Thursday, December 24, 2009

Is healthcare a right?

Many on the left think that healthcare is a right not to be denied to anyone. I think they're wrong. I think their hearts are in the right place, but they're simply wrong. And before you start with the heartless conservative crap, hear me out.

Everyone in this country deserves the opportunity for healthcare. No, and I mean no one, should be denied coverage. This, as I've said, is one of the things I think the current healthcare legislation has right. People with preexisting conditions should be able to get care, they should know however that they're going to be paying more. Smokers should be able to get healthcare insurance, but they should pay out the ass for it because they make the conscious decision to endanger their health many times a day.

Regardless of whether you think that healthcare is a right or not, let's try to look at the issue from an economic point of view. Even before we do that, we have to come to some realizations. Whether you like it or not, the United States of America was founded on free-market principles. We have a lot more regulation nowadays, but our economy is essentially a free-market, where supply and demand sets pricing. Even if you think that capitalism is the bane of humanity, it's here to stay. At least in this country. And so long as we have a capitalistic society, we can't be instituting things that will affect a large portion of the economy negatively. Healthcare is estimated to make up 16% (Washington Post), and instating a healthcare system which negatively affects the economic efficiency of said system will hurt the economy. There's no way around it.

Back to the question at hand.

Whether you believe it's a right or not, let's just consider it what it is; a good.

When you go to buy homeowner's insurance, you're purchasing a good. It's the same when you buy car insurance. You're buying a good.

"But those don't pertain to the wellness of people" you say. Some could argue that they do, but I won't. Let's dig deeper.

Health insurance is only one type of insurance used to hedge against emergencies or tragedies. What about life insurance? Life insurance is used to make sure that those who depend on someone else to make the living have fiscal security after their loved ones have died. Should this be considered a right? What about long-term care insurance. This is becoming increasingly more important as the baby boomers start to retire. LTC insurance is something bought by the insured to make sure that when the inevitable time arrives in which they are put in a care facility they won't be a drain on their family's wealth. Should this be considered a right?

We can extend this argument to dental insurance and optical insurance. Are these rights? They are certainly good things, and they should be made available to anyone, but they're not a right.

So what's a government to do? If health insurance is not a right, then what can it do to lower costs? First we have to address the first problem in this dilemma, which is the government is trying to do something (PLEASE GOD STOP THEM!). Their hearts may be in the right place, but their brains aren't.

Some people argue that the government should set prices. Hmm...

Let us explore when our government has tried to set prices in the past.

After imports of oil fell sharply in the 1970s, the government tried to "help" the citizens of the U.S. by doing two things, one good and one bad:

  1. They reduced regulation on domestic oil companies, allowing them to pump more oil into the market. (The Good)
  2. They started to fix prices of gasoline to keep the prices artificially below what the market would have set them at. (The Horrifically Bad)
Here's what the pricing structure looks like when the market is allowed to set prices:


Demand and Supply meet and the price is set. Let's see what happens when the government attempts to set prices lower than the market dictates:


When the government sets the price of a good it creates a shortage. When a good is in shortage, it must be rationed.

So, if the government considers healthcare a right it will start to set prices. In this case the price setting is taking the form of a heavily subsidized "public option" that still might get through both houses. As I said in my previous post, this public option business is just one more thing that will complicate the market and increase prices for free market alternatives. This will push more people into the public option and eventually drive private health insurance out of the business except for the very rich. The public option is just a stepping stone on the way to a single-payer health system for the progressives.

So after all private options are gone the government will be the only purveyor of healthcare. They'll be pressured to keep prices artificially low, which will create a shortage. The shortage (caused by everyone wanting healthcare and doctors leaving the profession because it doesn't pay as well as it used to) will create the need for rationing.

So next time a progressive, liberal, or Democrat tells you that healthcare is a right, and that government run healthcare won't result in rationing, explain to them in a nice and respectful manner why they're completely wrong and need to take a few courses on basic economics.

I did a little sleuthing of Canada's two main progressive parties, and even they admit that their healthcare system makes necessary the act of having to wait for care, both basic and specialized.

Here's a screenshot from the New Democratic Party of Canada website:


Kind of funny how the media in America keeps telling us that Canada's health system doesn't mean longer wait times for procedures.

Just like I said in my last post, if we stop looking at this issue from an emotional standpoint and start looking at it from an economic standpoint, it's starts to make more sense.

Thursday, December 10, 2009

The White House's goals for healthcare reform

I'll try not to be snarky about this. I have my views on the issue, everyone else has their own views. I'm not trying to change any views, I just want to explore things from a rational, economic, and common sense point of view, instead of just making decisions based on emotions, which I think is a major shortfall of the left's greatest downfalls when it comes to these things.

Taken from:

Key things they want to change:

- Reduce long-term growth of health care costs for businesses and government
- Protect families from bankruptcy or debt because of health care costs
- Guarantee choice of doctors and health plans
- Invest in prevention and wellness
- Improve patient safety and quality of care
- Assure affordable, quality health coverage for all Americans
- Maintain coverage when you change or lose your job
- End barriers to coverage for people with pre-existing medical conditions

Let's take these one at a time.

"Reduce long-term growth of health care costs for businesses and government"

Government bureaucracy won't achieve this. When I say bureaucracy I'm not trying to simply use emotional words to evoke hatred or mental images of lazy government employees. I'm talking to convey the sheer amount of "movement" that has to be achieved to get anything done when it comes to getting stuff done in a government setting.

