All Universal Health Care proposals are variations of a system of third party funding that are centrally planned and imposed by the government. Third party funding is a system of non-reciprocal relationships among a consumer and a producer, two parties, in which the producer is paid by a third party, not the consumer. Removing the connection between the value received and the value paid by one party, the consumer, the reciprocal relationship, destroys the voluntary, mutually beneficial power of human reciprocal exchanges that makes free societies so constructive of the human good.
Design Problems of Government Programs of Third Party Funding
To make the destructive effects of third party funding clear, suppose Arleon buys dinner for all of us on one of our family outings. Now, except for the time and energy involved, the cost for each person, except for Arleon, is zero. Whatever I order from the menu is free to me so I can order whatever I’d like regardless of the price. In contrast, if I was buying my own dinner, I might not order an expensive entrée or order wine or dessert; I might not eat out at all. But in this case of Arleon’s generosity, it is free; there is no value and no benefit to me for considering costs so I participate but in this face-to-face situation I don’t want to appear to be taking advantage of Arleon. So in this intimate, limited, private situation, the arrangement works well for its purpose.
But the situation makes the problems worse if Arleon stays home but told us he would pay for our evening meal. Then he sees the total bill but he doesn’t know who ordered what, who might have wasted food, who ordered more expensive dishes, or even what our level of enjoyment and appreciation was. We have the case of third party funding in which someone, Arleon, is paying for something we receive free from the restaurant but now this set of relationships among three parties doesn’t work quite as well with Arleon absent as it did in face-to-face interactions. The situation deteriorates still more if Arleon repeats the generosity on a regular basis. Now suppose that some members of the group think everyone needs basic food care so we vote to make meals an entitlement. Of course we can’t make Arleon foot the bill but we can make government pay for the entitlement.
Now instead of a person and a private, voluntary arrangement of private good, we have created an impersonal, government program, and we have done so by force, the force of law. Besides removing private good from society, the government meal care requires some central planning with enforced mandates determining how citizens must obtain food, the kind of food they can receive, the costs that will be allowed, how the program will be funded, and who can deliver the food. Food care must in some way be standardized to be fair but because citizens are so diverse, some will be better served than others. To get what they need and want, the vegetarians must fight political battles with the meatatarians. The food providers must do battle to get more funding. Now reform of meal care becomes a perennial business since shortages, poor quality, the “funding crisis,” the standards, the corruption and influence peddling, all kinds of problems require constant attention. Politicians now can easily make grave announcements about problems that they will solve if elected. But with so many people and food providers invested in the system, no one dares suggest that it was the attempt to create a government program to solve the “food care crisis”, that is, third party government funding, that is the fundamental problem.
As to design problems, these conclusions follow:
First of all, that programs of third party government funding can only operate if mandated by force of law;
Second, they destroy the private good by substituting the destructive effects of third party government funding for the constructive power of mutually beneficial exchanges between parties and the generation of private good;
And third, they create permanent problems of increasing costs, the tendency to extend and grow, the reduction of quality and service, the limitation of services, shortages, and constant political conflict.
My personal philosophy is this: Since government programs of third party funding always substitute destructive incentives for constructive incentives, they do not define nor serve the common good, and government programs are a priori immoral. But where government is properly used to prevent force and fraud in any human exchange in society—including its own use of force or fraud—it protects the common good that arises and can only arise from voluntary actions of citizens as they incrementally create more and more cooperative relationships from their constructive activities of creation and exchange. By definition if we use government to take away these constructive powers of free human activity, that government action is immoral.
In the case of having Congress devise a system of Universal Health Care, we cannot escape creating all the fundamental design issues and political problems (and probably corruption) that always arise in any attempt to use government force to impose a system of third party funding on all citizens. And underlying the design problems are issues of equity that we can uncover when we ask, who benefits? But besides these fundamental design problems, the question is also one of fact as to the results of the various designs. The facts are also fraught with difficulty.
Using Research to Determine What Works
Trying to answer the question of the whether Universal Health Care might be wise by using empirical research fails unless we understand the nature of the research problem. We don’t have controlled experiments—a free market health care system in one country which could be compared to a Universal Health Care system in another—so we don’t have clear data that are meaningful in answering the question of free market health care versus government controls. Added to this are the difficult problems of how things in the political arena tend to get distorted by ideologic feeror, and it means we should be humble about our beliefs of fact founded as they mayt be many on misconceptions or misperceptions.
First, and perhaps most important, to pose the political issue as limited to one between our existing system and Universal Health Care is a classic example of a false dichotomy. The design of the U.S. health care system is not one of a free market system since it is already largely under government controls which in fact are causing most of its problems. For example, in the HMO Act of 1973 the government created HMOs (which we all seem to hate); they are not the result of the activities of a free-market. That HMO law required all but the smallest employers to offer their employees HMO coverage.
