Sunday, May 6, 2012

The Case Against ObamaCare (full version)

*[Note: This is the full version of the editorial (length wise, it better resembles dissertation) I wrote against ObamaCare in the months before it was passed. Keep in mind that I have not edited this text at all from it's original format, and since it was written nearly three years ago it does not wholly resemble my developed views on the issue. My understanding of the economic, constitutional, and historical issues it discusses is now more nuanced and complete than it was then; this is not "the best I can do" to make a case against the law. Additionally, it only minimally discusses the bill's constitutionality, relying instead on more pragmatic arguments against its passage. But it is still a useful analysis of the law's negative ancillary effects and offers some basic suggestions on what real reform would include.]

While healthcare reform has been a priority of the political left for decades, in recent years the problem has grown to pressing magnitude irrespective of political affiliation. As President Obama noted in his Congressional Address on the issue, “I am not the first president to take up this cause, but I am determined to be the last.” Reform seekers trumpet that 47 million Americans do not have health insurance, and that rising costs have caused healthcare to constitute 1/6th of our economy. Health insurance premiums have skyrocketed for decades at rates unsustainable in a healthy, balanced economy. These problems have made effective, cost efficient, and radical healthcare reform a necessity. It is for precisely these reasons that the proposed healthcare legislations in the House and Senate must not be passed, and that they be replaced with a wiser, fairer, cheaper removal of government regulations instead of an illogical, unfair, costly expansion of them.

The proposed healthcare cure features the following flaws:

I. A False Diagnosis

In order to effectively cure our ailing healthcare system, it is critical that its specific ailment is accurately diagnosed. Central to this diagnosis is a fluid understanding our current healthcare setup and how certain factors have caused the problems the industry sees today. Congressional liberals would love to convince their constituents that the industry’s failure is a result of greedy, “profiteering” insurance industries and the helplessness of afflicted patients. A sick individual cannot be expected to forgo the purchase of healthcare, regardless of its cost, and so liberals argue this allows health insurance companies to raise the price indefinitely without losing business. The healthcare and health insurance industries are, in reformist eyes, arenas in which the open market has failed to provide an affordable, reasonable price, and so the government has taken it upon itself to heavily regulate the industry.

But this theory does not hold up to careful examination. Healthcare is by no means the only insurable product which consumers cannot go with out. Shelter is also necessary for survival, yet home insurance is a thriving, successful, affordable industry. This is because on the open market, the price is set by the all-too-important rules of supply and demand, forcing companies to compete and offer lower prices acceptable to the consumer. In an unrestricted free market, competition sets a price that is affordable to the consumer yet profitable to the producer. These same principles apply to every other industry on earth, including such successful industries as auto, home, and life insurance. The president is correct that rising, uncontrollable costs are due to a lack of competition, but he errs in determining why that lack of competition exists, and how to fix it. In reality, the health insurance in this country is not sold on an open market, and the places it deviates from a free market, rather than the profits the industry produces, are the sources of the problems it sees today.

One major example of this deviation is the third party, employer-based system utilized by 85% of insured Americans. Under this system, employers provide each of their employees with a bought-in-bulk company health insurance. While this practice originated as a perk used by employers to lure prospective workers, it has molded into a tremendous hindrance to a free market in the industry, compounded by government taxation of these benefits as a source of income instead of a purchased product. Since companies can make far more money selling in bulk to employers, it’s only natural that they raise the prices for individual buyers. The result, as Obama noted in his healthcare address this September, it that it costs three times as much for an individual to purchase his own insurance as it costs the employer to provide it to him. This ludicrous system also has the handy feature that the unemployed, who are most unable to pay for insurance as they have no income, must pay prices three times as high as employed people “pay” (the cost being withheld from their paycheck). And since employers have their wallets in mind instead of their employee’s health, they will naturally buy the cheapest option available, rather than the one which provides the best coverage. This means that 85% of insured Americans are forced to rely on someone else to make their healthcare choices for them, voiding their ability to shop for the coverage and prices most suited to their needs. The other 15%, thanks to this system, must face prices three times as high. Ones employer purchasing his health insurance makes no more sense than purchasing his house, car, or any other expensive, complicated, and individualized purchase.

