the online date of September 18).

I point out that the three core tenets of Obama's plan -- mandatory insurance, forcing insurers to ignore pre-existing conditions (and meet other political demands), and expanded subsidies -- have all been endorsed by Republicans.

Meanwhile, the "public option" isn't a central element of Obama's plan, as the other controls alone effectively nationalize the insurance industry. (And, as John Lott suggests via Brian Schwartz, something like the "public option" already dominates the insurance industry.)

Read the entire op-ed. And share it with your Republican friends!

Below is the complete text:

Republican plans for health care reform similar to Obamacare

Democrats pretend that Republicans are just a bunch of obstructionists when it comes to health proposals. Meanwhile, Republicans debate minor aspects of Barack Obama’s plan such as whether it subsidizes illegal immigrants and abortions.

The reality is that every key element of Obama’s plan either came from Republicans or arose with Republican support.

Obama underplays this fact because it is an embarrassment to his self-defined legendary status. This is the man who told Congress, “I am not the first president to take up this cause, but I am determined to be the last.” He wouldn’t have sounded as impressive had he admitted, “My plan cobbles together various Republican-endorsed policies.”

Republicans neglect their role in creating Obamacare because they like to pretend they support free markets and offer a real alternative to Democratic policies. More often than not, when Republicans are not “me tooing” the Democrats, they are taking the lead in expanding political controls of the economy.

The core of Obama’s plan is the mandate: he wants to force everyone to buy politically controlled insurance. But this has already been tried.

Mitt Romney, former Republican governor of Massachusetts and presidential candidate, worked with Democrats to push through just such a plan. Obamacare is little more than warmed-over Romneycare.

What were the results? Last fall Paul Hsieh, a Colorado radiologist, wrote “Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America.” He found “the plan has increased costs for individuals and the state, reduced revenues for doctors and hospitals,” and fallen short of universal coverage.

Last month the Cato Institute’s Michael Cannon checked in on Romneycare. He found higher taxes, exploding costs for insurance premiums, longer waits to see specialists, and “the groundwork for government rationing.”

Obama wants to replicate this failed Republican experiment on a national scale.

Another key part of Obama’s plan is to force insurers to ignore pre-existing conditions. This is again part of Romneycare, but other Republican leaders also endorse the idea.

Colorado Rep. Mike Coffman wrote for the July 30 Denver Post that he wants politicians to “require health insurers to cover those with pre- existing conditions.” In his tepid response to Obama, Rep. Charles Boustany of Louisiana also praised the idea.

Of course, forcing insurers to ignore pre-existing conditions incentivizes people to wait until they get sick to buy insurance, so the position amounts to an endorsement of the mandate, too.

What both Republicans and Democrats like to ignore is that politicians from both parties have created the problem of pre-existing conditions.

Tax distortions push people into non-portable, employer-paid insurance. Ever-changing controls outlaw some insurance options and make others impossible for insurers to offer.

Various federal and state controls undermine the competitiveness of insurance companies, making them largely unresponsive to the needs of consumers. And politicians price some out of the insurance market by forcing up premium costs with special-interest favoritism.

Rather than violate the right to contract for insurance, government should get back to the business of preventing fraud and enforcing contracts, preventing arbitrary denials of claims.

In addition to mandates and insurance controls, the third major aspect of Obama’s plan, expanded subsidies, also came from Republicans.

Obama told Congress, “For those individuals and small businesses who still cannot afford the lower-priced insurance available in the exchange, we will provide tax credits, the size of which will be based on your need.” These “tax credits” in fact serve as outright handouts for some.

If Obama’s plan sounds familiar, it might be because you read the same proposal from Republican Sen. Jim DeMint. His “Health Care Freedom Plan” proposes the “tax credit” subsidies that Obama endorses.

True, most Republicans don’t support Obama’s “public option.” However, Obama seemed willing to deal away his public option in the spirit of faux compromise. Moreover, between the mandate and other controls, all insurance will be controlled by the federal government, anyway, so the public option isn’t the central element of Obama’s plans.

To their credit, some Republicans, including DeMint and Coffman, do have some good ideas. They support rolling back some insurance controls to make premiums more affordable and expanding Health Savings Accounts to let people buy insurance directly with pre-tax money. Tort reform is less important but still a useful idea.

Unfortunately, many Republicans seem deathly afraid to say what millions of Americans long to hear: that people have the right to live their own lives and pursue their values by their own judgment. That government’s proper role is to protect individual rights. That people should interact through voluntary exchange, not force.

When elected officials are able to articulate the message of liberty, and mean it, we might have something better on the table than different flavors of political controls.

Armstrong publishes He and his wife buy high-deductible insurance and pay for routine care with a Health Savings Account.

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Wednesday, September 16, 2009

The Big Korkowski

Dude. Can a bald, edgy lawyer from Crested Butte win the Republican nomination for U.S. Senate? I wouldn't bet the odds in Vegas. My early prediction is that Andrew Romanoff will take the Democratic nomination from Senator Bennet, then lose narrowly to Jane Norton in the general. But I've been wrong before with these predictions.

But at least Luke Korkowski is an interesting underdog. How many people running for Congress say they want to abolish the federal reserve and run "legislation that gradually brings Medicare and Medicaid to an end?" At least among major parties in Colorado, the answer is exactly one. But is Luke a force or a farce?