The government also changed the tax code during the war years to allow businesses but not individuals to deduct the cost of health insurance premiums; it effectively tied insurance to employment. The government also created Medicare, Medicaid, and other programs; now the government accounts for almost two-thirds of health care spending and most of the costs of paperwork and bureaucracy necessary for administering health care services.
Most recently, the Bush administration pushed through the largest single entitlement program in the history of the U.S., the prescription drug entitlement for retirees. Government involvement created the problems due to entitlement programs and coupling employment to health insurance and which have particularly hurt the unemployed. We must blame Congress for the unintended consequences of the government failing to deliver on its promises. Since we don’t have a free market in health care, we cannot blame the free market incentives for causing the health care “crisis.”
Second however, even in comparing the U.S. Health care system to other systems, perhaps most people would accept four generalization that can be derived from the research:
1. As to efficacy, international comparisons of longevity are distorted by things like homicide rates and low-birth-weight infants.
2. As to universality of coverage, the number of uninsured is boosted by illegal immigrants, people eligible for Medicaid who have not signed up, and people earning over $50 K per year.
3. As to costs, the recent rapid increase in health care spending in the U.S. the last 30 years has been in procedures involving specialists and high-tech medical equipment.
4. As to fairness, comparisons among groups receiving different levels of these types of high-techn services surprisingly do not show significant difference in outcomes.
We can use these generalizations to evaluate political positions that advocate Universal Health Care. They should not try to use incomplete or misrepresented facts to create an improper justification nor should they make comparisons between the results of the U.S. system and other nations’ systems as if that is the only choices we face.
For example, these are true but misleading statements about health care that politicians and advocates use in support of Universal Health Care:
1. The United States has lower life expectancy and higher infant mortality than Canada, which has national health insurance. A true statement but none of the difference can be shown to be due to the differences in the designs of health care systems. Other factors—differences in violent deaths, immigration.
2. Some 47 million Americans do not have health insurance. True according to census data but those data do not take account of Medicaid, illegal immigrants, richer people who could but choose not to be insured, or those who decline employer offered insurance. The percentage who need insurance but can’t afford it is only a few percentage point of the total population.
3 and 4. Health costs are eating up an ever increasing share of American incomes. True but not due to differences in health care design. Spending on public and private health care in the U.S. rose from about 5 percent of United States national income in the 1950s to about 16 percent. This increasing cost isn’t due to waste, abuse, or fraud but is due to advances in medical technology and the rising wealth of Americans. Just as Americans have much larger homes, more cars, more technology, more leisure activities and travel, more of everything so also do they buy more health services. That increase in spending is s sign of progress of our wealth producing capacity.
The important conclusions is that the U.S. system is now largely a design of third party funding and as a result, it tends toward over treatment and increasing costs with decreasing benefits. In order to decide between free market and designs for Universal Health Care, and then choose Universal Health Care, we must have clear data that show there are health care systems of third party funding imposed by government do not reproduce the problems always associated with any systems of third party government funding. A more extensive approach would be to compare the results in general of free markets versus centrally planned systems of government involvement. Those comparison can be made and have been done. Their results are unequivocal. Free systems always produce increases in quality, efficiency, choice, and availability whereas government systems at their best present a stasis in a system (perhaps the U.S. Postal Service would be an example) but more often they produce decreases in quality, efficiency, choice, and/or availability (and in the case of government schooling, in equity as well we might add).
Summary—My Position
Politically, health care is now defined to be in a “crisis,” and we must understand that politicians must so define the situation whether it is or not if they are to use health care as a viable political issue for their election. They can define health care as a problem by the improper use of research. There are, of course, problems with our current system but the almost universal approach to the problems of previous government intervention in health care is to advocate more government intervention even to the extent of Universal Health Care imposed on all citizens by government force. But few politicians (I can think of only one presidential candidate) urge the removal of the perverse incentives established by government design. It is government intervention in health care that has created most of the current problems and it is more government intervention that is proposed as a solution. But before accepting that solution, we need to more deeply understand what happens when we turn things over to government. We need to discuss and understand the proper role of government, how constructive human activity advances society’s well-being, and how government helps or hinders the constructive power inherent in humans’ free activities. And rather than a grand plan affecting everyone, for those problems concerning the poor or disenfranchised, we need to consider exactly how they could be precisely targeted and better served.
We don’t necessarily have to turn to Universal Health Care as the only alternative to our current system; we can consider how a free market system would work, how it could better serve to advance society’s health, and how even the poor can be well served in free systems. However, if we are to make a wise and moral choice, we must understand the fundamental differences we face between moving our society toward free markets versus moving it towards more government involvement. The fundamental debate as always comes done freedom versus government.
