, a journal of politics and culture.

Monday, August 3, 2009

In Health Debate, Left and Right Need to Check Premises

The following article originally was published on August 3, 2009, by Grand Junction's Free Press.

In health debate, left and right need to check premises

by Linn and Ari Armstrong

Hundreds gathered at the state capitol last Tuesday to protest the further political takeover of medicine. On Wednesday more than a thousand gathered in Fort Collins and Colorado Springs.

The left has also been vocal. Around the time of the rallies, Rep. Diana DeGette released a speech praising Democratic "reform," and assorted columnists joined in.

Obviously, our sympathies tend toward those who protest Obamacare. (Your junior author gave a speech at the Denver rally that you can view at However, while we criticize the left, we also disagree with various sentiments expressed by the right.

We'll begin with the left, where snappy but bogus statistical arguments continue to defy reasoned analysis. DeGette claimed that the United States has "one of the worst results in infant mortality." Ed Quillen of the Denver Post wrote that the French pay less for health care for better results. "We pay considerably more to get shorter lifespans and more dead babies," he wrote.

But obviously health care is only one of many influences on life expectancy (which continues to rise here). Diet plays a large role; Americans tend to carry around more extra pounds. Economists Robert Ohsfeldt and John Schneider point out that relatively high rates of car crashes and homicides depress U.S. life expectancy. By Quillen's logic, politicized medicine can also cure risky driving.

The U.S. beats France hands down when it comes to cancer survival or access to health technology.

As Sally Pipes and others point out, infant mortality is recorded differently in France than it is in the U.S. Here an infant with "any sign of life" that then dies counts as an infant mortality. France adds a viability standard, so the same infant that counts as an "infant mortality" in the U.S. may count as a stillbirth in France. Ronald Baily adds that more infants tend to be born underweight in the U.S. because more teens have children here.

DeGette and Quillen damn American doctors precisely because they heroically try to save infants that in France would be discarded.

The left suffers worse ideological problems. Mike Littwin, also of the Post, argued last week that equality-driven, politically-run health care is a moral issue.

We quite agree it is a moral issue. It is immoral to seize people's resources by force. It is immoral to forcibly override the independent judgment of doctors, patients, insurers, and consumers and to nullify their agreements. We oppose politically-run medicine because it violates morality. Moral health care respects people's rights of liberty, property, and voluntary association.

Unfortunately, the right also veers off track. Previously we wrote about the failings of Republicans like Mitt Romney, who pushed through mandatory, subsidized insurance in Massachusetts, and Jim DeMint, who advocates different health welfare.

Many at the Denver rally urged members of Congress to "read the bill first." We agree, but politicized health care threatens our health and liberty even if they read the bill.

Some opposed Obamacare because it may include tax financing of abortions. Yet this is a side-line issue. We get the eerie feeling that some on the right would accept bureaucratic medicine if it came packaged with an abortion ban (a possibility that should give the left pause).

We join the many calls for tort reform, but again that's not a fundamental issue. Reining in law suits won't fix the problems caused by political interference in health funding, delivery, and insurance. Still, we do want to weed out frivolous suits while compensating damage resulting from negligence.

One of the speakers at the Denver rally, Preston Gibson of the Jefferson Economic Council, eloquently argued that the "public option" would drive out private insurance.

Unfortunately, Gibson also claimed that "employer-sponsored health insurance has been the foundation of the highest quality health care on earth." Wrong. Employer-paid insurance is the product of federal tax manipulation. It is non-portable. It is expensive because it encourages people to use insurance for routine care rather than unexpected, high-cost emergencies.

American medicine is great despite the IRS-promoted employer-paid system. We should move away from employer-paid insurance to individual policies. We support the expansion of Health Savings Accounts to allow the purchase of insurance with pre-tax dollars.

Jeff Crank, organizer of the Denver rally, likewise made many admirable points. However, he also claimed that the "right kind of health care reform" includes "eliminating the pre-existing conditions exclusion." We take this to mean imposing more political controls on insurance companies.

When insurers are forced to take people with pre-existing conditions, many people wait to buy insurance until they get sick, undermining the very purpose of insurance (and leading to Romney-style mandates). The real answer is to remove all the political controls of insurance that have mostly destroyed the market for long-term policies.

Too often neither the left nor the right gets it. The name of our favorite health policy group summarizes the essential values we must protect: Freedom and Individual Rights in Medicine.

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Sunday, July 12, 2009

Dr. Schroeder Replies to Grand Junction Model

Dr. James Schroeder wrote an important article for Friday's Free Press of Grand Junction. He responds to media hype about the "Grand Junction Model" for health reform.

[A] large study done at Dartmouth University looking at variations in Medicare spending was released in April 2008.... The Dartmouth Atlas is being overstated. ... All the data showed is that some hospitals spent more than others. ... The death rate in this particular study was 100 percent. ... The only logical conclusion to be made is that Grand Junction is efficient at getting people to the point of death.

Hang on to your wallet, because the Dartmouth Atlas will now be touted as showing that some regions (Grand Junction being the shining example) are “more efficient” at delivering health care while saving money! This in turn will serve as the anvil upon which health care spending throughout the country will be hammered into line by a federally controlled health care system. ...

The current administration advocates a system that will take those difficult value judgments out of your hands and put them in the hands of a nice, caring, compassionate bureaucrat. ... The (barely) unspoken message is that you have a duty to die cheaply in order to save money for everybody else. ...

Please read the entire article for yourself.

I have but a couple of nits to pick. Schroeder writes, "Health care services are finite, just like any other commodity. At its core, the entire health care debate boils down to distributing a finite number of dollars for the purchase of health care services for a diverse population of 300 million. The only way to do that is by allocating expenditures and resources, or in other words rationing."

That paragraph is wrong for two reasons. First, while the availability of doctors, hospitals, drugs, etc. at any given time is limited, the amount of health care services can change dramatically over time. Today vastly more health care is available than was the case a century ago. One of the effects of socialized medicine would be to reduce the amount and quality of health care available, particularly as the better doctors left the field and the better students looked for careers elsewhere.

Second, "rationing" pertains only to political distribution of goods or services. For example, if you walk into a grocery store and purchase hamburger instead of steak, that's not "rationing;" that's a rational response to prices. If you choose to go to an urgent care office rather than an emergency room, that's not "rationing" the emergency care. A free market involves willing agreements among buyers and sellers, consumers and producers. That's not rationing. Rationing is when politicians and bureaucrats decide who gets what, and how much they get.

A free market in health care involves no rationing. The partly-socialized medicine we live under today involves considerable rationing. A completely socialized system involves nothing but rationing.


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Wednesday, June 10, 2009

Liberty in Religion and Medicine

Today's Denver Post published a letter from Kaye Fissinger titled, "Church and medicine." She argues that Catholic churches should not be able to practice "Catholic doctrine on birth control, sterilization and abortion."

Following is my online reply:

I advocate the separation of church and state. I also advocate freedom and individual rights -- a free market -- in medicine. Kaye Fissinger's position violates both ideals.

Women have the right to get an abortion -- from willing providers. Patients do not have the right to force hospitals or doctors to offer abortions -- or any procedure -- against their judgment.

Likewise, customers do not have the right to demand that any business provide some good or service. You have no right to require that a car dealer sell the truck you want to buy, or a grocer particular produce, or a book store a particular book. If you walked into a Marxist bookshop and demanded to purchase Ayn Rand, for instance, that would be a violation of the bookstore's right of free speech. You do, however, have every right not to shop at that store.

The ones who properly set policy at a hospital are its owners. If a church owns a hospital, the church properly decides policy there. The owners do owe potential patients full disclosure regarding their faith-based policies. I would choose to do business elsewhere.

Doctors who disagree are free to work elsewhere. If you work for a bookstore, you agree to sell the books the owners wish to sell. The principle is no different when it comes to medicine. If you wish to sell different books or perform different medical procedures, get a job someplace else.

Hospitals should not need to rely on "conscience clauses" to protect their rights of property and contract. Likewise, a bookstore owner who dislikes pornography or some other sort of publication should not have to pass some "conscience" test to abstain from selling such works. Yet the logical implication of Fissinger's view is that somebody should be able to walk into a Christian bookstore and demand a book praising abortion, atheism, Satanism, or whatever (or into an atheist bookstore and demand a copy of the Bible).

Fissinger's interpretation of the First Amendment is completely wrong. The First Amendment prohibits state establishment of religion. It does not guarantee lack of dominance of some doctrine. For example, 75 percent of Americans are Christian. The First Amendment does not require mass conversion to other religions in order to prevent Christian "dominance."

The fundamental problem in medicine is that there is no free market in health care. Governments spend more than half of all health-care dollars. Tax-funded hospitals, like tax-funded schools, should not be able to impose any faith-based practice. The solution to this problem is not to expand political control of hospitals, but to return to liberty in medicine.

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Wednesday, May 27, 2009

Public Health Plan Deception

Via Brian Schwartz: this short video demonstrates that, not only would Obama's health scheme lead to "single-payer" (i.e., politically-controlled) health care, but it is intended to to so:

Of course, these consequences, intended or not, do not automatically disqualify Obama's plan. To read why politically-controlled medicine is wrong and bad for our health, see Freedom and Individual Rights in Medicine.