It's no secret that I like Ryan Frazier. Unfortunately, he seems to think he can platitude his way through the nomination. I guarantee he will not be able to out-platitude Jane Norton. He might be able to express his platitudes more energetically, but that won't get him very far. For example, what in the hell does it mean to "give people a hand up, not a handout?"

It would be pleasant if the various Republican candidates would actually spell out their positions at some point. For example, Frazier seems to be trying to ride the fence when it comes to abortion. According to a news story republished on Frazier's web page, "Frazier is pro-life on abortion." Yet Frazier told Westword, "I am not a fan of abortion, but I struggle with whether it is the appropriate role of the government to place itself there." Still elsewhere, Frazier indicated that it's a matter of state's rights. So which is it, Ryan? Either you do, or you do not, wish to impose legal restrictions on abortion. I don't want to hear about your struggles, I don't want to hear empty code words, I want to hear what is your position on the issues.

At least I know, definitively, what Korkowski thinks about something.

I also wonder whether Frazier's heart is really in the race. I saw him at the Denver 9/12 rally. He was speaking to a few people on the edge of the crowd. I talked to him for a while. But I wondered what he was doing there. Where were the college kids with "Frazier For Senate" T-shirts handing out flyers among the crowd? If you're going to work a crowd, then for Reagan's sake work the crowd! If you're too worried about getting associated with cranks, then stay home or campaign elsewhere. But to go to a rally and chit-chat on the sidelines struck me as peculiar for somebody running for the U.S. Senate.

I had no idea who the bald guy standing on the chair was as he prepared to address Liberty On the Rocks Wednesday night. But then it struck me: "You're the bike guy, right?" By coincidence, just that morning I had read Lynn Bartels's article on the candidate's upcoming bicycle trip from Salida to Keystone.

I noticed the article only because Korkowski called it his "Free Colorado" tour. (This struck me because, as the reader may have noticed, my web page is called There is now also and But there is only one, original

Of all the possible election scenarios, here's one I consider particularly interesting. Josh Penry, desperate to overcome his "recognition gap" with Scott "His Wackiness" McInnis, successfully pleads with Frazier to run as his lieutenant governor -- certainly a decent step up for a city councilman. This leaves open the Senate race for the establishment candidate to run against a scrappy underdog who doesn't shy from principles. I'm not saying I'm for that, but I do think it would be an interesting scenario.

I'm still not quite sure why Korkowski is running for U.S. Senate. I'm definitely no fan of his national sales tax. But at least I know, specifically, what some of his positions are. And in today's political climate of gloss and glamor, that's worth a lot.

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Tuesday, September 15, 2009

Restore Free Market to Address Pre-existing Conditions

The following article originally was published September 14 by Grand Junction's Free Press.

Restore free market to address pre-existing conditions

by Linn and Ari Armstrong

Barack Obama's most compelling examples of problems in health care involve insurers dropping coverage of people once they develop health problems. A related issue is the trouble some have in getting new insurance after they develop health conditions.

We agree that these problems of pre-existing conditions are serious and provide a compelling reason to reform health insurance.

However, Obama is totally wrong about the solution. The problem of pre-existing conditions is a consequence of decades of political controls of medicine. The solution is to roll back those controls and restore a free market, not introduce more controls and the worse consequences they will inevitably breed.

Obama and many others like to pretend that today's health insurance operates in a free market. It does not. Federal and state politicians have seriously undermined the competitiveness of insurance through gross violations of the contract rights of insurers and their customers.

Through tax distortions, federal politicians have driven most Americans into expensive, non-portable insurance funded through employers. Lose your job, lose your insurance.

Moreover, employer-paid insurance operates more like pre-paid health care than real insurance, again because of the tax distortion. Such "insurance" tends to cover routine, low-cost care but increasingly falls down when it comes to expensive emergencies.

By contrast, real insurance in a free market would tend to cover unexpected emergencies and leave routine care for direct payment, thereby keeping premiums much lower than what most pay now.

A major consequence of federally promoted, employer-paid insurance is to create problems of pre-existing conditions. If somebody gets sick and can no longer work, the person also loses health insurance and probably can't find another provider.

Politicians continually subject health insurance to changing controls, different from state to state. This effectively prevents insurance companies from offering long-term contracts, because insurers cannot know what political controls they'll have to deal with down the road. It also reduces insurance competitiveness, as a policy issued in one state is not valid in another.

Another way that politicians undermine competitive insurance is to outlaw insurance options that politicians and bureaucrats don't happen to like. In his article "How Freedom to Contract Protects Insurability," Dr. Paul Hsieh points out that political controls effectively prevent organizations such as church ministries from creating insurance.

"The only thing preventing individuals from creating their own contractually binding risk pools today is the government," Hsieh writes.

Yet, ignoring all the ways that politicians harm those with pre-existing conditions, Obama pretends that the fundamental problem is insurance profits.

In a free market, profit means that customers happily pay for some good or service. It is only outside of that market context that profit is bad. For example, a Mafia boss might "profit" by killing people, or a politician might "profit" by doing favors for special interests.

The fundamental issue is not profit versus non-profit, but freedom versus force. The problem with insurance companies is not that they seek to make a profit, but that they must operate as de facto agents of political overseers who call the shots.

On a truly free market, in which insurers and their customers were free from today's political controls, people would tend to buy insurance directly, rather than get stuck with the few non-portable plans their employer chooses for them.