Another hindrance to the free market in healthcare is government intervention. Sheldon Richman, editor of The Freeman magazine, points out that “Nearly every aspect of medicine and health insurance that the politicians say needs fixing is the result of politicians’ previous attempts to fix something.” And as David Hogberg of IBD notes, “Over the past 40 years government's role in the health care system has continually expanded, from programs like Medicare, Medicaid and SCHIP, to regulations like HIPAA and COBRA.” These obstacles to free market have only served to raise costs by making the system more complicated and less efficient. Such entitlement programs provide no incentive for individuals to limit their healthcare intake, as it’s free, causing government costs to soar. Such regulations raise costs by making the market more complicated, less efficient, and less free. Another example of meddling government intervention is a law which disallows the purchase of health insurance from other states. Pennsylvanians can buy orange juice from California, grapes from Italy, and chocolate from Belgium, but they cannot buy health insurance from Delaware. Finally, the federal government has cooperated with the AMA to form a virtual cartel of doctors with the power to restrict the supply of healthcare. Richman writes that while the above third-party payer regulations increase demand “others constrict supply: occupational licensing, insurance mandates and barriers to entry, patents on drugs and devices, FDA regulations, certificate-of-need requirements, and more.” Such restrictions severely cap the number of practicing doctors, limiting the supply (and increasing the price) of healthcare. Famed economist Milton Freidman wrote nearly 50 years ago that "Licensure has reduced both the quantity and quality of medical practice," and that trend has increased dramatically today. In this way government intervention only serves to tamper with the laws of supply and demand, and contributes significantly to rising costs.

These are the real problems in the health insurance industry. Yet those pushing through the healthcare bills give the industry a false diagnosis; they instead blame the industries ills on corporate greed and “profiteering”. Despite the fact that profit drives our economy and is beneficial to all in an open market, many liberals give it a negative, greedy connotation. Not only do the Senate and House plans ignore the true causes of health insurance, but they exacerbate them. Instead of removing middle-man interference with market dynamics, the plans expands the senseless third-party system by forcing most employers to provide insurance for their employees, under penalty of fine or tax. And instead of lowering government meddling with the industry, the legislation creates over 1900 pages and “450,000 words of new regulations, rules, mandates, penalties, price controls, taxes, and bureaucracy,” as Denver Post columnist David Harsanyi accurately described the House bill. Any prescription written to cure a system ailing from government intervention with more government intervention is surely doomed to failure.

II. Improper Examination of Similarly Afflicted Patients

For decades, the supposedly better healthcare systems of Europe and Canada have been hailed as a model by liberal reformists. Contrary to leftist belief, these systems are no better, not much different, and produce a far lower quality healthcare than do our own. One catchphrase Obama used to argue for the adoption of such policies is “We spend one and a half times more on healthcare than any other country, but we aren’t any healthier for it.” He uses the US’s comparatively low life expectancy to back up this argument. But life expectancy truly has no correlation to the quality of healthcare. The US is the fattest nation in the world, and you are far more likely to be killed through crime or a car crash here than in most other countries, lowering our life expectancy irrespective of the healthcare system. Forbes columnist Shika Dalmia cites Robert L. Ohsfeldy and John E. Schnieder’s book The Business of Health, which “set out to determine where the U.S. would rank in life span among developed nations if homicides and accidents are factored out. Their answer? First place.” Obama is confusing his causes and effects; our national health isn’t a result of how much we spend on healthcare; rather how much we spend on healthcare is a result of our national health (or lack thereof).

Contrary to Obama’s claim, American healthcare’s quality is second to none. Canadians and others are forced to wait in tremendously long lines to receive inferior service, Britain’s NHS is sued dozens of times daily for malpractice, and many wealthy foreigners flock to the US to receive treatment because they know it is superior to what they get in Europe or Canada. British Tory David Hannan has labeled the government run NHS “a 60 year failure” which he “wouldn’t wish on anybody.” While the NHS is more radical than what is being proposed, Hannan holds similar feelings regarding the proposed US bills: “I find it incredible that a free people living in a country dedicated and founded in the cause of independence and freedom can seriously be thinking about adopting such a system…and massively expanding the role of the state.” The cost of healthcare and health insurance in America is a problem, but the quality is certainly not; in fact it’s the most advanced in the world.