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Thursday, February 26, 2009

HIV Testing Opens Door to Abortion Restrictions

Senate Bill 179 would require pregnant women to be tested for HIV or opt out.

The fact that State Senator David Schultheis's case against the bill is shameful and ludicrous does not imply that the bill is a good idea. In fact the bill represents an illegitimate use of state power to interfere in private medical decisions. It violates freedom of contract and private property. Moreover, the bill creates a dangerous precedent that could be further abused by those with more insidious agendas.

David Harsanyi writes:

I suppose, it's possible to oppose a bill mandating HIV testing for pregnant women if you believe it's a gratuitous coercion of the individual. But I can absolutely appreciate the argument that the state has a responsibility to protect children from the negligent behavior (and contracting HIV isn’t always a matter of reckless behavior) of adults. And since the bill features an op-out clause, I don't see it as particularly worrisome.

I'm surprised that Harsanyi, a critic of the Nanny State, doesn't take the "gratuitous coercion" of the bill more seriously.

Here's what 179 actually says in modifying Statute 25-4-201, which already requires pregnant women to be tested for syphilis:

Every licensed health care provider authorized to provide care to a pregnant woman in this state for conditions relating to her pregnancy during the period of gestation or at delivery shall take or cause to be taken a sample of blood of the woman at the time of the first professional visit or during the first trimester for testing pursuant to this section. The blood specimen thus obtained shall be submitted to an approved laboratory for a standard serological test for syphilis and HIV. Every other person permitted by law to attend pregnant women in this state but not permitted by law to take blood samples shall cause a sample of blood of each pregnant woman to be taken by a licensed health care provider authorized to take blood samples and shall have the sample submitted to an approved laboratory for a standard serological test for syphilis and HIV. A pregnant woman may decline to be tested as specified in this subsection (1), in which case the licensed health care provider shall document that fact in her medical record.

Having the opt-out clause is much better than not having one. However, it's still a bad bill.

The proper purpose of government is to protect individual rights, including the right to contract voluntarily. This bill instead violates the right of contract by placing political requirements on what should be a decision between doctors (and other care providers) and their patients.

Women know in advance whether they are at risk of HIV. My wife is at zero risk of HIV infection. To "encourage" her to get tested for HIV is ludicrous and insulting, insofar as legislators attempt to replace her judgment with their own.

Moreover, this is largely a solution in search of a problem. A Rocky Mountain News article begins, "The head of Denver's HIV prevention program said Wednesday he doesn't recall the last time an HIV-positive baby was born here."

Paul Hsieh addresses the "nudge"-like opt-out allowance:

The basic premise of libertarian paternalism is that the government should use its power to "nudge" people into acting in their best interest, while leaving them the choice to "opt out."

However, nudging represents an assault on freedom, because it undermines man's basic tool of survival -- his mind. By creating a default, libertarian paternalism in essence says, "Don't worry -- we'll do your thinking for you." Sunstein's book explicitly compares Americans to a bunch of Homer Simpsons in need of such guidance. If Americans surrender their minds to the government, they become easy prey for demagogues and dictators.

Once we concede the legitimacy of "nudging," nudges will inevitably escalate. Over time, libertarian paternalism will become less "libertarian" and more "paternalistic."

Once it is accepted that the state legislature should be in the business of telling my wife (and all other women who may become pregnant) to get an HIV test, it is only a matter of time before a future legislator decides that the opt-out clause is useless.

In recent years, Republicans opposed to abortion have been most interested in politically managing pregnancy care, as by trying to require ultrasounds prior to an abortion. Former Governor Bill Owens criticized Schultheis on the following grounds: "It's extremely inconsistent for any person who is pro-life to oppose this effort to potentially save the life of a child."

If the state legislature "encourages" women to be tested for HIV, for the purported sake of the fetus, legislators open the door to future efforts to politically control medicine to restrict abortions.

Leftists who endorse 179 while wanting to keep abortion legal are incapable of thinking in principle or seeing more than a few months down the legislative road.

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Thursday, January 22, 2009

Feds Caused Medical Cost Shifting

Today the Rocky Mountain News sorta kinda praises "Gov. Bill Ritter's proposal to expand medical coverage by leveraging new fees on hospitals." The paper summarizes:

[A] well-designed plan could ease some of the cost-shifting that occurs when patients who require care and can't pay their bills show up at emergency rooms and doctors' offices. And cost-shifting results in private health insurance premiums rising much faster than they should.

Under the plan, hospitals would pay fees to the state based on the number of beds occupied or the days patients are admitted. These fees would then be leveraged with a dollar-for-dollar match from the federal government.

But why is this a problem in the first place? It is a problem because the federal government forces hospitals to treat people without compensation. Imagine a federal law that required grocery stores to hand out food, for free, to anyone claiming to need it; that would result in "cost-shifting" in food. On a free market, many health-care providers would negotiate lower prices based on need, and charities would help cover those unable to pay the bills. But the federal law interrupts these voluntary solutions and forces some to pick up the tab of others, whether they can afford it or not.

This is a classic case of the federal government trying to solve a problem (with Ritter's help) that the federal government created.


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Wednesday, January 7, 2009

Three for Freedom

Paul Hsieh writes for the Christian Science Monitor:

... Any government that attempts to guarantee healthcare must also control its costs. The inevitable next step will be to seek to control citizens' health and their behavior. Hence, Americans should beware that if we adopt universal healthcare, we also risk creating a 'nanny state on steroids' antithetical to core American principles. ...

Please help the good doctor earn the widest possible audience.

Next, Brian Schwartz has a nice piece from January 3 in Boulder's Daily Camera:

[Y]ou cannot walk away from an elected politicians who claim "we're all in it together." Politicians "bring people together" with legislation. If you peacefully refuse to cooperate with such legislated "togetherness," you're a criminal and can end up in prison.

Finally, the Denver Post published my letter critical of Hoover and FDR:

... [N]o critic of the New Deal claims the trouble started with FDR. Instead, Republican Herbert Hoover helped launch the Depression with his horribly destructive tariffs and wage and price controls. And the Federal Reserve destabilized the money supply.

FDR inherited unemployment nearing 25 percent, and it never fell below 14 percent through 1940. Hopefully Barack Obama won’t have to push unemployment over 14 percent to be considered as great a president as FDR.

I also briefly summarize the causes of the worsening economic conditions of 1937 and 1938.

I have also written a more detailed reply to David Sirota.

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Tuesday, December 30, 2008

Attorney General Bilks Drug Producer

Tillie Fong reports:

Colorado will get $1.2 million from a national settlement with Cephalon Inc., after the pharmaceutical company was accused of marketing and promoting three drugs for "off-label" use.

The announcement by the Colorado attorney general's office Monday said the money will be used to reimburse the state Medicaid system. ...

While it is legal for doctors to prescribe Food and Drug Administration-approved drugs for off- label use, drug companies are not allowed to market or promote directly their drugs for such purposes.

Is there any claim that Cephalon's advertisements were fraudulent? No. Is there claim that Cephalon has acted negligently? None that I'm aware of. (I checked the AG's web page and found no media release on the matter.)

So this company has been punished for advertising its products and selling them to willing customers. Doing business is now often a crime in the United States.

These restrictions are a violation of the company's rights of free speech, property, and association.

While often the attorney general's office does important work protecting people's rights, in this case it has helped violate people's rights and undermined the proper purpose of government.

Let us say that a company does act fraudulently or negligently. Is there a proper government role in such cases? Yes! There is a role for both criminal fraud and criminal negligence. However, the more important role for government is to provide the legal context for tort. That is, people should be able to sue a company for fraud or negligence. Now, torts should be restricted such that companies may not be punished for unforeseeable harms or for transactions in which customers voluntarily accept risk.

But in no case would fraud or negligence justify the government transferring wealth from the company at fault to a welfare program! Instead, any damages should go directly to the victims. (Whether a state welfare agency decides to pay for certain drugs for certain purposes is a different issue, and not one that justifies legally punishing drug producers.)

In this case, though, there were no victims -- except for the company itself and its customers.

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Sunday, December 7, 2008

Obama Signals Massive Federal Spending

Well, here it comes. We can't claim he didn't warn us. Obama will try to socialize medicine and massively increase federal spending.

The Denver Post reports:

President-elect Barack Obama is formally launching his ambitious health-care reform effort with a call for ordinary Americans to spend the last two weeks of December talking about health care, then sending their ideas to Washington.

Former Sen. Tom Daschle, the man who will lead the reform effort and Obama's likely nominee for Secretary of Health and Human Services, reached out to citizens during a health-care summit in Denver on Friday morning. He cast it as the first step in an ambitious effort that will end in a much improved health-care system for the country -- and one that won't be derailed by economic crisis.

Especially now that the Rocky Mountain News appears to be on its way out, we can look forward to more such journalistic cheerleading for Obama's grand spending sprees.

Obama, the Post declares (citing Tom Daschle), will "increase access to health care for the poor and uninsured."