In a free market, insurers would be free to offer more plans to more people, and consumers would be free to shop around, regardless of state boundaries. Politicians would no longer coddle insurers with protectionist controls and tax favoritism.

In a free market, insurers would compete on the basis of quality, security, and transparency of contract. Today, because of political controls, insurance companies face little real competition, and they would face even less under Obama's policies.

In a free market, insurance companies would be able to offer long-term policies that today are politically impossible.

The proper role of government is to protect individual rights, including the right of businesses and their customers to freely contract. The government's role in a free market is to prevent fraud and ensure fulfillment of contract. If government were doing its legitimate job, insurance companies could not arbitrarily drop people.

Almost the entire problem of pre-existing conditions was caused by political controls. Given that politicians have mucked things up so badly, the last thing in the world we need is for Obama to expand political controls of medicine.

We should instead fight for real freedom in medicine and health insurance, in which the problems of pre-existing conditions would be rare and easily handled through voluntary charity.

True, restoring a free market in the future will not solve all the problems of those who now have pre-existing conditions, no insurance, and ongoing, expensive medical care. Therefore, we support, as a transitional measure only, a tax-subsidized high-risk pool, such as Cover Colorado currently provides.

When it comes to problems of pre-existing conditions, the disease is political controls. The cure is more liberty.

Linn Armstrong is a local political activist and firearms instructor with the Grand Valley Training Club. His son, Ari, edits from the Denver area.

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Monday, September 14, 2009

Atlas Shrugged Relevant for Modern Times

The following article originally was published September 14, 2009, in the Longmont Times-Call.

Atlas Shrugged relevant for modern times

by Ari Armstrong

"Who is John Galt?" Atlas Shrugged, Ayn Rand's novel first published in 1957, is more relevant than ever. Modern political interventions from the bailouts to health controls mirror events of the book, and the novel reveals innovative moral themes behind the politics.

In response to heightened interest in Rand's answers to today's moral and political crises, a local group that promotes Rand's philosophy, Front Range Objectivism, is sponsoring a twenty-week Atlas Shrugged reading group in Longmont starting October 1.

Sales of the novel have surged, surpassing 300,000 copies in the first half of this year, a 250 percent increase over the same period last year. The novel has been discussed recently by media ranging from the New York Times and National Public Radio to Rush Limbaugh.

John Allison, who turned BB&T bank into a stable and profitable powerhouse, has credited Rand's ideas for some of his success and called Atlas Shrugged "the best defense of capitalism ever written."

Meanwhile, respected philosophers such as Tara Smith forge bright new paths in moral theory and other fields based on Rand's work.

What is it about Atlas Shrugged that draws continued interest?

While the novel features detailed treatment of complex moral and political ideas, including a challenging speech by the story's hero, it is first a classic work of literature.

Rand draws rich, psychologically complex characters, including great champions of industry and the arts as well as despicable villains.

Which reader can forget the driven railroad executive, Dagny Taggart, or her passionate affair with steel titan Hank Rearden? Or Dagny's manipulative brother James? Or the struggle of James's virtuous wife Cheryl to understand her husband's viciousness? Or the three students and their beloved professor who vow to "stop the motor of the world" until its producers can work on their own terms?

On one level, Atlas Shrugged is about politics. Interventions such as Troubled Asset Relief, General Motors, "cash for clunkers," numerous offices of czars, and pending legislation on energy and health reflect the political controls of industry chronicled in the novel.

Rand eloquently makes the case that the proper purpose of government is to protect individual rights, including rights to control one's resources and exchange goods and services with others voluntarily. Government should protect us against force and fraud and otherwise leave us free to pursue our business.

Yet Rand advocates much more than free markets. She explains why we need economic liberty to live successfully. We produce the things we need to advance our lives through reason, by understanding reality and then acting in the world to achieve our values. Houses, computers, foods, medical treatments, automobiles: all are produced by applying one's knowledge to the task of living well.

Reason requires freedom. One must be free to look independently at reality and pursue knowledge, wherever it may lead. To the degree that some resort to force, they shut down reason and impede productive advancement. To live as beings of reason, we must achieve political and economic freedom and a world in which people interact through persuasion, not force.

Rand pushes ever deeper, exploring the foundations of value. Rand's heroes are driven by a love of existence -- a passion to understand the world around them and live successfully in it. It is ultimately this commitment to living that grounds all values, Rand's heroes discover.

The villains of the novel, on the other hand, seek to block out and obscure their knowledge, cheat reality, and ultimately abdicate their responsibility to pursue their lives.

Several participants of a summer reading group commented that, though they'd read Atlas Shrugged before, reading and discussing it in greater detail almost turned it into a new novel. It is a long book with a complex plot and set of ideas. The heroes develop over many pages and story-months, so Rand's meaning is not always obvious.

If you have never read Atlas Shrugged, now is the perfect time. If you have read it before, consider returning to the novel to mine its riches. It is a work capable of changing its reader -- and the world.

Ari Armstrong publishes For more information about the Atlas Shrugged reading groups, see

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Sunday, September 13, 2009

Denver 9/12 Rally: Freedom Forever

In my speech at the Denver 9/12 rally, I discussed the fundamental moral and political choices our nation faces. To illustrate these themes I described how the problem of pre-existing health conditions, and the resulting difficulties of buying insurance, is primarily a product of political controls, starting with tax-driven, non-portable, employer-paid insurance.