Yet America’s system is already far closer to those of Europe than many realize. The US already guarantees healthcare to 1/3rd of the populace through Medicare, Medicaid, and SCHIP. With the exception of England, most European countries utilize a part-public, part-private blended system not unlike our own, including France and Germany. Dalmia compares:
For the same flat fee—regardless of whether it is paid for primarily through taxes as in France in Germany or through lost wages as in America—patients in all three countries effectively get an ATM card on which they can expense everything (barring co-pays) regardless of what the final tab adds up to…Thus, in neither country do patients have much incentive to restrain consumption or shop for cheaper providers.
France and Germany are struggling to contain costs too; the US spends a massive 16% of its GDP on healthcare, while France spends 20% and Germany spends 11%. These identical struggles stem from an identical problem featured in the US healthcare system: the use a third party system which eliminates cost consciousness and leads to price increases. It is lunacy to model the US health insurance system off of those with equal or higher costs and inferior quality of service.

III. Too Many Doctor’s Orders

Perhaps the most outrageous aspect of this bill is its blatant, unfair encroachments on individual liberties. The first of these illogical mandates is forcing all insurance companies to cover customers with pre-existing conditions at no extra charge. As Richman put it:
If someone is already sick, no government plan to pay his medical bills can be called ‘insurance.’ Insurance is a voluntary way to spread risk. Risk comes from uncertainty. But someone already sick doesn’t face a risk that he might need medical attention for his ailment. He is certain to require the attention.”
But the problem with this practice is not only that it defies the English language, it also defies business logic. Why should any company in any field be forced by the government to do something sure to lose it money? The equivalent is forcing companies to sell life insurance to a dead man, insure a car that has already crashed, or insure a home that has already burned down. Sick people without insurance are unfortunate, but they are not entitled to coverage for their ailments any more than other unfortunate people are entitled to coverage for their woes.

The defiance of individual liberty gets much worse. At least individuals forced to make bad investments may leave the insurance industry if they so choose. But in order to pay for this costly policy, the healthcare bill forces nearly all Americans to buy health insurance whether they want it or not, and forces all companies to provide their employees with this product. The proposed Senate legislation fees those who don’t have insurance 750 dollars for the privilege of remaining uninsured, and these fees are indexed to increase in future years. Speaker of the House Nancy Pelosi has gone so far as to suggest jail time for those who fail to comply. Obama attempted to justify this unconstitutional new law in his Healthcare address:
There may be those, and especially the young and the healthy, who still want to take the risk and go without coverage…The problem is, such irresponsible behavior costs all the rest of us money. If there are affordable options and people still don't sign up for health insurance, it means we pay for these people's expensive emergency room visits…That's why under my plan, individuals will be required to carry basic health insurance--just as most states require you to carry auto insurance.
What the president calls “irresponsible behavior” might also be called “choice”. The government is not a parent; it’s not responsible for making us responsible, and such nannying is hardly the motive behind this mandate. Similarly, when the president says such emergency room visits are “expensive”, what he means is that they account for less than 3% of our healthcare budget, or about $40 billion.

Such petty cash is a trivial superfluity when compared to the trillion plus dollars the current bill is projected to cost, leading to the realization that Obama cares about neither the well being of those who choose not to purchase insurance they can afford nor the light dent this puts on taxpayers. The true motivation behind the individual mandate is so that the young and healthy can subsidize the old and sick. The only way the government can even pretend to afford covering people with pre-existing conditions (namely the old and sick) at no extra charge is to forcibly extract funds from those who don’t require treatment (namely the young and healthy). Politically, democrats cannot take extra tax dollars out of them through a government run single-payer system, but an individual mandate shaking those who don’t need health care by the ankles is the next best thing. Congress may well be willing to compromise on the public option, but no educated supporter of these bills will budge on the individual mandate because they realize it is the central component, the bottom jenga block, to the entire legislation. Without it companies could not afford to cover those with pre-existing conditions, the number of uninsured would not significantly decrease, the public option could not be self-sustaining, and the whole jenga tower would come crashing down.

