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May 20, 2014

Rebel MD

There are several factors that contribute to the absurd costs of healthcare in America today — and all those factors are, without exception, a result of government intervention, in one form or another. But one factor alone stands out above all others. That one factor is the third-party payment system.

It doesn’t matter if the third party is an insurance company, or if that third part is a government bureau: by placing a middle-man between patient and doctor, you create this nightmarish scenario of $20,000.00 emergency room visits for an elbow injury.

As Dr. Jeffery Singer (MD) recently explained:

Last week, researchers at Harvard and Dartmouth released a report estimating that health care costs will continue to grow faster than the economy for at least the next two decades. This is a tremendous burden on average Americans, who already spend nearly a fifth of their average annual pre-tax income on health care.

Why can’t Obamacare stop this trend? Because the law doubles down on one of the biggest contributing factors to the high price of medical care: Health insurance.

Health insurance is a complicated system that serves patients’ needs last. It introduces a third party into the doctor-patient relationship. This can be a private company—such as modern insurance companies—or the government—such as in Medicare and Medicaid.

“Obamacare’s architects expanded a health insurance system that artificially increases costs and decreases choice.”

Third party entities don’t spend money like you and I do. We care about two things when we buy a product: quality and affordability. Insurance providers aren’t overly concerned about either. Affordability isn’t their biggest concern because they’re spending someone else’s money—their members’ premiums. They’re also not concerned as much about quality because they’re spending that money on someone other than themselves—the patients receiving treatment.

This is a basic reflection of human nature.

The failure to understand this has been a fatal chink in all Republican arguments against ObamaCare:

You can’t denounce one form of third-party payment only to favor another, since any form will invariably drive up costs.

Remember: what we call “health insurance” in America today is not actual insurance. It’s pre-paid healthcare. Insurance is something you buy in the unlikely event of an emergency. Actual insurance, free from government regulation, is legitimate.

All of which I mention because if there’s any good thing that’s come out of the whole ObamaCare dog-and-pony show, it’s that it’s brought many of these issues to the forefront — and people are beginning to realize exactly what’s at issue here.

It’s also spawned (at last) a number of doctors to become more forceful and philosophical in the defense of their own lives and labor, which, incidentally, is the fundamental and inarguable principle at stake in all questions of socialized medicine:

Do doctors and nurses possess the right to their own life and labor, or do they not?

Rebel MD is the most recent website I’ve come across the defends, forcefully though somewhat inconsistently, the principle of individual rights in medicine.

January 28, 2013

ObamaCare: The Resistance Endures

Michael Cannon is Cato Institute’s director of health policy studies and an indefatigable crusader against socialized medicine. Recently, he wrote an excellent article concerning the continuing resistance against ObamaCare, the need to maintain that resistance, and the relative success of that resistance so far:

Former Romney adviser Avik Roy now advises conservatives “to accept the defeat of the movement to repeal Obamacare.” Conservatives should instead shift their energies to “the most desired conservative outcome of all: a fiscally sustainable, fully reformed set of health-care entitlements.”

National Review, that conservative icon that “stands athwart history, yelling Stop,” seems a strange venue for encouraging conservatives to accept defeat. Roy also has a curious understanding of conservatism’s goals, which as I recall have more to do with protecting freedom than with administering the entitlement state. But when Roy likened ongoing Obamacare resistance to Teruo Nakamura, “the last known holdout from the Imperial Japanese Army, [who] finally surrendered” on a Pacific island some 30 years after his team lost World War II, I nearly spat out my sushi.

Perhaps I can bring my friend around to the view held by most Obamacare opponents:This thing is still vulnerable. And even if we fail to stop it, trying to stop it will do more to protect liberty and improve social welfare than a strategy of accepting, legitimizing, and “redeeming” it.

After three years, Obamacare remains unpopular. Both the raw numbers and the intensity favor its opponents. Last month, for the first time ever, Gallup found that a majority of Americans oppose a government guarantee of health insurance for all. The ongoing resistance to Obamacare is a grassroots phenomenon. It has probably intensified since the election, as many disappointed voters (and non-voters) have sought an outlet for their frustrations.