See People's Press Collective for the report.

Lu Busse, chair of The 9.12 Project Colorado Leadership Team, said the proper response to the cry, "health reform now," is "freedom forever." Of course, real health reform means reestablishing freedom in medicine, so the two goals are wholly consistent.

Chuck Moe:

Amy Oliver:

Jon Caldara:

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Friday, September 11, 2009

Obama Was Against the Mandate Before He Was For It

Back on February 26, 2008, Barack Obama criticized Hillary Clinton for offering the same health insurance mandate that he endorsed just two days ago. (Thanks to Adam Eidelberg for looking up the transcript of the primary debate.)

Obama was right to question the mandate when Clinton proposed it. I've written more about the matter elsewhere (such as here.) For now, as a prelude to the before-and-after Obama quotes, I'll summarize the main arguments against the mandate.

1. People have the right to choose which products to buy. It is immoral for politicians to force people to buy politically-controlled products.

2. The main reason some fraction of "the young and healthy" currently decide not to buy insurance is that politicians try to force the young and healthy to subsidize other people's health care through jacked up insurance premiums. This is especially true in employer-paid insurance, and it is also true for directly purchased insurance due to state benefit mandates.

3. Obama's pretense that the mandate solves the problem of forcing "the rest of us to pick up the tab" is laughable. The entire point of the mandate is to force some people to pick up the tab of other people's health care through higher insurance premiums. That's why Obama must force people to buy it. Without this coercion, Obama's other insurance controls would dramatically increase costs of premiums and thus the numbers without insurance.

4. Real free-market reforms would lower the cost of insurance premiums so that more people could afford it. Roll back controls that jack up premiums. Expand Health Savings Accounts so that people can buy lower-cost insurance (as well as routine care) directly with pre-tax money.

5. The main reason why some people rely on expensive emergency room treatment, rather than seek out less costly alternatives, is that the federal government forces emergency rooms to offer care without compensation. That policy is wrong, and it predictably introduces perverse incentives.

6. People without insurance do not necessarily force others to fund their treatment. Many fund their treatment out of pocket. Again the solution is to legalize insurance they can afford and want to buy.

7. Mandated insurance is expensive insurance. Obama wants to force insurers to cover more routine care, continuing the federal push to pervert insurance into pre-paid medical care. When routine care is "free" (or nearly so) at the point of service, patients have practically no incentive to monitor costs. Also, under a mandate special interests continually try to get more services covered, jacking up premiums, as has happened in Massachusetts.

With that background, let us turn Obama's position on mandates, then and now:

Obama then:

I have endured, over the course of this campaign, repeated negative mail from Senator Clinton in Iowa, in Nevada, and other places, suggesting that I want to leave 15 million people out.

According to Senator Clinton, that is accurate. I dispute it and I think it is inaccurate. On the other hand, I don't fault Senator Clinton for wanting to point out what she thinks is an advantage to her plan.

The reason she thinks that there are more people covered under her plan than mine is because of a mandate. That is not a mandate for the government to provide coverage to everybody. It is a mandate that every individual purchase health care.

And the mailing that we put out accurately indicates that the main difference between Senator Clinton's plan and mine is the fact that she would force, in some fashion, individuals to purchase health care.

If it was not affordable, she would still presumably force them to have it, unless there is a hardship exemption, as they've done in Massachusetts, which leaves 20 percent of the uninsured out. And if that's the case, then, in fact, her claim that she covers everybody is not accurate.

Now, Senator Clinton has not indicated how she would enforce this mandate. She hasn't indicated what level of subsidy she would provide to assure that it was, in fact, affordable. And so it is entirely legitimate for us to point out these differences.

The Democrats now have "indicated" how they would "enforce this mandate:" they would subject defectors to hefty fines.

While Obama claimed "the plan I'm proposing will cost around $900 billion over ten years," he wasn't specific about how much he would subsidize individuals.

Obama now:

For those individuals and small businesses who still cannot afford the lower-priced insurance available in the exchange, we will provide tax credits, the size of which will be based on your need... [F]or those Americans who can't get insurance today because they have pre-existing medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill...

Now, even if we provide these affordable options, there may be those -- particularly the young and healthy -- who still want to take the risk and go without coverage. There may still be companies that refuse to do right by their workers. The problem is, such irresponsible behavior costs all the rest of us money. If there are affordable options and people still don't sign up for health insurance, it means we pay for those people's expensive emergency room visits. If some businesses don't provide workers health care, it forces the rest of us to pick up the tab when their workers get sick, and gives those businesses an unfair advantage over their competitors. And unless everybody does their part, many of the insurance reforms we seek -- especially requiring insurance companies to cover pre-existing conditions -- just can't be achieved.

That's why under my plan, individuals will be required to carry basic health insurance -- just as most states require you to carry auto insurance. Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers. There will be a hardship waiver for those individuals who still cannot afford coverage, and 95 percent of all small businesses, because of their size and narrow profit margin, would be exempt from these requirements. But we cannot have large businesses and individuals who can afford coverage game the system by avoiding responsibility to themselves or their employees.

As I have noted, it is the mandate (not the public option) that defines Obama's current policy. Mandated insurance is morally wrong and destined to generate bad consequences. We do not need more mandates. We need more liberty.