Such a mandate eradicates any semblance of free market principles the current system has left. Insurance, as a sellable commodity, is when a company assumes a varying level of monetary risk in exchange for accordingly varying monetary payment. The sale of insurance is based on the premise that the risk is worth the payment for the company and that the cost is worth the security for the individual, making it a mutually beneficial business agreement. But the congressional plans force companies to assume risks that are clearly not worth the payment, and force individuals to purchase security against those risks at prices that it may not be in their interests to pay. If the producer is forced to sell, and the consumer is forced to buy, the principles of choice and freedom through which so many markets have flourished cannot be present.

The bottom line is that under no circumstances, no matter how dire the situation, should the government have any power to force anybody to purchase any product at any time. Obama makes a politicians lie when he claims that “most states require you to carry auto insurance”; no state has any such requirement unless the consumer first chooses to purchase a car. That prerequisite is key, as the consumer purchases a car with full knowledge that he must now also pay for insurance. But the only prerequisite for the individual mandate is being alive, which hardly gives the government the right to swipe money in exchange for unwanted services. Yet the more important distinction between car and health insurance mandates is that auto-insurance is only mandatory for drivers because it is essential to the financial security of other drivers the consumer may cause to crash, not because the government cares about the driver himself. Car insurers cover the FULL cost of the accident if their customer is at fault, even for the other driver’s car/injuries. This is why they charge according to perceived driving proficiency, and charge accident-prone drivers more than safe ones. Without the mandate, uninsured and risky drivers would incur huge and unfair costs on the innocent drivers they crashed into, even if the crash was entirely the fault of the uninsured. Health insurance, on the other hand, does not insure anybody other than the purchaser of the policy, so the only one who can be scorched by its non-purchase is the one who made that decision not to purchase it.

If the government forces everyone to obtain health insurance, they must define what constitutes as passable coverage, so these bills dictate that all insurance plans meet the government’s specific qualifications. These qualifications include covering all patients regardless of risk, guaranteed renewal for life, no annual or lifetime limits on coverage, and full coverage for all hospital visits, incidental services, prescription drugs, physical exams, colonoscopy, mammography, rehabilitative services, and maternity care. Any plan that does not follow these specifications to a T is illegal. Individuals may not pay for only what they want insured, they must instead buy whatever quantity of insurance the government deems appropriate. This will outlaw the “catastrophic coverage” plans favored by many Americans, which cover emergency costs like cancer or a car crash but not routine things like doctor checkups. Naturally, these plans cost less, because the company incurs far less risk; banning them will drive up the cost of insurance and remove consumer choice from the industry.

Forcing all these things to be insured for every American removes the incentive to check ones healthcare consumption in these areas, as it’s already paid for. If people are covered for more products and services than they are now, they will naturally use more products and services than they do now, and this increased usage will force up the costs of care. This same principle is responsible for the soaring costs of Medicare and Medicaid, and will contribute to a higher price tag on this bill than the president’s calculations admit. Advocates insist these preventive-care requirements will save money because they can catch more expensive diseases before they progress, but the evidence says otherwise. Preventive care may stretch ones life, but it will commonly shrink ones wallet as he pays for more services over a longer lifespan. Health-care expert John Goodman of the National Center for Policy Analysis cites “literally hundreds of studies from over the past 40 years that show preventive medical services usually increase medical spending,” and John Stossel writes “contrary to popular belief, checkups for children and adults do not save the health care system money.”

And why is it the government’s job to make such meddling, trivial laws in the first place? If one wishes to make a less extensive coverage agreement with another, with no risk to anyone outside themselves, it is exclusively their business and entirely none of the government’s concern. The government should not have the ability to enforce a one size fits all plan on the entire nation, making it illegal for companies to offer insurance that fits their specific economic needs and illegal for individuals to purchase insurance that fits their specific coverage needs. Nobody knows what kind of plan is best for the consumer better than the consumer himself, and the government is no exception. Obama has boasted that this plan promotes “competition and choice,” but the renowned economic institute FEE suggested a more accurate catchphrase: “cartel and restriction”.