Of course the system is rigged to solicit the opinions of those special interests who desire the concentrated benefits of wealth transfers. But Americans who favor liberty may also send in comments. (I include my comments below.)

Paul Hsieh explains why Obama's plan would lead inexorably to a government take-over of medicine. See also a piece by Grace-Marie Turner (via Brian Schwartz).

Obama also wants to redirect resources on a massive scale to politically-approved enterprises. The New York Times reports:

President-elect Barack Obama promised Saturday to create the largest public works construction program since the inception of the interstate highway system a half century ago...

Mr. Obama's remarks showcased his ambition to expand the definition of traditional work programs for the middle class, like infrastructure projects to repair roads and bridges, to include new-era jobs in technology and so-called green jobs that reduce energy use and global warming emissions.

Given the government ownership of roads, the government will fund such projects. Yet, given that system, the dedicated gas tax is the best way to link use to funding. The only goal should be to improve the roads, not to "stimulate" the economy, a recipe for wasteful special-interest spending. (The proper policy of turning the transportation infrastructure over to a free market lies beyond the scope of this post.)

Spending in other industries will only further bring them under the direct control of the federal government. We'll see more spectacles like the one of car manufacturers prostrating themselves before their political masters, promising to be good boys and girls and make things the way Big Mommy thinks best.

Obama's policy, to the degree that it is implemented, will stifle entrepreneurial creativity, turn business leaders into servants of the political class, and transfer funds away from the productive to the profligate.

Following are my comments to Obama:

Dear President-Elect Barack Obama,

I am writing express my support for individual rights, which you appear ready to undermine. People have the right to decide for themselves how to spend what they earn and on what terms to cooperate with others. The government's sole legitimate function is to protect our rights to life, liberty, property, and pursuit of happiness.

You propose to expand the forcible redistribution of wealth, not only to advance the government take-over of medicine, but to "create" numerous politically-approved jobs.

Yet the failures of modern health care are a direct result of previous political controls of medicine, including tax policies that have tied insurance to employment and mandates that have increased the cost of insurance.

Your make-work schemes will not add net jobs to the U.S. economy; they will only divert resources away from some jobs to ones that you and your political supporters favor. The funds inevitably will be influenced by special-interest politicking. The modern mortgage crisis, like modern problems in medicine, were caused by misguided political controls, including manipulation of interest rates, government-sponsored lending institutions, and unjust lending mandates. The proper response to the mortgage crisis is a renewal of economic liberty, not a continuation of failed political controls.

I am not persuaded that your administration will listen to the voices of Americans who favor liberty. As you surely know, special interests will dominate your solicitation process, as they stand to gain from your wealth redistribution plans. Meanwhile, the many Americans who stand to pay the price in terms of higher eventual taxes, inflation, and lost economic opportunities may be mostly ignored. I urge your administration to rethink your unjust policies of "spreading the wealth around" by political force. I urge you to instead help restore the nation to its heritage of liberty.

Ari Armstrong

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Wednesday, July 30, 2008

Selfish Kidney Transfers

The headline atop Brian Maines's Denver Post story states, "Selflessness, to the third power: 3 kidney transplants to occur simultaneously across country." However, the transplants seem to involve entirely selfish behavior:

Martha Hansen, 48, of Albuquerque will give a kidney to Maggie Mrva, 56, of Denver at the Aurora hospital.

Mrva's husband, Slavo, is in Tuscaloosa, Ala., where he will give a kidney to an Alabama woman who wished to remain anonymous.

A friend or relative of the Alabama woman (also anonymous) is in Wake Forest, N.C., where the person will give a kidney to Hansen's friend Robin (who wishes not to identify herself further).

All six parties benefit in this mutally-beneficial exchange. Three people get kidneys. A husband helps save his wife. And two people help save their friends. Sounds like a spectacular deal to me. If my wife or a dear friend needed a kidney, I'd be ecstatic to be able to participate in such a program, because my participation would be a supremely selfish act.

Unfortunately, the federal government forcibly prevents most potential mutually-beneficial kidney transplants, thereby causing the premature deaths of thousands of Americans, as I've pointed out. Thus, while we should be thrilled for the three people receiving kidneys, we ought not forget about the tens of thousands of people kept on waiting lists by the federal government.

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Thursday, June 5, 2008

Unions Fight for Higher Health Costs

Brian Schwartz has pointed out that Colorado's union bosses are trying to further screw over Colorado workers -- so long as the unions expand their power. Schwartz writes:

Re: "Who has your health at heart?" May 22 guest commentary.

AFL-CIO executives John Sweeney and Mike Cerbo perpetuate the big lie behind politician-controlled medicine: that the free market is not working and that costs have been spiraling out of control because of markets.

But costs have been increasing precisely because of the employer-based insurance they espouse, which is a consequence of a biased and non-free-market tax code. It favors employer-based insurance and penalizes other types of medical insurance.

We consume medical care like a business traveler dining on the company's expense account: Since someone else pays the bill (insurers), patients need not shop around, so providers don't compete on price. ...

Employer-based insurance also coddles insurance companies, which have little incentive to please consumers. They know we're essentially locked to our employer and the costly insurance plans they offer. To buy a competitor’s product, we must change jobs or pay a stiff tax penalty.

The AFL-CIO should be ashamed of promoting self-serving policies that both empower labor unions and result in expensive medical care and insurance.

Schwartz covers additional angles of the health-policy debate at Patient Power. And Paul Hsieh discusses problems with the British system and other issues at the FIRM blog.

Nevertheless, with a Democratic legislature (and a weak-spined Republican minority), we continue to suffer the further socialization of health care. For example, Governor Bill Ritter recently bragged about signing eleven health-related bills, most of which expand political control of medicine.

Colorado's advocates of individual rights in medicine have stopped the worst plans and slowed down the political takeover of medicine. If you care about your health and your liberty, now is the time to join them.


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Tuesday, May 6, 2008

Surprise, Surprise: Bill 217 Captured by Special-Interests

As Brian Schwartz has reported, State Senator Bob Hagedorn said that "to load up mandates" into his bill 217 would be its "kiss of death." Unfortunately, while the bill deserves death, bad legislation has a way of rising from the dead to stalk citizens.

Schwartz points to a May 2 article from the Denver Business Journal by Bob Mook that reports the following:

[Representative Anne] McGihon acknowledged the House is much different than the Senate bill, but it now is supported by a wide range of advocacy groups -- some of which originally opposed it. ...[T]the bill was severely changed in the House with provisions that removed a coverage cap of $250,000 from the plans. Another House provision would direct the panel to consider plans that cover hospice and palliative care...

I'm not sure where the bill stands now. But even if the bill is stripped of its House provisions, the fact that the bill was immediately subjected to special-interest lobbying indicates where this legislation is headed, if it becomes law. Not only will the new commission it creates be subjected to continual lobbying, but, if the legislature enacts the commission's recommendations, the legislature too will be subjected to such pressure, so long as the legislation remains in force. It is the inevitable result of politician-controlled medicine.

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Monday, May 5, 2008

Gorman Skewers Bogus Families USA Health Claims

Families USA is a "non-partisan" outfit that is a partisan fighting for government-controlled health care. It advocates policies that would harm families and that run contrary to the USA's heritage of liberty. The organization is built on deception and it uses bogus claims to advance its agenda.

Back in February, Linda Gorman and I pointed out that a Families USA "study" regarding the magnitude of costs shifted from the uninsured to the insured is deeply flawed. We wrote:

Those who advocate an individual mandate throw up all kinds of numbers to support the wild claims that the proposal would save everyone money. A Jan. 8 article from The Denver Post claims that "Coloradans who have insurance spend an extra $950 each year to cover the costs of those who show up at the hospital without insurance."

The article attributes the number to state Rep. Anne McGihon, who said that the figure comes from Partnership for a Healthy Colorado. Partnership for a Healthy Colorado, in turn, says it got the figure from Families USA, which published a paper in 2005. That paper's estimates were unable to accurately predict the percentage of uninsured residents in Colorado. The paper also grossly overestimated at least some costs of uncompensated care.

The Lewin Group, the modeling firm hired by the commission to collect information about Colorado, reported total Colorado expenses for the uninsured of about $1.4 billion. Of that amount... leftover uncompensated costs, the ones that are not paid by any identifiable source, total $239 million. Divide $239 million by Colorado's 2.8 million insured residents, and the result is a maximum likely cost-shift of about $85 per insured individual per year.

To "fix" the problem of $239 million in cost-shifting, the [Commission for Healthcare Reform] proposes to increase health spending in Colorado by more than $3 billion...

Then, on May 2, Gorman posted an article to John Goodman's Health Policy Blog regarding Families USA's claims about insurance and mortality:

In the series of reports, called "Dying for Coverage," Families USA purports to show how many people are killed by a lack of health insurance in each state. For example, they claim 6 people die every day in Florida because they are uninsured. Seven die every day in Texas, 8 in California, and 25 in New York.

How is Families USA able to tally up all this carnage with such pinpoint precision? As it turns out, these claims are based on a 15-year cascade of studies - each repeating the errors and misinterpreting or mischaracterizing the findings of the previous one and ultimately relying on data that is 37 years old. ...