Resistance will grow later this year as a result of “sticker shock” at Obamacare’s “startling rate increases” of 30 to 40 percent in the individual market and 100 percent (!) for young adults.

Officials in nearly half the states have joined the resistance thus far, by declining to establish the health-insurance “exchanges” essential to the law and/or to implement its costly Medicaid expansion. If states hold the line, then insurers, hospitals, and such — who were counting on those subsidies to offset Obamacare’s taxes and Medicare cuts — will join the chorus demanding that Congress reopen the issue.

The Obama administration probably won’t be able to get exchanges up and running by October in those two dozen states. A Xerox official who makes money implementing those exchanges for states said of the logistical task HHS faces, “These are systems that typically take two or three years to build. The last time I looked at the calendar, that’s not what we’re working with.”

Obamacare still faces a barrage of lawsuits. Those challenging the contraceptives mandate and the Independent Payment Advisory Board won’t kill the law. But they might improve it. Either way, they will keep its negatives high. The Pacific Legal Foundation’s challenge to the individual mandate could take down the entire statute. Kaiser Health News says Oklahoma attorney general Scott Pruitt’s lawsuit is “by far the broadest and potentially most damaging of the legal challenges” related to Obamacare, and “even some health law supporters concede [it] seems correct as a literal reading of the most relevant provisions.” If Oklahoma prevails, “the whole structure [of] the health care reform law starts to fall apart.” Look how panicked the law’s supporters are. Tell me again why now is the time to “accept defeat”?

Continuing to insist on repeal can also help to avoid the looming debt crisis. Congress desperately needs to cut spending. The easiest stuff to cut is (a) unpopular spending that (b) hasn’t started yet and therefore isn’t protected by the kind of organized constituencies that protect existing spending. Obamacare fits both criteria. Since the administration won’t be able to implement it on time anyway, Congress should enact a two-year delay of its new entitlement spending. That would be a huge victory and reduce federal deficits by $160 billion. Opponents are more likely to get that delay if they keep demanding full repeal.

Following Roy’s advice would prevent opponents from capitalizing on any of these opportunities. Obamacare’s entitlement spending will begin flowing in 2014, and we will never stop it.

Fortunately, as I travel the country speaking about this law, I find that Obamacare opponents are solidly in the Frederick Douglass camp: “Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or both. The limits of tyrants are prescribed by the endurance of those whom they oppress.”

(Link)

January 10, 2013

James Buchanan: RIP

James M. Buchanan, economist and Nobel Prize winner, died Wednesday, January 9th, 2013. He was 93. He was also among the most important economists of the 20th century:

“A founder and profound contributor to the discipline of public choice, the branch of economics that examines how governments actually make policies. Prior to his work, many economists focused on market failures, assuming that government actions would bring efficiency. Buchanan argued that self-interested individuals decided both private and public matters. Government failure was a likely outcome in response to market problems. After Buchanan, economists could not blithely assume that government had a solution for every problem on the public agenda.”

(Source)

James Buchanan, a brilliant polemicist, was the perfect antidote to the overwhelming trend of Keynesian economics that pervade world culture, but which are destined to fail. The following is a brief but irrefutable critique of central planning — a critique Buchanan wrote in 1982 and which Don Boudreaux described as “Word for word, the most insightful thing I’ve ever read”:

James M. Buchanan, “Order Defined in the Process of its Emergence”*

*A note stimulated by reading Norman Barry, “The Tradition of Spontaneous Order,” Literature of Liberty, V (Summer 1982), 7-58.

Norman Barry states, at one point in his essay, that the patterns of spontaneous order “appear to be a product of some omniscient designing mind” (p. 8). Almost everyone who has tried to explain the central principle of elementary economics has, at one time or another, made some similar statement. In making such statements, however, even the proponents-advocates of spontaneous order may have, inadvertently, “given the game away,” and, at the same time, made their didactic task more difficult.