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Thursday, September 10, 2009

Mandate, Not Public Option, Defines Obamacare

Rather than "hope and change," Barack Obama offers a warmed-over Republican policy -- Romneycare -- that has already failed in Massachusetts. The core of Obama's fake reform (described most recently in his address to Congress) is not, as many conservatives suggest, the "public option." It is instead the proposal to force people to buy politically-controlled insurance. (For details on the Massachusetts fiasco, which Obama hopes to replicate on a national scale, see the articles by Paul Hsieh and Michael Cannon.)

It is the mandate that ties together the various tenets of Obamacare, particularly insurance controls (regarding coverage and pre-existing conditions) and expanded subsidies.

Regarding pre-existing conditions, I've pointed out, "Forcing insurers to ignore pre-existing conditions means allowing consumers to wait until they get sick to buy insurance... The logical consequence of forcing insurers to ignore pre-existing conditions is to force everyone to purchase insurance..."

Obama made the same point in his speech: "Unless everybody does their part [and purchases insurance under compulsion], many of the insurance reforms we seek -- especially requiring insurance companies to cover pre-existing conditions -- just can't be achieved." Just so.

Nevermind the fact that federal policies largely created the problems of uncovered pre-existing conditions.

Obama admits, "More and more Americans worry that if you move, lose your job, or change your job, you'll lose your health insurance too." But why is health insurance (and not any other sort of insurance) tied to employment for most Americans? It is because of federal tax distortions that drive expensive, non-portable, employer-paid insurance.

As I've noted (and again), the vast net of continuously changing insurance controls also helps to effectively outlaw stable, long-term policies that would remedy the problem of pre-existing conditions.

For more on this issue, please see Paul Hsieh's outstanding article, "How the Freedom to Contract Protects Insurability."

Obama wants to force insurers to ignore pre-existing conditions and also force insurers to cover preventative care (which would, incidentally, outlaw my high-deductible plan and force my wife and me to buy dramatically more costly insurance). The inevitable result of such controls is to jack up insurance premiums (leaving aside Obama's fantasy that giving people more "free" health care will somehow curb costs).

Mandated insurance requires expanded subsidies. After all, you can't force somebody to purchase a product that they literally cannot afford. If Obama follows the lead of Republicans, his "tax credits" will in many cases be direct subsidies.

Obama hopes to cheat a little on his mandate, claiming "there will be a hardship waiver for those individuals who still cannot afford coverage." (Whether you can "afford" this politically-manipulated "coverage" will be determined by the federal government.) Apparently Obama would subsidize these "hardship" cases through some combination of tax-funded welfare and tax-funded insurance.

With or without the "public option," the core of Obamacare remains the same: force everyone (or nearly everyone) to buy insurance, federally control what insurance people can buy (making it more expensive), and forcibly transfer more wealth to pay for health.

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NPR Gets Liberty On the Rocks Reaction to Obama's Health Speech

NPR reporter Jeff Brady watched Barack Obama's health address to Congress with members of the Denver Tech Liberty on the Rocks. He interviewed numerous participants and quoted three in his report.

Amanda Teresi, founder of Liberty On the Rocks, explained why forcing insurers to ignore pre-existing conditions runs contrary to the basic purpose of insurance: "The idea is that it's health insurance. And the whole concept of insurance is that you get it before you get sick, or before something happens to you. It would be the equivalent of not having any car insurance, hitting a tree, and then calling Geico and saying you want to sign up. It doesn't make sense."

(I've written a first and second article on the topic.)

T. L. James suggested that Obama's comments about tort reform won't amount to much. James told Brady, "Tort lawyers fund an important part of the Democratic power base, their funding base for their elections. There is no way that he's going to do anything that's going to turn them away from the Democratic party."

Finally, Orin Ray said he didn't think Obama's speech really changed anybody's mind.

Brady did a nice job with his brief report. However, I wish he had mentioned the more fundamental issues. The fact that Obama wants to force everybody to buy politically-controlled insurance is a huge deal, as is the fact that Obama wants to expand subsidies. Nor did Brady mention the political causes of today's problems in medicine, or that Massachusetts has already tried -- and failed -- to successfully implement Obama's key "reforms." (I discussed all of these issues with Brady.) Yet Brady didn't have much time for his portion of the report, and he was basically fair.

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Wednesday, September 9, 2009

Obama Wrong About Mandatory Auto Insurance

I watched Barack Obama's address on health policy tonight on television at Liberty On the Rocks at the Denver Tech Center. Both NPR and Fox 31 sent reporters to cover the speech and the free-market response to it. I'll have more to say about the speech in coming days. For now, I want to correct but one of Obama's remarks:

"That's why under my plan, individuals will be required to carry basic health insurance -- just as most states require you to carry auto insurance."

It is simply not true that states "require you to carry auto insurance." Rather, you must buy auto insurance (or face fines) only if you drive an automobile on politically operated roads.

For example, Colorado's statute 10-4-619 states that "compulsory coverage" applies to "every owner of a motor vehicle who operates the motor vehicle on the public highways of this state or who knowingly permits the operation of the motor vehicle on the public highways of this state."

In other words, if you don't own a motor vehicle, or you don't drive your vehicle on "public highways," you aren't required to buy auto insurance.

It is indeed interesting that Obama sees a politically controlled industry as the model for health care.