[T]here is no point at which anyone from Families USA actually examines a medical record. There is no interview with any doctor, any patient or any family of a deceased patient. There is only algebraic mumbo jumbo in support of an unsupportable claim.

Gorman explains the problems with Families USA's claims in greater detail in the article.

Gorman's criticism follows one by Michael Tanner, who explains, "The Families USA study was not a traditional 'double blind' experiment with a control group and a treatment group." Tanner offers additional evidence discrediting the Families USA claims.

As I have reviewed, Brian Schwartz discovered that a summary of State Senator Bob Hagedorn's bill 217 cites the bogus Families USA study.

Finally, on May 3, the Rocky Mountain News published Gorman's letter regarding Families USA's claims about Medicaid. Gorman points out that an earlier article from the Rocky, "Report ties Medicaid cuts to job losses," "simply repeated the substance of a press release from Families USA." Gorman continues:

...What the Bush administration is proposing is a slightly smaller budget increase, about 7.1 percent rather than 7.4 percent. The 2009 budget numbers are available on Page 61 at 09budget/2009BudgetInBrief.pdf.

If Families USA were a real family making $50,000 a year, these budget numbers would be the equivalent of having an expected windfall of $53,700 reduced to $53,550.

Families USA is known for approaching health care with a well-defined ideological slant and for producing lousy numbers on all manner of health-care issues. One hopes that, next time, the Rocky will take the Families USA reputation for inaccuracy into account, and that it will check before it unquestioningly reproduces their press releases as news.

It would also be pleasant if Colorado legislators would refrain from basing state policy on Families USA's misinformation campaigns.


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Thursday, May 1, 2008

For Better Health, Repeal Political Controls

The following article originally was published by the Independence Institute on April 30, 2008.

For Better Health, Repeal Political Controls

By Ari Armstrong

My wife and I pay $132 per month total for high-deductible health insurance, hundreds of dollars less than we would pay for comprehensive insurance. Our goal is to never need to make an insurance claim. We pay for all of our routine medical care -- doctor visits, eye glasses, dental work, prescriptions -- out of pocket, and we like it that way.

Our medical expenses come out of our Health Savings Account (HSA), which means that it's all pre-tax money. Unfortunately for us, various enemies of HSAs have been trying to undermine them at the national level.

By paying less for high-deductible insurance, we've been able to pay off debts faster and prepare for a family, something that has been difficult given our high tax burdens.

If Colorado wants to keep and attract young working families, the legislature ought not further muck up health insurance by loading in a bunch of new expensive mandates. Nor should the legislature require such couples to further subsidize others through higher taxes and/or insurance premiums.

If the legislature wants to make health insurance more affordable for more people, it should repeal existing political controls that have driven up insurance costs and priced some people out of the market.

However, we should realize that the broader problem with health insurance is that, because of federal tax policy, most insurance is tied to one's job. Lose your job, lose your insurance. Because of the tax benefits of "paying" people with insurance coverage, such insurance is really pre-paid medical care that discourages economic provision and consumption of health care.

Our society has largely forgotten the proper purpose of insurance when it comes to health. Most people remain healthy into middle age, when risks for various diseases start to increase. Through insurance, we voluntarily pool our resources to pay for the care of the few who get unlucky. If federal policy had not driven health insurance off track, we'd buy insurance when we're young at a low rate and keep the same policy long-term, and we'd also pay for routine and expected expenses directly, which would encourage healthy competition.

All of the commonly cited problems with medicine have been caused by decades of political intervention in medicine. For details, see "Moral Health Care vs. 'Universal Health Care'," by Lin Zinser and Paul Hsieh, MD, at

Yet, rather than act to repeal the controls that are the cause of the problems, many of today's politicians want to impose still more controls. If they succeed, the result will be worse health care that costs even more.

Here in Colorado, the legislature has considered everything but repealing the controls that are the cause of the problems. In 2006, then-Governor Bill Owens signed into law Senate Bill 208 to create the Blue Ribbon Commission for Healthcare Reform. That commission rejected the only free-market proposal and recommended such measures as massively expanded taxes and forcing everybody to buy insurance. The Commission's recommendations basically went nowhere.

But apparently one failed commission deserves another, so State Senator Bob Hagedorn is currently pushing Bill 217. If the bill passes, later this year Governor Bill Ritter will appoint "a panel of expert advisors" to come up with a bunch of new political controls for the legislature to consider in the future.

Originally, the bill encouraged the "panel of experts" to assume that all Coloradans would be forced to purchase politician-approved health insurance. The amended bill lists that only as an option.

Forcing people to buy insurance would cause two basic problems. First, you can't force somebody to buy something they can't afford, so any such plan must accompany massive tax hikes and subsidies. Second, once politicians force you to buy something, special-interest groups will constantly fight to include their pet service as part of the forced package, whether you want it or not. The result will be continual pressure to expand the scope of the forced insurance and make it ever more costly.

Much of the bill describes the creation of politician-approved "value benefit plans" for health insurance that would be subject to a variety of restrictions and substantially subsidized through taxes.

Yet consumers and providers have the right to decide through voluntary exchange what plans constitute a value to them. We don't need a new bureaucratic commission; we need liberty.

Ari Armstrong, a guest writer for the Independence Institute, blogs at


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Thursday, April 24, 2008

Schwartz Starts Patient Power Blog

Hooray! Brian Schwartz has started a blog called Patient Power, "brought to you by the Independence Institute."

Within a minute of viewing Schwartz's blog, I learned something new about State Senator Bob Hagedorn's Bill 217, which raises the possibility of new controls and a mandate to force people to buy politician-approved insurance. Schwartz writes:

The Bill Summary for Colorado Senate Bill 08-217 (which I’ve written about here), which would make it a crime for Coloradans not to buy politician-approved medical insurance, includes a link to a report by a group that calls itself “Families USA”* titled Dying For Coverage, which claims that lacking health insurance causes thousands of Coloradans to die each year. ...

* You gotta love the name “Families USA.” If you disagree with their policy recommendations, you must be against families, and worse yet, the USA!

Sure enough, the very first pdf file included in the summary is the Families USA study, which, as I pointed out yesterday, is seriously flawed.

In other words, Hagedorn's bill is motivated by a fabrication.

In his opening post, Schwartz writes:

Why “Patient Power”?

Because this is what government controls have taken away from us. It's what we need to continue to benefit from life-saving medical advances and care, and be satisfied with our experience with physicians, hospitals, and insurance companies.

State and federal policies have wedged insurance companies between between you and your physician, which erodes the doctor-patient relationship. Doctors have more incentive to please insurance companies than they do to please you, the patient. Government controls have also placed your employer between you and medical insurance companies, so insurers seek to please employers, and not you. ...

Patients and doctors alike owe Schwartz thanks for defending their liberties.


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Wednesday, April 23, 2008

Tanner: Families USA Health Study Flawed

Michael Tanner of the Cato Institute wrote an article for today's Rocky Mountain News that criticizes a recent study by Families USA. That study, Tanner summarizes, claims " that 360 Colorado residents die each year because they lack health insurance." Tanner notes that, "all things being equal, it is better to be insured than uninsured," but Families USA misstates the actual problem.

Tanner writes:

The Families USA study was not a traditional "double blind" experiment with a control group and a treatment group. Rather, it is a retrospective analysis, which compared the rates of people who died with insurance to those who died without insurance. Since the proportion of people without insurance seemed to be higher than those with insurance, they extrapolated likelihood to project excess deaths due to lack of insurance. But there are just too many outside variables to make such interpretations valid.

Even the Urban Institute's Jack Hadley, who co-authored a similar Institute of Medicine study cited by Families USA has said that "observational studies . . . cannot answer the question of whether health insurance directly affects health outcomes." And a detailed review of the academic literature by Helen Levy and David Meltzer of the University of Chicago Harris Graduate School of Public Policy Studies found little proof of a "causal relationship" between health insurance and better health.

Moreover, the reason that many people cannot afford insurance is that political controls have priced them out of the market. Yet Families USA is dedicated to promoting even more political control of medicine.

Tanner continues:

One thing we know for certain is that government-run health-care systems frequently deny critical procedures to patients who need them. For example, at any given time, 750,000 Britons are waiting for admission to National Health Service hospitals, and shortages force the NHS to cancel as many as 50,000 operations each year. And in Canada, more than 800,000 patients are currently on waiting lists for medical procedures. ... A study by Christopher J. Conover with the Center for Health Policy, Law and Management in the Terry Sanford Institute of Public Policy at Duke University found that as many as 22,000 Americans die each year from the costs associated with excess regulation.

Tanner notes that various mandated benefits in Colorado significantly increase the cost of health insurance.

It's quite a coincidence that the flawed Families USA study popped just before State Senator Bob Hagedorn starting pushing bill 217, which, originally, advocated forcing individuals to buy health insurance.

Hagedorn recently said that 217 is "the antithesis of what Massachusetts has done." Yet 217 still creates the possibility of an individual mandate, the core of the Massachusetts plan.

The Daily Sentinel reports, "Senate Bill 217 would have carriers submit plans to the state rather than have the state dictate the kinds of plans it would require carriers to offer, Hagedorn said."

