Consider this question: how did we arrive at this pseudo-monopolistic situation where healthcare costs are spiralling out of control with no competition in the marketplace to bring prices back to sane levels? The answer is through government rules and regulation. All the required certifications, licenses, legal fees, board examinations, government approvals, etc., has made the current system what it is today. Much of this at the behest of the big health and insurance lobby, and the remainder due to the efforts of the often well-intentioned but misguided social welfare bureaucrats who erroneously believe they are performing a public service.
The solution is not more government, but less government. However, it is not enough simply to say: let government not be involved. The government must also undo the horrendous rules and regulations that keeps these monolithic institutions largely shielded from the competitive effects of the free marketplace and allows them to maintain their virtual monopoly status. The government must first undo the damage and protectionism, then they must step out of the way and let a genuinely free-market function. This is the quickest and most effective method of dispersing the big health and insurance monopolies.
Others say that incorporating a single-payer system would remove all unfairness and injustice and provide universal coverage at a price where industry could still make a reasonable profit. However, this shifts and magnifies the costs from direct consumer-level expenditures, to less apparent increases in taxes and almost completely hidden increases in inflation taxes through debt-based printing-press financing, which eventually destroys the middle class. Within a single-payer system how does one prevent healthcare providers from performing unnecessary procedures, treatments, or diagnostics? Just how does one control costs? The answer is: one doesn't. The consumer is not cost-conscious because cost is completely removed from view and from his or her decision-making process. Can there be any level of efficiency in such a system? "There are always government-controlled price-caps," some quip. Which provider would ever charge anything less than the maximum allowed? And is a price-fixed economy really the direction in which we wish to proceed? Have we really learned nothing from the failed economic policies of the former Union of Soviet Socialist Republics? In these questions, the economic absurdity of such a system quickly becomes apparent.
Many liberal-minded individuals seem to think that a genuine free-market approach to healthcare will leave the common people "for the wolves." This common characterization of the big health and insurance organizations may be accurate, but they have been given free reign precisely because of the protectionism they enjoy from government in the form of rules and regulations that prevent others from entering the marketplace. Remove this protectionism, and the wolves will be busy defending themselves from competitors, instead of gorging themselves silly in the hen house.
There are several alternatives that have not been given any attention in the current public debate, as they require greater individual responsibility, and therefore are politically unpopular. Thomas DiLorenzo, Professor of Economics at Loyola University, discusses the "facialistic" climate of the current healthcare debate, and Hans-Hermann Hoppe, Professor Emeritus of Economics at the University of Nevada, provides a thoughtful four-step solution to the healthcare problem. DiLorenzo also discusses Nobel laureate Milton Friedman's analysis of the history of healthcare supply in America in, "Socialized Healthcare vs. the Laws of Economics." Friedman's key conclusion was that, the more money that was spent on government-run healthcare, the less healthcare Americans received. Thomas DiLorenzo eloquently summarizes:
"The more money that has been spent on government-run healthcare, the less healthcare we have gotten. This kind of result is generally true of all government bureaucracies because of the absence of any market feedback mechanism. Since there are no profits in an accounting sense, by definition, in government, there is no mechanism for rewarding good performance and penalizing bad performance. In fact, in all government enterprises, exactly the opposite is true: bad performance (failure to achieve ostensible goals, or satisfy "customers") is typically rewarded with larger budgets. Failure to educate children leads to more money for government schools. Failure to reduce poverty leads to larger budgets for welfare state bureaucracies. This is guaranteed to happen with healthcare socialism as well."
Bringing up Milton Friedman's ideas is always sure to excite widely disparate and passionate responses. One colorful poster retorts: "I'll ask you to indulge me and help me understand why I should not dismiss Milton Friedman as a eunuch engaged in the universal effort of fourth graders to steal each other's lunch money?" The brief yet entertaining 1979 interview of Milton Friedman by Phil Donahue on Socialism vs. Capitalism should give one a cursory idea. The uniquely informative and highly educational unabridged version of this excerpt is also available in several parts.
Many believe that the principles of a free-market system go against humanitarian ideals. But this is simply not the case. Consider, in a free-market system, enterprise would be freer to address the needs of the less privileged, not because they would be directly involved in humanitarian activity (though this possibility is not precluded), but instead through the pursuit of their own self-interest. They would provide products and services to meet the needs of those less fortunate segments of the population. And this is the fundamental point: it’s through the pursuit of self-interest (contrast to selfishness) that we automatically provide for the needs of others. The underlying idea here is that self-interest can produce an orderly society benefiting everyone. Bringing Adam Smith’s ideas to the forefront of discussion, it's as though there were an invisible hand at work. In the words of Milton Friedman discussing Adam Smith’s Invisible Hand (from his 1979 PBS television series, "Free to Choose"):
“It is as though individuals who intended only to pursue their own separate interest were lead by an invisible hand to promote the public welfare which was no part of their intention. Adam Smith was talking about the economic market: about the market in which people buy and sell. He pointed out that in order for a butcher, a baker, or a candlestick maker to make an income, he had to produce something that others wanted to buy. Therefore in the process of promoting his own interests and looking to his own profit, he ended up serving the interests of his customers.”
One famous and commonly used quote to justify welfare state policies comes from John Kenneth Galbraith:
"The modern conservative is engaged in one of man’s oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness."
But consider this: is it really “unselfishness” to have one's choice of being altruistic taken away and instead having it forced upon the individual by legislative edict? Who’s really engaged in a superior moral justification for selfishness? The person who wants to leave people free to choose, out of a deep respect for individual choice and liberty—even when they disagree with those choices—or the person who wants to force others to conform to their own views, through rules, regulations, and legislation because they believe they occupy the morally superior higher-ground?
You decide.
"I think there has been one underlying basic fallacy in the whole set of social security and welfare measures. And that is the fallacy that it is feasible and possible to do good with other people's money. That view has two flaws. If I'm going to do good with other people's money, first I have to take it away from them. That means that the welfare state philosophy of doing good with other people's money, at it's very bottom, is a philosophy of violence and coercion. It's against freedom because I have to use force to get the money. In the second place, very few people spend other people's money as carefully as they spend their own." — Milton Friedman
"With respect to the two words "general welfare," I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators. If the words obtained so readily a place in the 'Articles of Confederation,' and received so little notice in their admission into the present Constitution, and retained for so long a time a silent place in both, the fairest explanation is, that the words, in the alternative of meaning nothing or meaning everything, had the former meaning taken for granted." — James Madison, Letter to James Robertson, 1831
"Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated." — Thomas Jefferson, Letter to Albert Gallatin, 1817
"Charity is no part of the legislative duty of the government." — James Madison
"When the people find they can vote themselves money, that will herald the end of the republic." — Benjamin Franklin
"I consider the foundation of the Constitution as laid on this ground that 'all powers not delegated to the United States, by the Constitution, nor prohibited by it to the states, are reserved to the states or to the people.' To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power no longer susceptible of any definition." — Thomas Jefferson, 1791
References:
1. Thomas DiLorenzo, "American Healthcare Facialism"
2. Hans-Hermann Hoppe, "A Four-Step Healthcare Solution"
3. Thomas DiLorenzo, "Socialized Healthcare vs. The Laws of Economics"
4. The Phil Donahue Show with Milton Friedman (1979)
5. Milton Friedman, "Free to Choose" (1979 PBS Series)
6. Adam Smith, "The Wealth of Nations"
7. Ludwig von Mises Institute, "A Free-Market Guide To Healthcare"