Obama's proposal to force everybody to buy politically controlled insurance is not like the requirement to buy auto insurance for public highways. Under Obama's proposal, there is no escape and no exception. If you don't buy insurance that politicians and their appointed bureaucrats approve for you, you face hefty fines. If you want to self-insure, or if you don't like the politically-approved insurance, that's tough. You will be forced to buy it. Because Obama is all about choice, competition, and freedom. And two plus two equals five.

September 10 Update: Wesword's Michael Roberts picked up on the NPR coverage of Liberty On the Rocks and also quoted this blog post. As I pointed out in the comments, this post made a delimited point quickly. I've written much more about mandated insurance elsewhere.

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Reid Errs on International Health Comparisons

Tonight President Obama will renew his pitch for more political control of medicine. One important part of the debate is how the U.S. compares to other nations. Recently the Denver Post republished an article from the Washington Post by T. R. Reid on the matter.

As my dad and I have pointed out (and again), the U.S. outperforms various European nations by measures such as cancer survival and access to technology.

As is also well documented, nations with the most severe political controls of medicine ration care (see also Patient Power). To take just one recent example, see the following article in the British Telegraph: "Sentenced to death on the NHS: Patients with terminal illnesses are being made to die prematurely under an NHS scheme to help end their lives, leading doctors have warned."

However, the fundamental choice is not between the current American system and some system similar to that of some other nation. The fact is that American medicine is already mostly controlled by politicians, and in that respect it already resembles the politically controlled systems throughout Canada and Europe. To the degree that American medicine fails, it fails because politicians have mucked it up. Where health care in other nations succeeds, that is largely to the extent that it retains some elements of freedom and borrows the successes of American innovations.

Reid definitely comes at the matter with the presumption that it's the government's job to ensure "universal coverage." It is not. Rather, it is the government's job to protect individual rights, including rights to offer and purchase health care and insurance on a free market, by voluntary exchange. The fact that government has violated rather than protected our rights is what has created the medical mess in which we now live. (For a historical survey, see the article by Lin Zinser and Paul Hsieh.)

If government would protect our rights rather than interfere in medicine, health care would be better in quality, lower in cost, and widely accessible. It is ironically the political crusade for "universal coverage" and care that leads to skyrocketing costs, rationing, and widespread difficulties in getting good health care.

Part of Reid's confusion is to treat politically controlled insurance and health providers as "private." If politicians control something, it is not "private" in any meaningful sense, even if the ownership is nominally so.

With an eye toward Reid's mistaken premises, then, let's evaluate his arguments.

Reid helpfully concedes that U.S. health is hardly a free market:

In some ways, health care is less "socialized" overseas than in the United States. Almost all Americans sign up for government insurance (Medicare) at age 65. In Germany, Switzerland and the Netherlands, seniors stick with private insurance plans for life.

Meanwhile, the U.S. Department of Veterans Affairs is one of the planet's purest examples of government-run health care.

However, Reid seems to think this counts as a reason for expanding political controls in the U.S.

Reid grants that Canadian health features waiting lines. However, he claims, "studies by the Commonwealth Fund and others report that many nations -- Germany, Britain, Austria -- outperform the United States on measures such as waiting times for appointments and for elective surgeries."

Reid simply misstates the survey results.

Here's what the Commonwealth Fund actually says, contrary to Reid's summary: "The U.S. patients reported relatively longer waiting times for doctor appointments when they were sick, but relatively shorter waiting times to be seen at the emergency department, see a specialist, and have elective surgery."

The survey also notes that the difference is partly attributable to the fact that some Americans lack health insurance, and this is primarily a problem resulting from political controls of insurance, which drive up costs.

It would have been helpful had Reid pointed out some of the other findings of the survey.

On the matter of doctor visits, the question is "Waited 6 days or longer for a doctor appointment (last time sick or needed medical attention." Australia came in at 10 percent of surveyed "sicker adults," Canada at 36 percent, Germany at 13 percent, New Zealand at 3 percent, the UK at 15 percent, and the U.S. at 23 percent. Notice that this question pertains to a patient's scheduling of a doctor visit, not necessarily the availability of doctors.

On the question of waiting four or more hours in the emergency room, only Germany beats the U.S.

"Waited 4 weeks or longer to see a specialist?" The U.S. comes in at 23 percent, compared to 57 percent in Canada and 60 percent in the UK.

"Waited 4 months of longer for elective surgery?" The U.S. stands at 8 percent, while Canada is at 33 percent and the UK at 41 percent.

All that said, such surveys are inherently limited in reliability. For example, people in different cultures might have very different ideas about when a doctor's visit is "needed." And people are not likely to try to see a specialist or get elective surgery if they think their attempts will be fruitless, so the U.S. might perform even better than the survey results indicate.

But, again, it is not enough just to compare the U.S. against other nations. We have to get at the underlying causes of problems in the U.S. and abroad.

Writing for Reason, Shikha Dalmia points out:

The fact of the matter is that America's health care system is like a free market in the same way that Madonna is like a virgin -- i.e. in fiction only. If anything, the U.S. system has many more similarities than differences with France and Germany. [A]part from England, most European countries have a public-private blend, not unlike what we have in the U.S.

Dalmia points out that government pays for nearly half of all health care dollars in the U.S. and "directly covers about a third of all Americans through Medicare (the public program for the elderly) and Medicaid (the public program for the poor)." The U.S. also forces emergency rooms to provide care without compensation.