What a joke. Bill 217 would in fact dictate what sort of plans carriers must submit. Moreover, once the plans are submitted, the legislature can continue to impose more controls on them.

It is interesting, though, that Hagedorn is now running away from Massachusetts, even though the Massachusetts plan is in fact the primary model for proposed plans in Colorado. Paul Hsieh has collected numerous stories describing the problems with the Massachusetts plan.

If reformers such as Hagedorn get their way, perhaps politicians in other states can pretend that their statist proposals are the "the antithesis of what Colorado has done."


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Sunday, April 13, 2008

Nuts and Bolts of 217 Anti-Health Bill

I've been writing about Senate Bill 217, which seeks to impose Massachusetts-style health controls in Colorado, so I thought it was a good time to pull a few quotes from the bill itself. Colorado's legislative bills can be downloaded at the state legislature's web page. Click on "All Versions," and download the confusingly labeled "Preamended" version. This version of the bill states, "This Unofficial Version Includes Committee Amendments Not Yet Adopted on Second Reading." Additional versions of the bill may appear as it moves through the legislature.

Section 1(e) states that the bill would create "a balanced partnership between private and public sectors." Translation: politicians are going to control the health-insurance market to an even greater extent than they do already.

Section 2(a)(I) creates a new commission, a "panel of expert advisors appointed by the govern," composed of actuaries and insurance insiders, which "shall prepare a request for proposals to be issued to health insurance companies." The companies will be asked to describe "Value Benefit Plans," or VBPs. Section 2(b) describes how the VBPs are supposed to work. They must include "benefits for primary and preventive care participation in wellness programs, and incentives for plan participants to engage in healthier behavior."

In other words, the VBPs will be high-cost, all-encompassing plans, not real insurance with high deductibles, like my wife and I currently purchase.

Here's a big one: subsection VIII specifies that VBPs must take all comers, regardless of health, and charge everybody of the same age and region the same rate. In other words, the plans would force some people to subsidize the health expenses of others.

And here's the penultimate requirement: XII states that the plans must "assume that all Colorado residents would be required to purchase health insurance."

But Section 3 pushes the real work onto the 2010 legislature. "[T]he governor may reject proposals..." "If the governor recommends legislation and the general assembly chooses to pursue legislation..."

To quote the infamous Jayne Cobb, I'm smelling a lot of "if" coming off of this plan.

But, "if" the 2010 legislature chooses to screw Coloradans with more political controls of medicine, then it will impose mandates and a "mechanism to enforce" mandates "through the state tax laws." The insurance plans would, of course, be subject to political approval. What the bill does not mention is that the plans would be subject to continual special-interest pressure to keep forcing up premiums.

Nor does the bill mention that the reason health insurance is too expensive for many people to afford is that politicians have for decades been undermining the insurance market with tax distortions, forced wealth transfers, and reams of mandates. SB 217 would impose more of the same.


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Saturday, April 12, 2008

Hillman Defends Liberty in Medicine

Mark Hillman, a former Republican state senator, has come out with an excellent critique of a new legislative proposal to impose Massachusetts-style health controls in Colorado. The measure, Senate Bill 217, would force everyone to buy politically-approved health insurance and expand health welfare. I lambasted the proposal yesterday.

In a Speakout for the Rocky Mountain News, Hillman explains:

In calling for health insurance companies to design "value benefit plans" to provide a low-cost insurance alternative, the bill says that the state "shall not specify benefits or other details" of those plans. Just two paragraphs later, however, the bill stipulates a dozen mandated benefits or other details that value benefit plans must include.

Essentially, insurers are prohibited from proposing anything that's remotely innovative. They are commanded not to "interfere with the existing small-group market" but are locked into the same rating criteria that has devastated that market for most of the last decade. ...

SB 217 does change the existing health-care market in one dramatic respect, by signaling to insurance companies that state government is ready to force its incorrigible citizens to buy health insurance, even if it's unaffordable.

The bill calls for "a requirement that all Coloradans obtain health insurance either individually or through their employer" and provides for enforcement "though the state tax laws."

Rather than allow insurers to offer new choices or allow consumers to obtain coverage across state lines where Colorado's draconian regulations aren't strangling the market, legislators prefer to penalize taxpayers for the audacity of refusing to buy insurance that costs too much.

Hillman's analysis is right on. I can only hope his former colleagues are paying attention. It's nice to see that a leader of Hillman's stature -- and a party man to boot -- takes seriously liberty in Colorado.


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Friday, April 11, 2008

CO to Adopt MA Health Disaster?

Welcome to Colorful... Massachusetts?

The Massachusetts health mandates have been a disaster. As Paul Hsieh, MD, summarizes:

The state of Massachusetts has already imposed a similar plan of mandatory health insurance on its residents for over a year now, and it is failing badly. Like Senator Hagedorn's proposal, the Massachusetts plan requires all residents to purchase health insurance, with state subsidies for lower income residents.

But rather than creating a utopia of high-quality affordable health care, the result has been the exact opposite -- skyrocketing costs, worsened access, and lower quality health care.

Hsieh has compiled additional news and comments about Massachusetts.

Ah, but this time, socialized medicine will work, even though it has failed in every other state and nation that has tried it.

Naturally, Colorado's big newspapers are falling all over themselves to praise our political masters. I already mentioned the Rocky Mountain News's support for Hagedorn's scheme. And The Denver Post editorializes:

The bill by Sen. Bob Hagedorn, D-Aurora, and Reps. Ann McGihon, D-Denver and Tom Massey, R-Poncha Springs... [is] aimed at providing the foundation for universal health care coverage in 2010. It's patterned after the path blazed by Massachusetts under Gov. Mitt Romney by mandating health insurance for citizens who now lack it, just as motorists are required to have automobile liability insurance.

Failure to purchase such insurance could subject residents to a penalty on their state income tax. The state would subsidize poor people.

Even though the Rocky pretends that Hagedorn is offering an alternative to the "208" Healthcare Commission, Hagedorn's plan is essentially the same plan my dad and I criticized a year ago. (In the same article, we pointed out why mandated health insurance is not comparable to mandated auto insurance.)

But do not think that this socialistic scheme is the work of Democrats alone; as the Post points out, Hagedorn's bill includes a Republican sponsor. And, as the following voting tally indicates, Republican Shawn Mitchell helped pass the bill out of committee:

Mitchell is the same Republican who claimed just last month:

A bad market vote doesn't make it a lie for many Republicans, including this one, to claim the mantle of market supporter. We may be imperfect. It would be a lie to claim otherwise. But for willingness to embrace, defend, and advocate the functioning of free markets, Republicans are the only team in town.

But if a Republican will vote for a bill to force every Coloradan to purchase politically-approved health insurance, then no political control is out of bounds. Such Republicans support free markets in roughly the same way that Mahmoud Ahmadinejad supports Israel or cancer supports human health.

[June 23, 2008 Update: I understand that Mitchell passed the bill out of committee on condition that it was amended to remove some of the more objectionable parts, and then he voted against the bill on the floor. Mitchell has not responded to my further inquiries on the matter.]

Here's the upshot to Hagedorn's scheme. It's payola time for politically-connected insurance companies. What better than for politicians to force every person in the state to buy your product? This means that young, healthy workers will get screwed twice: once with higher taxes and again through higher insurance premiums.

The entire reason that health insurance is too expensive for many to afford is that politicians have systematically undermined the insurance market through tax distortions and a host of direct controls. But, rather than repeal the controls that created the problems, these politicians are intent on imposing yet more controls.

The only good news about the proposal is that it would not take effect until 2010, giving young people who don't think it's their duty to fund everybody else's health care, and doctors who don't want to work under the thumb of idiot bureaucrats, a chance to look for work in other states.


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Wednesday, April 9, 2008

Bailey Squishes on Health Mandates

Recently I had the opportunity to meet the charming and well-read Ron Bailey of Reason magazine. We briefly discussed his 2004 article that advocates an individual mandate for health insurance. While Bailey does some great work for Reason, he is completely wrong on the matter of health mandates. While his article is dated by magazine standards, the issue is very much alive; for example, the somewhat market-friendly Rocky Mountain News just endorsed mandates this past weekend. So, in refuting Bailey's case for mandates, I mean to discredit mandates generally (though of course my comments here are limited in scope).

Bailey makes three broad mistakes.

First, Bailey commits what I'll call the "Wonk's Fallacy." That is, he concocts the best possible policy to implement a mandate, but he ignores or peers past the real-world political process, which is dominated by ideological politicians (usually with redistributionist sentiments), high-priced lobbyists, special-interest groups, and accidents common to sausage-grinding.

The Rocky does the same thing. It editorializes:

Two aspects of SB 217 give us pause. First, it includes an individual mandate, requiring every uninsured Coloradan who is not enrolled in a government program to purchase coverage. But we can live with this so long as value benefit plans are indeed viable and available at modest costs.

That's a bit like saying one can live with socialism, so long as it is a "viable" sort of socialism.