Ironically, this mandate is entirely contrary to the promises Obama made during his campaign.
When opponent Hillary Clinton proposed the same individual mandate last spring, Obama repeatedly attacked her for it, claiming it was unfair and inneffective; he gravely warned voters that "everyone would be forced to buy coverage, even if you can't afford it. You pay a penalty if you don't." Now of course the individual mandate features a prominent role in healthcare legislation. Other healthcare flip-flop’s abound, including one on the promise not to “mess” with the insurance plans people already had. But to raise funding for the bill, the legislation cuts the Medicare Advantage program, a branch of Medicare preferred by many lower class seniors. As David Catron, an expert on healthcare revenue cycles with over 20 years experience in the field, writes:
The tragic irony here is that many of these very seniors voted for Barack Obama because he promised to protect their benefits from ravenous Republicans. Likewise, many of the workers now facing higher taxes voted for the president precisely because he vehemently denounced the very concept of taxing health insurance benefits. And many people who will soon face fines for not buying health insurance voted for Obama because he told them he was against insurance mandates and the penalties that go with them. These voters, along with many others, have been swindled.
Democrats proclaim that since they won a resounding victory in the 08 elections, their proposed changes are in line with the will of the people. But what they’re proposing now is entirely different from what they proposed then, and it’s no wonder that with each new opinion poll an increasing majority of the country does not favor the proposed changes.

IV. A Costly Placebo

Arguably the most controversial aspect of the healthcare bill is the creation of a government run public option, which advocates claim will lower prices by removing inefficiencies, thus increasing competition in the health insurance industry. It will do nothing of the sort; as Steve Chapman aptly notes, “efficiency is to government programs what barbecue sauce is to an ice-cream sundae: not a typical component.” But increasing competition is not the reformists aim in the first place. If that is the goal, why would the government not remove the abundant regulations and free market detriments already in existence? Such laws hinder competition, and are expanded tenfold through this same bill. Even with these impediments, “it will come as a surprise to private health insurance providers that they have not had to compete until now,” Chapman remarks. There are over 1,300 competing health insurance companies across the nation, and while some control most of the business select states like Indiana and Alabama, this is largely due to the aforementioned government law against purchasing out of state insurance, not a lack of available competition in the private sector. On average, the typical state has about 27 competing insurance companies, more than enough to lower prices were government intervention removed. Given his Keynesian track record, it’s hard to take Obama seriously when he claims that “My guiding principle is an always has been that consumers do better when there is choice and competition.” In reality, the advocates of this bill do not care about or understand true market competition, and the public option serves only to expand detrimental government intrusion.

Public option backers oft belabor supposedly obscene health insurance profits as justification for less profit-hungry government intervention, but in reality health insurance is only the 86th most profitable American industry. Chapman observes that “Health care plans average profits of just 3.3 percent. In wireless communications…profits are 11 percent. Does Obama think we need a government cell-phone company to compete with Verizon and AT&T?” No private company can ever be expected to fairly compete with the government, as their goals are entirely separate. While private companies are out to make a profit, the public option aims merely to get as much insurance out to as many people as possible. Since government employees have fixed salaries, they’d have no incentive to increase profits, only to break even. Chapman argues that with a public option, “private insurers will be ‘competing’ against a team that gets to write the rules, run the draft and hire the referees.”

Even if it were fair to companies, the entire premise is flawed. Just because many people can’t afford something is not grounds to create a government run company to sell it to them at a price they deem affordable! Political trends towards entitlement in the past few decades are disturbing, and this bill merely promotes the fallacious concept that if people can’t afford something, the government will provide it for them. This ideology is the equivalent of giving a man a fish instead of teaching him to fish; the government hand feeds citizens affordable insurance instead of freeing the market so that it can produce lasting affordability. The US constitution instructs the government to “promote the public welfare,” not “provide the public welfare;” similarly the Declaration of Independence ensures the inalienable right to “the pursuit of happiness,” which is very different from ensuring happiness itself. The spirit of these documents establishes the government’s role as to provide equal rights, not to provide equal things. In this application, the government should protect everyone’s right to free enterprise instead of attempting to provide affordable insurance.

Taken in conjunction with the “pre-existing conditions” stipulation and the individual mandate, this public option is not in fact a government run insurance program but a rather a disguised redistribution of wealth program. Since the price of what those with pre-existing conditions would receive far exceeds the price they would pay, they would effectively be receiving a government check. Any sick individual could merely walk up to the government and, in exchange for a set sum of money, receive a service worth a larger sum of money. The government will fund this by forcibly extracting money from other people through the individual mandate. This renders the proposed public option as not an improvement of health insurance, but the initiation of health welfare: a government body through which the unfortunate receive a service at the expense of others.