I want to argue that the “order” of the market emerges only from the process of voluntary exchange among the participating individuals. The “order” is, itself, defined as the outcome of the process that generates it. The “it,” the allocation-distribution result, does not, and cannot, exist independently of the trading process. Absent this process, there is and can be no “order.”

What, then, does Barry mean (and others who make similar statements), when the order generated by market interaction is made comparable to that order which might emerge from an omniscient, designing single mind? If pushed on this question, economists would say that if the designer could somehow know the utility functions of all participants, along with the constraints, such a mind could, by fiat, duplicate precisely the results that would emerge from the process of market adjustment. By implication, individuals are presumed to carry around with them fully determined utility functions, and, in the market, they act always to maximize utilities subject to the constraints they confront. As I have noted elsewhere, however, in this presumed setting, there is no genuine choice behavior on the part of anyone. In this model of market process, the relative efficiency of institutional arrangements allowing for spontaneous adjustment stems solely from the informational aspects.

This emphasis is misleading. Individuals do not act so as to maximize utilities described in independently existing functions. They confront genuine choices, and the sequence of decisions taken may be conceptualized, ex post (after the choices), in terms of “as if” functions that are maximized. But these “as if” functions are, themselves, generated in the choosing process, not separately from such process. If viewed in this perspective, there is no means by which even the most idealized omniscient designer could duplicate the results of voluntary interchange. The potential participants do not know until they enter the process what their own choices will be. From this it follows that it is logically impossible for an omniscient designer to know, unless, of course, we are to preclude individual freedom of will.

The point I seek to make in this note is at the same time simple and subtle. It reduces to the distinction between end-state and process criteria, between consequentialist and nonconsequentialist, teleological and deontological principles. Although they may not agree with my argument, philosophers should recognize and understand the distinction more readily than economists. In economics, even among many of those who remain strong advocates of market and market-like organization, the “efficiency” that such market arrangements produce is independently conceptualized. Market arrangements then become “means,” which may or may not be relatively best. Until and unless this teleological element is fully exorcised from basic economic theory, economists are likely to remain confused and their discourse confusing.

James M. Buchanan — 1919 – 2013 — RIP.

June 9, 2011

The Best Day Yet For Individual Freedom — By Ilya Shapiro

Ilya Shapiro is a senior fellow at the Cato Institute. He is also the editor-in-chief of the Cato Supreme Court Review. Before joining Cato, he was a special assistant and advisor to the Multi-National Force in Iraq. The following article, which is brief and well-done, appeared June 8th, 2011, on the CATO website:

In the most important appeal of the Obamacare constitutional saga, today was the best day yet for individual freedom. The government’s lawyer, Neal Katyal, spent most of the hearing on the ropes, with the judicial panel extremely cautious not to extend federal power beyond its present outer limits of regulating economic activity that has a substantial aggregate effect on interstate commerce.

As the lawyer representing 26 states against the federal government said, “The whole reason we do this is to protect liberty.” With those words, former solicitor general Paul Clement reached the essence of the Obamacare lawsuits. With apologies to Joe Biden, this is a big deal not because we’re dealing with a huge reorganization of the health care industry, but because our most fundamental first principle is at stake: we limit government power so people can live their lives the way they want.

This legal process is not an academic exercise to map the precise contours of the Commerce Clause or Necessary and Proper Clause — or even to vindicate our commitment to federalism or judicial review. No, all of these worthy endeavors are just means to achieve the goal of maximizing human freedom and flourishing. Indeed, that is the very reason the government exists in the first place.

And the 11th Circuit judges saw that. Countless times, Judges Dubina and Marcus demanded that the government articulate constitutional limiting principles to the power it asserted. And countless times they pointed out that never in history has Congress tried to compel people to engage in commerce as a means of regulating commerce. Even Judge Hull, reputed to be the most liberal member of the panel, conducted a withering cross-examination to establish that the individual mandate didn’t help that many people get affordable care, that the majority of people currently without coverage would be exempt from the requirement (presumably due to their income level).

In short, while we should never read too much into an oral argument, I’m more optimistic about this case now than any other.