In the real world, policies are subject to political manipulation and unintended consequences. For example, Paul Hsieh, a Colorado doctor, has compiled various stories about the problems with the Massachusetts plan, which, as a combination of mandates and expanded welfare, is in some ways similar to the plan proposed for Colorado. Moreover, as Michael Tanner pointed out during his recent trip to Colorado, mandates are in fact continually subject to special-interest group pressure to expand the scope of what's mandated.

Bailey's second major error is more fundamental. His case for mandates explicitly rests on the forcible redistribution of wealth as an allegedly unalterable political "fact." And his case implicitly grants that it is the state's responsibility to ensure that people obtain health care. Once that case is granted, the free-market position is lost. Completely socialized medicine is inevitable, until and unless somebody effectively makes a principled case for liberty in medicine. (Thankfully, Hsieh, writing with Lin Zinser, has made just such a case, but it remains to be seen whether their efforts can overcome the widespread capitulation by the sunshine friends of liberty.)

In order to keep us off the fast road to socialized medicine, Bailey has placed us on the slow road to socialized medicine.

Bailey's third main problem is that, by pushing mandates, he de-emphasizes the true cause of existing problems in modern medicine: decades of political interventions. The reason that health care is a problem today is that it has already been largely socialized. For details, see the article by Zinser and Hsieh. To make insurance more available, what politicians can and should do is remove the political controls that have made health insurance too expensive for many people to afford.

Now that I've summarized the major issues, I'll go through some of Bailey's specific points.

Bailey begins his article by quoting a poll showing that "62 percent of the respondents favored a universal, government-run medical insurance program." I don't know what the polling would show today. But such polls are irrelevant for deciding which policies are, in fact, based on individual rights and which would therefore achieve good medicine in practice. It is the job of friends of the market to move public opinion, not sell out their principles to it. Moreover, very often people's opinions are "soft," in that people can be swayed by solid arguments. Unfortunately, Bailey's approach is more likely to move public opinion even further in the direction of socialized medicine.

Bailey writes, "[T]he increasingly successful campaigns to privatize Social Security and expand school vouchers suggest a way out: mandatory private health insurance."

I have no wish to reiterate my case against so-called "privatized" Social Security here. But I will point out that, when the government forces you to buy something and therefore tightly controls what it is you can buy, the product is in a fundamental sense not "private." Similarly, if the government forced parents to pay for schools of the government's choice, those schools would not be "private." When the government forces you to buy investments, insurance, education, or whatever, those items are not "private" in the sense of existing in a free market. They are merely socialized by another means. In common libertarian parlance, such government controls are counted as fascistic rather than as communistic, with socialism remaining the broader category.

Bailey then conducts a very interesting discussion of the problems in medicine and part of the history of political controls. Bailey also notes that one reason that health care has become more expensive is that doctors can do so much more to help people:

As William B. Schwartz, a professor of medicine at the University of Southern California, notes in his 1998 book Life Without Disease: The Pursuit of Medical Utopia, "In 1950 costs of health care were remarkably low, because, for a large percentage of patients, doctors really couldn't do much. People spent relatively little on health care (only 4.4 percent of gross domestic product) and got what they paid for -- very few useful diagnostic tests or effective treatments." In 1950 there were no polio, measles, or hepatitis vaccines; no open heart surgeries or pacemakers; no organ transplants; few cancer chemotherapy agents; no MRI or CAT scans; and no drugs for ulcers, high blood pressure, or arthritis.

Bailey also explains the fundamental problem with employer-paid insurance, which is the direct result of tax distortions: "'Everybody thinks they're spending somebody's else's money,' explains Robert Helms, a health care scholar at the American Enterprise Institute."

Bailey laments, "Unfortunately, there is no prominent political or intellectual figure on the national scene offering a comprehensive free-market alternative to socialized medicine."

Well, no, political figures tend not to advocate free-market alternatives when the self-proclaimed advocates of free markets themselves endorse socialism. Yet, in Colorado, a very small coalition has been successful at making real free-market reforms a noticeable part of the public debate. Had Bailey fought for liberty rather than for socialism in 2004, today free markets would have had a better chance. Instead, today we have to waste our time fighting our "allies."

Bailey offers his main case for mandates:

Why not just tell Americans they are responsible for buying their own health insurance from now on? If people couldn't pay for medical care, either through insurance or out of pocket, they wouldn't get it. "After people begin to notice the growing pile of bodies by emergency room entrances," Tom Miller wryly suggests, "they will quickly get the message and go get medical coverage."

But that's not going to happen, says Mark Pauly, a health care economist at the University of Pennsylvania's Wharton business school. "Americans don't want to see their neighbor dying bleeding in the street," he says. ...

Since it's unlikely that Americans will allow their improvident neighbors to expire without medical care in the streets, is there a politically palatable alternative that can preserve and expand private medicine in the United States? Yes: mandatory private health insurance.

There are two main problems with Bailey's analysis. First, the options are not binary: either pay or don't pay at the time of service. A third option is to require people who get care to pay for it over time. Second, Bailey here completely ignores the legitimate role of voluntary charity, which can come from health-care providers as well as from individual donors and organizations. Notably, voluntary charity is much more likely to discriminate between the moochers and the truly needy and thus to encourage independence rather than dependence.

Bailey discusses health-savings accounts, shifting away from the employer-pay system, and "privatizing" Medicaid and Medicare, but those reforms are not and should not be tied to mandates.

Bailey closes, "The proposal for mandatory health insurance offers a way to maintain our private system, expand consumer choice, lower costs, and allow medical progress to continue." Bailey's claim is exactly wrong: the proposal for mandatory health insurance undermines liberty in medicine and paves the road to socialized medicine.

If we value our health and our freedom, what we need is liberty in medicine -- and allies wiling to advocate liberty rather than statism masquerading as privatization.


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Tuesday, April 1, 2008

Foolish Price Controls

It's almost as if Colorado Democrats are trying to actively destroy what's left of the private health-insurance market so that they can later impose socialized medicine. Yet, even though a Democratic plan to impose price controls should be an April Fools' joke, these legislators seem to be deadly serious, with an emphasis on the term "deadly."

The AP reports: "Democrats plan to introduce a package of bills to require health insurance firms [in part] to get prior approval for rate hikes..."

This is the same legislature that has imposed various mandates on insurance benefits, thereby driving up the cost of insurance.

It's just hard for me to believe that Democrats are this ignorant of basic economics. What is driving the artificial inflation of health-insurance costs is precisely the large collection of political controls over insurance. If it weren't for those controls, health insurance would cost far less, and many more people could afford it. But the Democrats have, so far as I have heard, expressed zero interest in repealing those controls. So what will happen if politicians add price controls to the mix? The result will be a shortage: fewer people will be able to obtain health insurance.

These Democrats seem to forget that a market price is determined by both consumers and producers. And both parties have the right to participate in arrangements by voluntary choice, without political meddling.

Note to Democrats: if you'd get a clue about economics and figure out that politicians do a horrible job of running the economy, you would pick up voters like me in a heart-beat. As I've recently discussed, I've already started voting for Democrats just because I'm so disgusted with Republicans. But this crazy talk about price controls and the like reminds me that Democrats want to control my every economic decision just as Republicans want to control my every personal decision. Is there anyone in Colorado government who actually understands and cares about liberty? It would sure be nice to have the option of voting for a candidate who didn't try to to run other people's lives for them.


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Friday, March 21, 2008

National Health Care Systems

The Cato Institute has released Michael Tanner's March 18 Policy Analysis titled, "The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World." The summary states:

...[N]early all health care systems worldwide are wrestling with problems of rising costs and lack of access to care. There is no single international model for national health care, of course. Countries vary dramatically in the degree of central control, regulation, and cost sharing they impose, and in the role of private insurance. Still, overall trends from national health care systems around the world suggest the following:

* Health insurance does not mean universal access to health care. In practice, many countries promise universal coverage but ration care or have long waiting lists for treatment.

* Rising health care costs are not a uniquely American phenomenon. Although other countries spend considerably less than the United States on health care, both as a percentage of GDP and per capita, costs are rising almost everywhere, leading to budget deficits, tax increases, and benefit reductions.

* In countries weighted heavily toward government control, people are most likely to face waiting lists, rationing, restrictions on physician choice, and other obstacles to care.

* Countries with more effective national health care systems are successful to the degree that they incorporate market mechanisms such as competition, cost sharing, market prices, and consumer choice, and eschew centralized government control. ...

After Tanner discusses meaningful and bogus ways to compare health care across nations, he takes a detailed look at specific countries, including France, Italy, Spain, Japan, Norway, Portugal, Greece, Netherlands, Great Britain, Switzerland, Germany, and Canada. While I have not yet read the entire report, it promises to provide crucial information for Americans trying to grapple with existing problems with U.S. health care.


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Saturday, March 15, 2008

Team Hsieh

Congratulations to Coloradans Paul and Diana Hsieh, who each had letters published recently in big papers.

Paul's letter to The Christian Science Monitor states:

... National healthcare programs violate the rights of consumers and healthcare providers to contract freely for medical services according to their best judgment. Such programs inevitably lead to rising costs and rationing, as demonstrated repeatedly in Sweden, Canada, and the United Kingdom.