Yet proponents of the bill adamantly deny accusations that the bill represents “a government takeover of healthcare,” and accuse the conservatives who spread such phraseology as alarmists or scare tacticians. They rightly claim that the vast majority of health insurance will still be bought and sold in the private sector, but fail to acknowledge that government stipulations over that private sector make it merely an extension of their power. As Forbes columnist Shikha Dalmia writes, the proposed legislation “will tell patients when, what and how much coverage they must buy; it will tell sellers when, what and how much coverage they must sell.” If that isn’t a government takeover of healthcare, what is?

V. Sneaky Premiums

And a costly takeover, at that. The most uncertain issue of the healthcare debate has been the financial hit of the proposed changes. Estimates as to the bills’ total cost range anywhere from $800 billion to over $2 trillion. For a country already 12 trillion dollars in growing debt, such a price tag is nowhere near affordable, and these bills are an irresponsible expenditure with so little funds to spare. In fact, we have no funds to spare; the majority of the bill is paid for by simply diverting at least 475 million dollars of so-called “inefficiencies” from Medicare. Never mind that these inefficiencies are vastly overestimated; illuminating half a trillion dollars of inefficiencies in a government healthcare program hardly argues for creating another government healthcare program. As Chapman put it, “efficiency is to government programs what barbeque sauce is to an ice-cream sundae: not a typical component.” Government spending on prior healthcare legislation is hugely responsible for our current deficit. Obama himself states that “the biggest driving force behind our federal deficit is the skyrocketing cost of Medicare and Medicaid.” These are desperate, failing, over-budget systems, however popular they may be among the poor and old. If there truly are hundreds of billions of dollars of inefficiencies in Medicare, (a program falsely heralded for its supposed efficiency) these funds should be reapplied to fix the problems within Medicare itself. The rest of the bill is funded through the socialistic individual mandate fees and typical big-government tax hikes on prescription drug industries, owners of various economic accounts and plans, the wealthy, employers, and many others. Other various levies, such as a 40% tax on insurance premiums exceeding $8,500, are abundant. Even with these funds, the fact is that both healthcare plans are tremendously costly endeavors at a time when we have no money to burn.

Thankfully, a trillion dollar price tag is a sure turn off to potential congressional supporters. It is for this reason that Obama and friends have taken to knowingly downsizing the projected cost.
While dishonest, highly optimistic projected costs are an unfortunately effective method of downsizing a program’s financial dent. Liberals have a long history of intentionally underestimating the cost of their reforms to get passage, and there is no better example than Lyndon B. Johnson and Medicare. Revealed tapes of phone calls between Johnson and the late Ted Kennedy reveal the president intentionally used his influence to make sure the projected cost of Medicare did not get too high. The program was passed, and not surprisingly the actual price has increased exponentially from the projections in nearly all aspects of the plan. As Richman observes “when Medicare was put together, the pooh-bahs projected that by 1990 hospitalization coverage would cost only $9 billion. When 1990 arrived, the price tag read $66 billion.”

Ronald Bailey of Reason Magazine compares this historical situation to our own:
Democrats who are pushing health care reform, especially the government-run insurance option, know that their cost projections are wildly underestimated. But like LBJ, contemporary Democrats don't care because they also know that once their health reform programs are enacted they will be almost impossible to kill. Enacting government health care is more important than telling their constituents the truth about what it will cost them.
And so, to get their beloved bills passed, reform advocates have found numerous means to “soften the blow” of the legislation. Douglas Holtz-Eakin, former CBO director, explains a few:
The bills are fiscally dishonest, using every budget gimmick and trick in the book: Leave out inconvenient spending, back-load spending to disguise the true scale, front-load tax revenues, let inflation push up tax revenues, promise spending cuts to doctors and hospitals that have no record of materializing, and so on.

