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Thursday, July 16, 2009

Bernie Sanders and government-funded healthcare vs. the unhampered market (II)

"Snoop", a reader of my previous post, "Bernie Sanders and government-funded healthcare vs. the unhampered market", writes,
Could you elaborate on what you call "the unhampered market"? Please explain how that would improve the delivery of medical care while enabling patients to manage the potentially catastrophic expenses.
Unhampered market: no government intervention in the market except to prevent force (or the threat thereof) or fraud.

An example: one of the factors that results in the large number of uninsured in the USA is that in the USA health insurance is tied to employment. Lose your job and you lose your health insurance. But this employment tie is a result of the government imposing wage controls during WWII, which led employers to use employer-provided health insurance as a way of attracting employees. So one government intervention in the market (wage controls during WWII) led employers to offer health insurance in lieu of cash compensation, which led to the tying of health insurance to employment, which led to a higher number of uninsured than would be the case otherwise (an undesirable, unintended consequence). We now have Bernie and others proposing to correct this undesirable, unintended consequence of the earlier government intervention (wage controls during WWII) with additional government interventions (government option, making insurance mandatory, single-payer, etc.). If you haven't already read the article by Gene Callahan to which I linked, I urge you to do so.

Most families would continue to require insurance to cover catastrophic events, but in a market unhampered by government intervention such insurance would be much less expensive than it is under the present "system". (People who expect government-funded healthcare to be "affordable" must have been asleep when government set out to make housing "affordable".) Some families would undoubtedly rely on the voluntary charity of their fellow citizens to help pay for their healthcare and/or their health insurance, but many, many fewer than under the present "system" or under the forced charity (an oxymoron, by the way) that would be the basis of a government-funded system.

Exactly how would an unhampered market in healthcare work? I don't know, but neither does anyone else! How could anyone draw a diagram of 300-plus million Americans continually modifying their behavior as the result of price signals? You can draw a diagram of the government's plan, but that's only because--despite the fact that it's pretty darned complex--it's orders of magnitude simpler than what would happen under the unhampered market. Besides, the government's plan doesn't allow for dynamic adjustments as supply, demand, and prices fluctuate. In fact, adjusting the government's plan would require an Act of Congress! :-) :-) In contrast, adjustments in the unhampered market would take place automatically and continuously, as citizens voluntarily modified their behavior in response to price signals.

It's odd that most people who oppose the unhampered market and who are advocates for government-funded healthcare probably do not believe in Intelligent Design; instead, most likely most of them believe in the evolution of life under natural law, similar to the evolution of the unhampered market under economic law and the price system. If an Intelligent Designer is not needed to explain the variety of life forms, why is government needed to design a healthcare system? (I just could not bring myself to put "government" and "Intelligent Designer" in the same sentence!)

If you think that the unhampered market can't do a better job than either our present "system" or some form of government-funded healthcare, you are saying that 300-plus American brains, coordinated by the laws of economics and the price system, are somehow less capable than the brains of the "geniuses" who have "designed" our present "system" or those of a few politicians and government bureaucrats who would design a government-funded system.

Advocates of government-funded healthcare--be it single-payer or some other variety--have been basing much if not most of their case on the fact that the present "system" is so flawed. I agree that the present "system" is flawed, but that doesn't mean that government-funded healthcare is the only or best alternative. Citizens and voters alike need to educate themselves regarding the unhampered market as an alternative to the present "system" and as an alternative to government-funded healthcare. Go to websites like cafehayek.com, fee.org, fff.org, lewrockwell.com, and mises.org and search for "healthcare". Learn about the unhampered market alternative to both our present "system" and government-funded healthcare. And be sure to look for articles that analyze the many problems with government-funded healthcare systems in other countries (Canada, the UK, etc.).

It's an imperfect world, so the unhampered market will not be perfect, but government-funded healthcare is no panacea, no silver bullet.

"Fool II", another reader, writes,
I assume if we take your proposal( which is probably one of a thousand) and implement it, then we will have to wait some 50 years to see the results. That seems unnecessary to me.
Canada, England, Germany, France, Japan and many more industrialised nations have already a system in place that has worked well. Why don't we build on their experience?
My reply:

You write, "Canada, England, Germany, France, Japan and many more industrialised nations have already a system in place that has worked well."

The correctness of this depends on what you mean by "worked" and "well".

I'd urge you to go to websites like cafehayek.com, fee.org, fff.org, lewrockwell.com, and mises.org and search for, e.g., "problems with Canadian healthcare". A good place to start is "Private Enterprise Grants Us Life" by William Anderson and "Socialism and Medicine" also by William L. Anderson.

"Fool II" replied,
I really do not have to listen to the opinions that I am not sure where they are coming from.
I have talked to many Canadians who are absolutely happy about their health coverage. And more, they will not exchange it with our system for any price. Doesn't that tell us something?
Sure, there is nothing perfect, but compared to our broken system, the majority of us would be more than glad to have the Canadian system with all its problems.
Here's my response:

You write, "I really do not have to listen to the opinions that I am not sure where they are coming from."