Dalmia adds, "This is not radically different from France, where the government offers everyone basic public coverage, of course -- but a whopping 90% of the French also buy supplemental private insurance to help pay for the 20% to 40% of their tab that the public plan doesn't cover."

Moreover, a significant minority of Germans "opt out of the public system altogether and rely solely on private coverage."

What about rationing? Dalmia points out:

Struggling with exploding costs, the French government has tried several times—only to back off in the face of a public outcry—to prod doctors into using only standardized treatments. In 1994, it started imposing fines of up to roughly $4,000 on doctors who deviated from "mandatory practice guidelines." It switched from this "sticks" to a "carrots" approach four years later, and tried handing bonuses to doctors who adhered to the guidelines.

Meanwhile, in Germany, "sickness funds" -- the equivalent of insurance companies—have imposed strict budgets on doctors for prescription drugs. Doctors who exceed their cap are simply denied reimbursement, something that forces them to prescribe less effective invasive procedures for problems that would have been better treated with drugs. But the most potent form of rationing in France and Germany—and indeed much of Europe -- is not overt but covert: delayed access to cutting-edge drugs and therapies that become available to American patients years in advance.

Cato's Michael Tanner has written both an op-ed and a longer policy paper about international comparisons. He points out:

Those countries with national health care systems that work better, such as France, the Netherlands and Switzerland, are successful to the degree that they incorporate market mechanisms such as competition, cost-consciousness, market prices, and consumer choice, and eschew centralized government control.

In France, for example, co-payments run between 10 and 40 percent, and physicians can balance bill over and above government reimbursement rates, something not allowed in the U.S. Medicare program. On average, French patients pay roughly as much out of pocket as do Americans. The Swiss government pays a smaller percentage of health care spending than does the U.S.

In his longer paper, Tanner goes into more detail on the health policies of particular countries.

Reid also argues that American insurance, which he laughably calls "free enterprise," has higher administrative overhead than other countries. I do not doubt that this is true despite the fact that Reid is probably ignoring the relevant administrative costs elsewhere (such as tax compliance). But this is only true because American politicians have totally screwed up the insurance market, turning insurance into expensive pre-paid health care. (See my article, "What is Health Insurance?"

Finally, Reid argues that it's "cruel" if politicians don't force insurers to ignore pre-existing conditions. I've addressed the matter in a first and second article. The upshot is that insurers and consumers have the right to enter voluntary contracts, and insurance controls create bad incentives and higher costs, leading to cries for more controls.

In general, Reid attempts to make his case by omitting the relevant facts.

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Thursday, September 3, 2009

Free Exchange Should Set Insurance Premiums

Should health insurance companies charge people with pre-existing conditions or known health risks more?

Lawrence Jones of Conifer wrote a thoughtful letter for the August 25 Denver Post arguing that higher rates are unfair for conditions beyond one's control. I thought Jones's letter deserved a full reply.

Jones writes:

Letter-writer William Hinckley [see the August 20 letter] thinks that charging higher insurance premiums to people with pre-existing medical conditions is akin to charging higher house insurance rates to dimwitted folks who knowingly choose to live in fire traps. People don't choose to get diabetes. People don't choose to have genetic predispositions to cancer.

Those who knowingly make risky life choices, whether to live in fire-prone shacks or to smoke tobacco, should certainly pay higher premiums as a result of their choices. But why should the boy with leukemia, the woman with breast cancer, the young athlete with diabetes? Why should the innocent be punished for wanting access to health care just because they actually need it?

Jones's fundamental mistake is to ignore the rights of insurers and treat insurance as a collectively owned good. Insurance is a product sold on the market that properly belongs to its producers. Insurers have every right to set the terms of insurance policies, including rates. And consumers are free to buy an insurer's product or not. The government's only proper role is to enforce insurance contracts and prevent fraud, whether by the insurer or the consumer.

Politically controlled insurance rates violate the rights of both insurers and their customers. The key characteristic of free markets is voluntary exchange. A producer cannot sell a product without a willing customer, and a customer cannot buy something that no producer wishes to sell. Producers and customers have the right to reach mutually agreeable terms, free from force.

What Jones ignores is that forcing insurers to charge unhealthy people lower rates means that insurers must charge healthier people higher rates, or risk bankruptcy. The typical result of Jones's policy is that young, healthier, less-wealthy workers trying to get ahead in life must subsidize everyone else.

Jones, then, implicitly means that he wants politicians to force insurers to charge healthy people more. Such political controls are a big reason why insurance premiums cost so much today, and why both Democrats such as Barack Obama and Republicans such as Mitt Romney call for mandated insurance. Some young healthy people decline to subsidize other people's health through politically-manipulated insurance premiums, so they must be forced to do it, the reasoning goes.

Jones misses a number of other points as well. For example, he ignores the fact that politicians have effectively outlawed long-term insurance contracts, as I point out in a recent article on pre-existing conditions.

Of course insurers should NOT charge people with health conditions higher premiums -- IF those people bought long-term insurance before they developed the conditions. But long-term insurance contracts, on the whole, simply are not possible in today's political climate. Real health reform entails restoring a free market in health insurance, so that insurers are more competitive, more responsive to customers, and more free to offer useful products.