Perhaps the most fantastic assertion about the legislation is that it would magically pay for itself. Advocates proclaim the senate plan will cut the federal deficit by $81 billion over the next ten years. They can only get away with this statement because plan’s initiation, with all its expenditures, does not take effect until 2013; however, the fees, mandated penalties, taxation, and Medicare cuts used to fund the plan, would take effect immediately, temporarily lowering the deficit over the short time frame they cite. Remember, the government can give to nobody what it has not first taken from somebody else. To claim that a trillion dollar bit of legislation is essentially free is wishful thinking at best. The projections for these costs, in addition to the aforementioned dishonesty, are based on the idea that every healthcare consumer will use the same amount of healthcare in the future as they do now. But by making additional services insured for every American, the bill removes the incentive to check ones healthcare consumption in these areas, as it’s already paid for and it is illegal for the rates to increase based on use. If people are covered for more products and services than they are now, they will naturally use more products and services than they do now, and this increased usage will force up the costs of care. This same principle is responsible for the soaring costs of Medicare and Medicaid, and will contribute to a higher price tag on this bill than the president’s calculations admit, just as those programs drastically exceeded their budgets.

Based on the simple rules of economics, the goals of the legislation are impossible and contradictory. The main goals of the proposed healthcare reform is to a) open access to health insurance to the 45 million uninsured Americans, and b) lower the soaring healthcare costs; Obama has personally promised both of these results. Both plans do promise--in fact ensure, under penalty of fine--that most of the uninsured obtain insurance. But due to supply and demand, it is mathematically impossible that both of these things take place under the current legislation. Healthcare products and services do not grow on trees; they are of a set, limited quantity and require much human effort and money to create. No bill can increase or decrease the set supply of hospitals, doctors, nurses, medicine, drugs, or medicinal technologies in the country. But by bringing in 31 million more insured americans elligible to receive these things, the demand for this set supply skyrockets! Economics and simple reason tell us that when there is more demand for the same supply of products, the price of those products increases. So by promising both things, Obama is either lying or unwilling to admit just how socialist this plan is. There are only two plausible ways Obama could possibly meet both goals: rationing or price controls. This is the root of Sarah Palin’s alarmist term “death panels,” as it is not difficult to imagine a government agency under such circumstances determining that 95-year old, cancer stricken Grandma shouldn’t receive that pricy hip replacement. Since such tools are socialistic and entail a host of other problems, democrats are sure to label their mention as an unfounded scare tactic; it is true that the current bill establishes the right to neither. But they are the only means by which Obama could magically bring about the contradictory promises his legislation contains.

Something’s got to give, and the most likely something is that the price of healthcare, and US spending on healthcare, will rise. Not surprisingly, projections have shown the bills will in fact fail to lower healthcare spending. Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, found that these bills “increase the pace of national health-care spending will increase by 2.1% over 10 years, or by about $750 billon”. Holtz-Eakin, former Congressional Budget Office director and fellow at the Manhattan Institute, shows “The CBO found that the House bill fails to reduce the pace of health-care spending growth…In this way, the bills betray the basic promise of health-care reform: providing quality care at lower cost.”

The above rhetoric has, at great length, torn apart the proposed healthcare reforms. Yet as the introduction to this paper plainly states, the US is in dire need of effective, efficient reform.
On Labor Day, the president challenged healthcare opponents: “What’s your answer? What’s your solution? The truth is, they don’t have one. It’s do nothing.” While doing nothing is a preferred alternative to the ominous changes the current bills entail, it is the aim of this paper to disprove that statement by suggesting multiple courses of effective government action, with equal vigor as it criticized those changes proposed.

A cheaper, fairer, freer health insurance reform bill would emphasize cost reduction over directly granting coverage to the masses. Reduction of the number of uninsured, currently around 47 million, is the primary goal of new health insurance legislations. But as associate editor of Reason magazine Peter Suderman argues, that number is greatly exaggerated:
The number is presented as a static fact, but instead it's the total number of people who go uninsured for even a single day each year. The number also includes several million illegal immigrants, 11 million individuals who already qualify for some form of government health assistance, and 18 million individuals who make more than $50,000 a year, many of whom presumably could buy insurance but simply choose not to.
Due to this, the number of people who are truly not eligible for government insurance and cannot afford it is closer to 18 million, less than 6% of our populace. It is not the government’s responsibility to ensure that each of these people get insurance; it is not even those individual’s responsibility, rather their prerogative. What is the government’s responsibility is finding ways to effectively decrease the cost of healthcare and health insurance which it has inflated through previous legislation. Not only will this help our national budget as a whole by lowering our healthcare expenditures, but it will lower the price for those 47 million individuals as well. So health insurance reform should center on fairly lowering cost, with the knowledge that success will increase health insurance ownership anyway.