OK, so here's where I'm coming from: I'm a small-L libertarian and a student of the Austrian school of economics. If you take a look at websites like cafehayek.com, fee.org, fff.org, lewrockwell.com, and mises.org you'll know where I'm coming from, especially if you take the time to read the articles by Gene Callahan and Bill Anderson (here and here) that I linked to previously.

It's easy to point out the problems with our current "system". It's also easy to point out the problems with Canada's current, single-payer system. It's interesting to me that the American advocates of single payer spend most if not all of their time pointing out the problems with the current American "system" and little if any time considering the problems with Canada's current, single-payer system. And I've never heard any America advocate of single payer discuss how and why single payer would be better than simply undoing all of the numerous government interventions in the healthcare market that have caused most if not all of the problems with the current American "system".

You write, "I have talked to many Canadians who are absolutely happy about their health coverage. And more, they will not exchange it with our system for any price. Doesn't that tell us something?"

Yes, it tells us something, but it doesn't tell us enough. There are many other Canadians who get tired of the long waiting lines in Canada for many procedures and come to the US to get the procedures they need in a more timely (and thus more compassionate) manner.

You seem to be assuming that single payer (a la Canada) and our present broken "system" (which very few Americans want to preserve) are the only two options, but they are not the only two options. You think that moving from our current "system", which is a healthcare market riddled with government interventions and their consequent undesirable side effects, to a system that is even more riddled with government interventions will be an improvement over the current system. Why is that better than moving to a system that has few if any government interventions and few if any of the undesirable side effects of the current "system"?

Meanwhile, I'm still waiting for the advocates of "Medicare for all" to explain their plan for closing Medicare's $86 trillion fiscal gap. That's "trillion" with a "T".

quickstepper, yet another reader, writes,
Ah! Libertarians. They have such a simple, sweet view of reality. Just eliminate the government and everything would be perfect.

You lambast Sanders for supposedly not knowing how to close some imaginary gap suggested by a member of the Fed (is that a governing institution that you support?) and yet you admit the following: "Exactly how would an unhampered market in healthcare work? I don't know, but neither does anyone else!"

The problem with your position is that it's based on the supposition that a market "unhampered" by the government would be a free market. History shows us that, without government controls, the market becomes completely distorted by monopolistic corporate practices.
My reply:

Thanks for your comment!

I don't think you could find a single libertarian who would say, "Just eliminate the government and everything would be perfect." In fact, I wrote, "It's an imperfect world, so the unhampered market will not be perfect . . ."

I didn't lambast Bernie for anything. As a libertarian, I disagree with Bernie on almost all economic matters, but at the same time I agree with him on many foreign policy matters. As well, I salute him for the legislation he has introduced in the Senate to audit the Fed (IMHO we should audit the Fed, then abolish it). So sometimes I agree with Bernie, sometimes I disagree with him. But I wasn't lambasting him, I was simply asking him and other advocates of single payer, who cite Medicare as an example of a successful single-payer system, what his plan is for closing Medicare's fiscal gap.

Most if not all libertarians would agree that if you limit government to preventing force and fraud, you'd have the best of all possible worlds, but still an imperfect one. On the other hand, as I wrote, "government-funded healthcare is no panacea, no silver bullet." Government-funded healthcare is likely to make matters worse, not better, since we can see all around us the undesirable consequences of previous government intervention in the healthcare market, some of which I mentioned in earlier comments.

No, I don't support the Fed; it definitely should be abolished. But when Richard Fisher says that Medicare's fiscal gap is $86 trillion I think he's probably in the right ballpark, even though he works for an institution I think should be abolished. The Peter G. Peterson foundation puts the "real national debt", of which the Medicare gap is the biggest part, at $56 trillion. Others give different numbers, but they all have this in common: they are all in the same ballpark and they are all huge. Bernie and other advocates of single-payer simply can't continue saying that Medicare is an example of a successful single-payer system when the single payer involved (the U. S. government) has no plans for paying--i.e., no plans for closing Medicare's fiscal gap, which is very real and not, as you claim, "imaginary".

Yes, I do admit that I do not know all the details of exactly how the healthcare market would evolve once all the government interventions in the healthcare market were undone. But I think it's better to acknowledge one's lack of knowledge than to pretend--as advocates of government-funded healthcare do--to know exactly how the healthcare market would evolve once more government interventions (e.g., single payer) are introduced.

Finally, you write, "The problem with your position is that it's based on the supposition that a market 'unhampered' by the government would be a free market. History shows us that, without government controls, the market becomes completely distorted by monopolistic corporate practices." First, a market "unhampered" by government would in fact be a free market--simply by definition. Second, corporations have no power except through government action. But once government intervenes in the market to favor one or more corporations, by definition, that market is no longer a free market, i.e., no longer a market free from coercion.

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