The entire purpose of health insurance, as I've argued, is to allow people to voluntarily pool their resources to protect against unexpected risks. If a risk is expected, such as if somebody knows prior to getting insurance that they have cancer, then the risk is simply not properly insurable.

Jones suggests that the "innocent" are "punished" when politicians do not force others to subsidize their care through higher insurance premiums. But this presumes that healthier people are somehow guilty. They are not. A free exchange between an insurer and a customer does not somehow "punish" a party outside that exchange.

Does this mean that people with pre-existing conditions and no health insurance cannot get health care? Obviously not. The idea that all health care must be funded through health insurance is ludicrous. The wealthy may fund their own health care out of pocket. The poor may look for voluntary charity, whether provided directly by hospitals or indirectly through charity groups. (Obviously today people have access to a wide array of health welfare programs. I favor gradually replacing welfare with strictly voluntary charity.)

Jones is also partly wrong about which diseases are impacted by personal behaviors. He mentions cancer and diabetes as examples. Yet both cancer and diabetes are often largely caused by one's choices.

The American Diabetes Association states, "Type 1 and type 2 diabetes have different causes. Yet two factors are important in both. First, you must inherit a predisposition to the disease. Second, something in your environment must trigger diabetes." What you eat can dramatically impact your likelihood of developing diabetes, as it can dramatically impact your ability to deal with the disease.

Likewise, cancer is partly genetically determined. For example, some women have genes that make breast cancer more likely. Nevertheless, our foods, activities, and chemical exposures can dramatically impact our risks of cancer.

I have two general points to make about this. To the extent that disease is impacted by personal behaviors, it is a very bad idea for political policies to encourage damaging behaviors. Laws forcing insurers to fund pre-existing conditions reduce the incentive of people take care of themselves. The inevitable result is more disease.

The second major point is that one person's unluckiness does not impose some sort of duty on a more-lucky person. The person without a genetic predisposition to get cancer is free to donate funds to treat cancer patients but should not be forced, under threat of imprisonment, to do so. The proper purpose of insurance is to protect ourselves against unexpected risks, not to equalize luck after the fact.

Health care is not a right. It is not some collectively owned good to be distributed by political whim. Health providers and health consumers have a right to negotiate mutually beneficial trades and to donate whatever they wish to charity. It is that right which government must consistently protect, if we value or lives, our liberties, and our health.

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Wednesday, September 2, 2009

How Republicans Can Win On Health Reform

"Republicans suck." I had heard that Jon Caldara began his July talk to the Denver Metro Young Republicans (DMYR) with that line, so I figured I'd repeat it when I addressed the group on August 25 about health policy.

I really like the DMYRs. It is a vibrant and passionate group on the whole truly committed to liberty. If the Republican Party of Colorado is to have a future, it needs to start with people like this.

I explained that Republicans have advocated bad policies in areas of insurance controls and health welfare.

It was Republican Mitt Romney, for example, who passed insurance mandates in Massachusetts, which the Democrats have now worked into their "reform" bill. I drew on the article by Dr. Paul Hsieh for The Objective Standard on the matter.

Michael Cannon has also written about the failures of the Romney model.

I explained that mandated insurance is inherently tied to tighter insurance controls and expanded subsidies. Moreover, Romney's plan didn't address the underlying problems, particularly the high costs of employer-paid insurance (driven by tax distortions) and capricious insurance controls.

The result of this GOP scheme? Skyrocketing tax costs and premiums, a damaged insurance industry, more political meddling, and doctor shortages.

Next I criticized Bob Beauprez's endorsement of mandated insurance and Mike Coffman's endorsement of insurance controls.

With respect to health welfare, I discussed Bush's costly Medicare prescription drug program, Jim DeMint's plan to expand welfare, and Michael Steele's endorsment of health welfare as a "right."

Then I turned to the positive portion of my talk. How can Republicans win on health reform?

First and foremost, Republicans must make liberty in medicine a moral issue. People have the right to control their own lives and resources, free from political interference. Republicans must answer the Democrats' challenge to address the moral argument. Republicans who try to make the debate all about budgets and cost are destined to lose.

Republicans must articulate the harms of decades of political controls in medicine. They must explain how tax distortions created the expensive, non-portable, employer-paid system. They must talk about how insurance controls drive up premiums and undermine a competitive, consumer-responsive insurance industry. And they must talk about all the ways that forced wealth transfers, via taxation and politically-controlled insurance premiums, drive up costs and reduce responsibility.

Finally, Republicans must advocate true free-market reforms. Expanded Health Savings Accounts would help offset the tax distortions driving employer-paid insurance. Rolling back insurance controls will restore competitiveness and bring down insurance rates. Tort reform will weed out frivolous law suits. And welfare reform will rein in expansions of various programs, control costs, and ultimately begin to move back in the direction of voluntary charity.

Many Republicans are trying to "me too" the Democrats on health reform by advocating more insurance controls and more health welfare. But is it not now abundantly obvious that Republicans cannot win on a Democrat-lite platform?

If Republicans wish to win on health policy and other issues -- and if they want to deserve to win -- they should start with DMYR's five principles:

* "The best government is a small, Constitutionally-constrained one."

* "A strong national defense is... vital to the preservation of our liberty."

* "Capitalism is the only moral philosophical system."

* Individual rights and personal responsibility.

* The Rule of law.

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