In contrast, the free market consistently lowers costs and increases availability. Those sectors of medicine that are least regulated by the government (such as LASIK and cosmetic surgery) have shown the typical pattern over time of falling prices and rising quality that we take for granted in the rest of the US economy. Because the free market respects individual rights, it is the only practical and moral solution for the problem of rising healthcare costs.

Diana's reply to a column by Dick Armey states:

Thanks to Dick Armey... for defending intellectual property in broadcast radio as a matter of justice to the creators.

Today's producers of music artists, management and record companies offer consumers around the world a vast array of music for all tastes. Those producers deserve to be rewarded handsomely for their efforts, not cheated of royalties by legal loopholes for broadcast radio or online file sharing.

While the Hsiehs cover quite different topics in these letters, both letters uphold the principle of individual rights.

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Friday, March 14, 2008

Tanner Defends Liberty in Medicine

Michael Tanner of the Cato Institute spoke at the Independence Institute March 6 about health policy. (He is shown with Lin Zinser of Freedom and Individual Rights in Medicine and Brian Schwartz.)

The bulk of Tanner's speech (around 37 minutes) is available here in mp3 format.

Tanner began by noting that the U.S. has the best health care in the world, despite its problems. While life span is not an appropriate basis for comparison because many other important factors impact it, the U.S. performs well in terms of outcomes for diseases.

While some complain that the U.S. spends "too much" for health care, Tanner noted that reducing costs is not an end in itself. "It's very cheap not to provide health care," he said. The problem is that American health care often is not subject to market pricing.

Another problem is that "too many people... are uninsured." However, Tanner added, often-cited measures of the problem are misleading. Because insurance is tied to employment, people often lose their insurance for a short time as they change jobs.

Tanner then reviewed harmful policies and proposals in Britain, Canada, and the U.S., such as the attempt by some to force employers to provide insurance for all employees. That proposal "flunks Econ 101," Tanner said, because it would reduce wages elsewhere and/or result in more unemployment.

What about forcing individuals to purchase insurance? Tanner noted the real costs of forcing emergency rooms to treat people without compensation. (Tanner did not suggest any change to that policy, though I have argued against it.) However, Tanner noted, such costs account for only around 2.5 to 4 percent of health-care spending, rendering them "somewhat manageable."

The problems of insurance mandates, on the other hand, would be severe. Such insurance would be subject to political rules; people would no longer be free to purchase the insurance they wanted. Insurance mandates are difficult to enforce, and it's impossible to force everyone to buy insurance. Mandated insurance is subject to continual pressure by interest groups to expand coverage, which expands costs and leads to limits on care.

Tanner said that the most important reforms must take place at the federal level, particularly regarding the tax code that entrenches expensive, employer-paid insurance. At the state level, the cost of insurance can be reduced by eliminating various mandates.

The key question, Tanner said, is this: "Do you decide, or does someone else decide for you?"


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Saturday, March 8, 2008

Update on Health Studies

In a February 10 article for The Denver Post, Katy Human wrote, "Children with health insurance, studies have shown, are less likely than uninsured kids to end up in emergency rooms, more likely to get key vaccinations and less likely to be absent from school."

My immediate thought upon reading this claim is that it doesn't indicate the causal relationship. So I asked Human about this, and she replied that the studies "control for factors such as income and education of parents." I wanted to check this and see what else the studies have to say, so I asked Human to provide me with the citations. On February 21 Human sent me a list of studies. Linda Gorman looked into the studies, and then Dave Kopel also took an interest in them. He checked into the studies originally mentioned by Human, looked at other studies as well, and wrote up his results for the March 8 Rocky Mountain News:

None of five studies Human cited after the fact support her article's statement about what "studies have shown" regarding the effects of insurance on emergency room use, vaccinations and school absences. Indeed four of the five studies she cited do not even address those topics (Cousineau, Medical Care, 2008; Skinner, BMC Health Services Research, 2007; Ward, CA: A Cancer Journal for Clinicians, 2008; Morbidity & Mortality Weekly Report, Sept. 7, 2007).

One study cited by Human was relevant, and it directly contradicted her article's claim. The study looked at the effect of providing SCHIP coverage (subsidized insurance for children whose families have too much income to qualify for Medicaid). Emergency room usage "did not change," the study found. (Szilagyi, Pediatrics, 2004).

... [Later] Human supplied two more citations to substantiate her article's claim about emergency rooms. One of the studies was irrelevant, a 2002 Centers for Disease Control and Prevention report which reported no data about frequency of emergency room use for the insured and uninsured.

Human supplied another study which did support her claim. William Johnson and Mary Rimsza investigated Yuma County, Ariz., and found that uninsured children there use emergency rooms more often. The Johnson and Rimsza article, published in Pediatrics in 2004, forthrightly acknowledged that four other studies have found that taxpayer-funded insurance for children actually increases emergency room usage, and a fifth study finds that there is no effect. Johnson and Rimsza suggested that results were different in Arizona because the state's medical welfare program links recipients to pediatricians, and having a pediatrician drastically reduces ER visits for both the insured and uninsured.

Of course, a broad correlation between lack of insurance and emergency-room visits is still possible for at least a couple of reasons. First, some people without insurance are more likely to visit the emergency room -- which by law must provide care for no compensation -- for care that is less-expensively offered at the regular doctor's office or at lower-cost clinics. Second -- and this point also applies to vaccinations and school attendance -- parents who purchase health insurance for their children may be more likely to be employed, make more money, have a higher level of education, live in safer neighborhoods and homes, encourage healtheir lifestyles for their children, and insist on regular school attendance. This is a statement only of anticipated averages; many model parents are less wealthy, and many parents pay for their children's health care out of pocket rather than through insurance.

However, the thrust of Human's article was not to reveal correlations regarding health insurance, but to advocate more tax funding for health programs. Everyone can agree that it would be good for more parents to buy health insurance for their children (though insurance as such should move in the direction of high-deductible policies with routine expenses paid out of pocket). But expanded tax subsidies create all sorts of problems with incentives, such as by encouraging some parents to drop private insurance in favor of tax-funded welfare.

It's quite a leap from "insurance for children is good" to "politicians should expand their control of medicine." Indeed, as Lin Zinser and Paul Hsieh argue, the proper way to make health-insurance more affordable is to repeal the existing political controls that have made it so expensive.

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Wednesday, February 20, 2008

The Sin is the Tax

So-called "sin taxes" are appropriately named, because it is morally wrong to forcibly transfer wealth even if the taxes discriminate against politically-incorrect behavior. Here's the latest from the Rocky Mountain News:

...Denver Democrat [Rep. Jerry Frangas] very quietly drafted a bill introduced this week that would raise alcohol taxes 2 percent to cover all of Colorado's 180,000 uninsured children.

The tax of 11 cents, for example, on a $5.49 six-pack of Budweiser, would raise about $57 million for the state children's health care program. When paired with federal matching funds, Frangas said it would provide up to $150 million.

In other words, through the magic of federal "matching" welfare payments, Frangas can capture a portion of the national income tax by imposing a state sales tax. That way, Frangas can also force people in every other state to fund the health care of select Coloradans. Ah, the glories of federalism in the modern age.

But socialized medicine is fine, "for the children," right? On the contrary, generally parents have a moral obligation to fund their own children's health-care expenses, and they should plan their families and expenses accordingly. Of course, parents whose children suffer unexpected, catastrophic illnesses already benefit from a wide array of voluntary charity programs (often in addition to insurance payments), as is appropriate. All of us want to see innocent children taken care of, which is exactly why even today's mixed economy often provides for their needs and why a truly free market would do so even better. However, unlike force-funded welfare, voluntary charity is more likely to discourage dependency and irresponsibility on the part of the parents. Offhand, I don't have a good estimate for how much socialized medicine "for the children" displaces private insurance (and discourages parental responsibility), but the figure is large. And, obviously, socialized medicine "for the children" is merely a stepping stone to socialized medicine for everyone. As one advocate of politically-funded medicine reportedly said, "[S]ome of you may think of me as an incrementalist. I prefer to think of myself as a sneaky sequentialist."

If politicians really wanted to help, they would repeal the interventions that have artificially increased the costs of health care and insurance and reduced access to medical services especially among the poor (as Lin Zinser and Paul Hsieh explain.)

What about a tax on alcohol? I oppose sales taxes in general. But, so long as there is a sales tax, it is wrong to discriminate against some people (in this case consumers of alcoholic beverages) and select legal activities. No doubt advocates of the tax on alcohol will argue that the tax would fund a "worthy" welfare program while discouraging a vice. But it is the proper role of government to protect individual rights, not to socially engineer behavior desired by politicians. While obviously alcohol can be abused -- as can many other properly legal products -- there is nothing inherently rights-violating or irresponsible about drinking alcohol. And purchasers of alcohol ought not be uniquely forced to subsidize other people's children.