In any industry, the unrestricted open market is the greatest cost setting tool. So to effectively lower costs, reform must do away with the numerous impediments to free trade, starting with the employer-based system. Allowing 85% of Americans to purchase their own insurance, based on their own individualized needs and budgets, would force the open market to set a fair price as it does in every other industry. Since insurance companies could no longer rely on employers to buy in bulk, they would be forced to lower prices to meet the demands of individual consumers, and since employees would no longer have a slice taken from their paycheck they would have additional salary with which to purchase this product or anything else they so choose. These salary hikes could also do much to stimulate our slow economy by encouraging open market transactions.

Additionally, the government tampering that has led to higher costs must be downscaled as much as possible. John Stossel rightly observes that, “professional licensing and controls on medical schools keep the supply of medical services limited and prices high.” The removal of these controls is essential to allowing the supply of healthcare to increase, and thus the price to decrease. Nonsensical state barriers to insurance purchases must be removed. Government cost controlling initiatives HIPPA and COBRA should also be eliminated. Due to their immense popularity, it is not politically feasible for the massive entitlement programs Medicare and Medicaid to be removed outright, despite their economic failures. This sticky situation warns gravely of the dangers of creating government healthcare programs that cannot be retroactively undone. Still, cost cutting measures may be taken to save Medicare. As our nation’s life expectancy, the age at which the average American dies, increases, so too should the age at which American seniors become eligible for Medicare. Pushing back this date a few years would take a few million patients off our government’s shoulders, easing the program’s economic burden. Furthermore, government bodies should be formed to ensure political aims to expand healthcare insurance do not riskily abuse government power to artificially increase these numbers; similar political trends regarding home ownership are largely responsible for our economy woes today.

These reforms, in full, may not be feasible right now due to the political climate at this time. As Obama has stated, political compromise is key to passing whatever reforms both sides can support. But compromise does not mean the extremely limited concessions Democrats have been willing to make, the minute details they have been willing to tweak, in their proposed reforms. Beneficial reform can be accomplished by comparing the ideas and suggestions from both sides of the aisle and implementing the compatible elements from each. For example, it is hard to imagine that Republicans would oppose the Democratic initiative to closing the legal loopholes insurance companies utilize to avoid paying when their customers get sick. Similarly, pragmatic Republican ideas like reforming the medical malpractice laws to make it harder to sue doctors, thus reducing the drain of defensive medicine and over-prescribing, are not based on party differences and should find bipartisan support. Obama has blasted healthcare opponents for sticking to “entrenched ideological camps,” and then proceeded to entrench himself in his own ideology. Truly effective, immediate, bipartisan reform attempts cannot run contrary to either party’s basic ideological differences if they are to succeed. If the President wishes to succeed in reforming healthcare in a bipartisan manner, he must forgo minor partisan concessions in exchange for more agreeable non-partisan concepts both sides can accept.

In conclusion, America’s healthcare system needs reform, and the consequences of failure to curb the growth of healthcare costs are dire. But as with any important, consequential national decision, congress must be sure to make the correct changes, and as the current plans do not take effect until 2013 at the earliest there is no rush to hastily pass a verdict. The current healthcare bills misdiagnose and mistreat the causes of healthcare woes, finalize an illogical third party system, further impinge on the open market, inflict on individual liberties, unfairly expand government powers, create another unconstitutional entitlement program, break recent promises to the American people, increase our national debt and simply cannot succeed. For these reasons Congress must vote against the proposed healthcare bills in both the House and the Senate, and instead pass a reform bill that will more fairly, cheaply, and effectively run the industry.

Ronald Reagan once wisely advised on the issue of government healthcare programs:
One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It's very easy to disguise a medical program as a humanitarian project — most people are a little reluctant to oppose anything that suggests medical care for people who possibly can't afford it. Now, the American people, if you put it to them about socialized medicine and gave them a chance to choose, would unhesitatingly vote against it.

 Here’s hoping the American congressmen will do the same.

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