Government is inefficient. If you can't admit that then you're either so far up your own ass that you'll deny anything bad said about government, or you've never had to deal with the government doing something that should be incredibly simple but turns out to be a giant clusterfuck.

I helped my father-in-law with some government paperwork. Remember cash for clunkers? He's a car salesman, but was given the task of dealing with the immense amount of paperwork that was necessary to get the money back from the government. We spent over a month dealing with the asinine forms, scanning, filling them out, dealing with the CFC website (a horrendous experience in and of itself), and then trying to submit. Every couple of days they'd change the rules and reject an entire batch of cars. We'd do them over again.

Government is so vast that for anything to get done, it has to go through many channels. Adding more bureaucracy to the healthcare mix will not do anything to reduce long-term growth of costs. I'm not too familiar with this part of the proposals, but I've heard about increasing mandates on employers. I think it's a nice benefit when employers provide healthcare for their employees, but I also think it causes more problems than it's worth.

If people were allowed the same tax benefit as companies have when it comes to healthcare costs (such as getting rid of the 7.5% AGI floor the current tax code has now for medical-related costs), the incentive to shop around for a better deal would be greater. Not only would people be able to have more choice than just what their employer offers, it would help mitigate the effect of one of the major causes of the uninsured today, that is, having healthcare attached to a job. When your employer provides your healthcare, you'd better hope that the economy doesn't go through a down cycle. If you get fired, you will be without insurance. Sure, there's COBRA, but it's expensive and doesn't last long. Detaching coverage from employment would at least save people from being uninsured if they lose their jobs.

"Protect families from bankruptcy or debt because of health care costs"

I think this is a great idea, but you have to explore why people were in that position in the first place. If a family has a member get sick and they have to go into debt to pay the hospital, it's a clear case of not being prepared. I'm not saying they deserve the debt, but they should have been better prepared. One of the major rules of being financially responsible is keeping an emergency fund of at least nine months worth of expenses. Not only does this cover the family for nine months in case of loss of jobs, it also is there to help with enormous medical costs, should they arise.

This is actually a whole other subject that deserves its own article, but I'll have to mention it to get my point across. Too many American families are in debt. They're not in debt because of evil banks or crooked capitalists, they're in debt because they lack the long-term thought processes that are so prevalent in millionaires. Most wealthy people aren't wealthy because they make exorbitant amounts of money. They're wealthy because they think and plan for the long term. They don't finance cars because they know that if they save the money they'll save a lot in the long run. They don't spend every dime they earn on unnecessary items. They save, they invest, and they prepare for the bad times while they're in the good times.

Too many families nowadays are have negative net worths because of their spending habits. This isn't so much a healthcare issue as it is a lifestyle issue.

"Guarantee choice of doctors and health plans"

I doubt a public option would affect this in the short-term, but it would kill consumer choice in the long-term. The government doesn't pay doctors a lot when it comes to healthcare. Why do you think that doctors will order all tests necessary? Three reasons: 1) They need to actually make money doing their job 2) They want to make sure they have their asses covered so ambulance chasers like John Edwards won't come and sue them for tortious acts and 3) They have no incentive to reduce costs for their customer if their customer has no incentive to reduce costs for themselves. When you don't pay for something, you don't shop around for the best price.

There wouldn't be a mass exodus of physicians overnight, but overtime, as the government takes more and more control of the healthcare industry, the incentive to be a doctor will be diminished. At that point there WILL be rationing of care.

And let's be honest here, the "public option" is just a stepping stone on the way to a single-payer system. Don't kid yourselves.

"Invest in prevention and wellness"

I see no problem with this, but what I fail to see is why the government must step in and do this. People can do it for themselves if healthcare is more affordable.

"Improve patient safety and quality of care"

Government can't increase safety of care. They can "mandate" or "regulate" safety rules that will, in theory, increase safety, but they can't guarantee it. Think of the big peanut scare a year or so ago. The FDA had rules on how to inspect peanuts, and there was still a government failure to ensure safety.

You don't hear the words
government failure in the news very often, but gee golly I sure am accustomed to hearing market failure come from the talking heads...

As for quality, see above under "Guarantee choice of doctors and health plans".

"Assure affordable, quality health coverage for all Americans"

Governmental frolics into the free market, whether they be in the form of regulatory changes and/or "competition" in the form of a government-run option, will always raise prices. Just like new taxes on businesses. You're a fool if you think that the firms simply absorbed the cost of new regulations and taxes. They pass them into you, the consumer.

"Maintain coverage when you change or lose your job"

Again, if people were allowed the same tax benefit as companies have when it comes to healthcare costs the incentive to shop around for a better deal would be greater. Detaching coverage from employment would at least save people from being uninsured if they lose their jobs.

"End barriers to coverage for people with pre-existing medical conditions"

I'm all for this. It WILL raise prices for everyone, but I think it's a noble cause. It will raise prices because more money will be leaving the insurance company's big "pot", so more money will need to go into the pot to cover costs. Too many people are denied coverage in this country. The insurance companies aren't perfect, and this is one of their major transgressions.

On a side note, keep in mind that you always will hear about the failures of insurance companies, and never the millions of people who've been helped by their insurance companies. That's not emotional enough for the media to air.

In conclusion, try analyzing important things (especially when they make up such a large portion of the economy) from an economic standpoint instead of an emotional one. It's easy to say that we should have universal healthcare because "we're the richest nation in the world" or "every human has a right to healthcare" or "because Europe does it". Try doing some critical thinking on the matter, and crunch the numbers. God forbid you pick up a calculator.