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Thursday, February 14, 2008

Schwartz Beats Polis's Health Argument

In a February 13 Speakout column in the Rocky Mountain News, Jared Polis, the gazillionaire running for Congress (in my district), argued:

[L]et us not delude ourselves into thinking that we have anything close to a "free market" in health care. A free market would allow the uninsured to die on the hospital doorstep rather than provide them treatment they cannot pay for. Having made a moral decision not to allow people in our great country to die in this fashion, let us discuss how to more efficiently provide for sensible universal health care.

Polis is correct that we do not have a free market in health care, but his description of a free market is completely ridiculous. My dad and I have already addressed the argument that Polis makes, and I wrote a lengthier critique along the same lines.

Brian Schwartz challenged Polis directly. In a comment to Polis's article, Schwartz argued:

Jared Polis writes: "A free market would allow the uninsured to die on the hospital doorstep rather than provide them treatment they cannot pay for."

This is a pathetic argument. Is Mr. Polis so heartless that he wouldn't help such a person if the law didn't compel him to do so? Or if he would, does he think that doctors are so heartless? Give me a break, Jared.

In the wake of the French Revolution, French economist Frederic Bastiat wrote that "every time we object to a thing being done by government, the socialists conclude that we object to its being done at all...It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain."

Apparently nothing has changed.

And on his blog, Schwartz adds:

[I]t is not hard to imagine that our community would provide such care even if a politician’s law didn’t compel us to do so. It’s not hard to imagine, because people do it. Consider the Shriners Hospitals for Children. According to Charity Navigator, their total revenue exceeed $640 million in 2005. In Colorado, private philanthropy accounted for almost $200 million in medical care for the uninsured. ...

The above examples do not address emergency situations, but it’s difficult to imagine that people in our society would voluntarily donate money to provide medical care for the uninsured in non-emergency situations, but not in emergency situations. Jared Polis, can you shed some light on this?

According to Jared Polis, a law is required compel doctors to treat the uninsured in emergency situations. Is Polis saying that doctors are so heartless and cruel that they would not treat someone for free? Is he saying that the electorate as too callous to fund charities to pay such that doctors could treat the uninsured in emergency situations?

Apparently, the answer is “yes.” Polis writes that we have “made a moral decision not to allow people in our great country to die in this fashion.” Not quite. Moral decisions are a matter of choice, not a threat. EMTALA threatens doctors with penalties up to $50,000 for not complying.

So Jared Polis thinks that the citizens of Colorado and Colorado’s physicians must be forced to do the right thing, since they lack the moral fiber to do it themselves. And yet, Jared Polis seeks public office, to represent us, the very people he doesn’t trust to do the right thing. So if the (apparently immoral) citizens of Colorado’s 2nd District elect Mr. Polis, how can we trust him to do the right thing?

Polis is clearly out of his depth. So he should fit right in should he move to Washington, D.C.


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Wednesday, February 13, 2008

A Very Costly Health-Care Solution

The following article originally was published by the Rocky Mountain News:

SPEAKOUT: A very costly health-care solution

By Linda Gorman and Ari Armstrong
Wednesday, January 30, 2008

As the health-care debate unfolds, we hear a lot about cost-shifting, the idea that some people are charged more for health care to make up for the fact that others do not pay. Various legislators, journalists and activists tell us that the state should adopt the Blue Ribbon Commission on Health Care Reform's recommendation to impose an individual mandate and force everyone to buy health insurance in order to end the unfairness of cost-shifting.

In fact, the commission's recommendations likely will shift more costs onto those who already have insurance. Along with the individual mandate, the commission recommends large subsidies for those whom the commission considers too poor to purchase the insurance it says they should have.

Under the commission's plan, people with health insurance would be taxed to subsidize health insurance for single people making as much as $40,000 a year, and families of four making as much as $82,600 a year. Many of these people pay for their own health care now, or have the assets to do so in an emergency.

The commission would also increase cost-shifting by forcing many more people into Medicaid.

Because Medicaid pays so little to providers, Medicaid as a whole generates far more uncompensated care and cost- shifting than the uninsured.

Those who advocate an individual mandate throw up all kinds of numbers to support the wild claims that the proposal would save everyone money. A Jan. 8 article from The Denver Post claims that "Coloradans who have insurance spend an extra $950 each year to cover the costs of those who show up at the hospital without insurance."

The article attributes the number to state Rep. Anne McGihon, who said that the figure comes from Partnership for a Healthy Colorado. Partnership for a Healthy Colorado, in turn, says it got the figure from Families USA, which published a paper in 2005. That paper's estimates were unable to accurately predict the percentage of uninsured residents in Colorado. The paper also grossly overestimated at least some costs of uncompensated care.

The Lewin Group, the modeling firm hired by the commission to collect information about Colorado, reported total Colorado expenses for the uninsured of about $1.4 billion. Of that amount, around 45 percent, or $627 million, was paid out-of-pocket by the uninsured themselves.

Private philanthropy covered $197 million. Another $341 million was paid by the Veterans Administration, workers compensation and various public programs.

The leftover uncompensated costs, the ones that are not paid by any identifiable source, total $239 million. Divide $239 million by Colorado's 2.8 million insured residents, and the result is a maximum likely cost-shift of about $85 per insured individual per year.

To "fix" the problem of $239 million in cost-shifting, the commission proposes to increase health spending in Colorado by more than $3 billion, funded with an income tax increase of $800 million to $1.8 billion, new taxes on various politically incorrect types of food and drink, and an increase in the cigarette tax.

The sensible way to solve cost-shifting is to reduce health-care costs so that people fund their own health care, not to force people to buy insurance created by special-interest groups or to expand Medicaid. Professor Christopher Conover of Duke University estimates that 10 percent of annual health costs are caused by inefficient regulation. Results from experiments in consumer-directed health-care plans suggest that freeing consumers, providers and insurers can reduce costs by up to 30 percent.

The hostility of the commission to any plans like this was summed up in two votes that took place one after another on the same day. First the commission voted to recommend that the state legislature study single-payer health reform plans. Then it voted not to recommend that the legislature study consumer-directed reforms. While single-payer plans have failed around the world, consumer-directed reforms are succeeding wherever they're given the chance.

Linda Gorman, a senior fellow with the Independence Institute, serves on the Blue Ribbon Commission for Health Care Reform. Ari Armstrong writes for

March 8, 2008, Update: After reading Dave Kopel's article about citations, it occurred to me that I had not provided the citations for the article above, so here they are, as provided by Linda. The first eight references refer to the "experiments in consumer-directed health-care plans."

1. Willard G. Manning et al. June 1987. “Health Insurance and the Demand for medical Care: Evidence from a Randomized Experiment.” American Economic Review, 77,3, p. 251-275.
* The abstract says “A catastrophic insurance plan reduces expenditures 31 percent relative to zero out-of-pocket price.”
* In the body of the paper they predict expenditures and find that “Mean predicted expenditure in the free care plan is 46 percent higher than in the 95 percent plan…” (p. 260)
2. Agenda, FY 05-06 Joint Budget Committee Hearing, Department of Health Care Policy and Financing, State of Colorado, January 4 and 5 2005. In response to question 32 the Department wrote: Average monthly allocation per client, $3,925. Average monthly expenditure per clint:$3,131 per client. This works out to a monthly saving of 20%.
3. “Full placement feat: HSA helps Wendy’s grill health costs,” Employee Benefit News, June 1, 2006. Gale Infotrak version, record A146476601. Reports that the return on investment for HSA program is 221% due to the fact that health claims costs fell by 14% from 2004 to 2005 and are on track to be 4% less than last year.
4. Silicon Designs experiment in 2005/2006. Lower out-of-pocket costs from employees (4.9 %) Lower company cost, from about 17% of salaries paid to about 15 percent of salaries paid. John Cole. “Report on One Year of Experience with HSAs/HDHPs,” Accessed March 8, 2008.
5. Humana, Inc. June 2005. “Health Care Consumers: Passive or Active? A Three-year Report on Humana’s Consumer Solution.” accessed March 8, 2008. A report on a three year internal experiment with a consumer directed plan for Humana employees. Cost increases were lower than trend by roughly 15 percent over the two years.
6. Wharam et al. 2007. “Emergency Department Use and Subsequent Hospitalizations Among Members of a High-Deductible Health Plan,” JAMA, 297, 1093-1102. This article looks at ED visits and subsequent rehospitalizations among members of a health plan that switched a fraction of insureds from a traditional HMO to a high deductible plan in 2001-2005. It concludes that ED visits decreased in those switched to high deductible plan with reductions primarily in repeat visits for conditions that were not high severity and in the rate of hospitalizations. It does not conclude anything about spending clinical outcomes.
7. J. Hsu et al. 2006. “Cost-sharing for emergency care and unfavorable clinical events: findings from the safety and financial ramifications of ED copayments study,” Health Services Research, 41, 5, 1801-20. Another study of the effects of copayments on ED use that does not directly address expenditures but does find that ED visits decrease with no apparent health effects when payments range from $20 to $100.
8. John Mackey. October 2004. Whole Foods Market’s Consumer-Driven Health Plan. A speech delivered at the State Policy Network Annual Meeting. Transcript available at

Christopher J. Conover. October 4, 2004. Health Care Regulation a $169 Billion Hidden Tax, Policy Analysis No. 527, Cato Institute, Washington DC.

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