American Healthcare Is Already Socialized Medicine; Can That Be Changed?

Here is a slightly cleaned-up version of a message I recently sent to my daughter, who had suggested I check out a piece in  I am not sure she anticipated the explosion she triggered.


I finally got around to the article, by a Dr. Darshak Sanghavi.  As usual with the lefties, there is just enough IQ at work to enable him to miss the point entirely, while wrapping up the standard lefty agenda with a bright bow.  Yes, of course, American healthcare is already substantially socialized – without benefit of Dr. Sanghavi’s article, I had made the same point in my recent Obama/RomneyCare piece.  Problem is that the doc uses this observation in support of further socialization, just as Hayek indicated the left always does:  first they feed you just enough of the drug to get you hooked, and then all further solutions are based upon building more drugs and palliatives around the condition rather than eradicating it.  Once you introduce a significant amount of central planning into the governmental methodology, the only response to the problems it fails to solve is more central-planning.   The contraption always gets more and more cumbersome and Rube-Goldbergesque, but that is the key to its longevity and charm:  only the academic branch of the left  is clever enough to keep re-working the contraption so as to keep it alive, though on permanent life-support.  (One can only be amused to learn that the doc went to Harvard.)

Specifically, the solution, as I suggested, is not to buy into the doctor’s “social insurance” model but rather to go back to the “actuarial model” (also his term), but this time to do the actuarial model correctly, not like the hybrid piece of garbage that we have allowed to build up under all American presidents starting with LBJ.  OF  COURSE a majority of Americans prefer the social insurance model  (a truism the Slate guy points out, and then uses as the launch-pad for the rest of his statist rant) – when no strings are attached (and the poll is taken without reference to how the proposed benefit is to be paid for), no human being living outside a monastery will ever turn down a “freebie.”  But that is the very essence of the demographic curse with which all liberal democracies must forever contend: the greater the proportion of the populace that you put into dependency upon government handouts, the greater the chances of your securing enough popular support for even greater levels of handouts.  This game did not start with Dr. Donald Berwick, or Obama, or Huey Long, or FDR or Herbert Hoover, or Teddy Roosevelt, or even Kaiser Wilhelm II.  Most of the various early versions of the Social Contract were nothing more than attempts to navigate through this very problem.

If you want to do healthcare right, and give yourself the best possible chance of evading the curse of the permanent “social insurance” model, you do what I have suggested in several of my postings:  you de-socialize the system but do it in a way that puts market forces back into play.   Paul Ryan has captured perfectly the essence of the “actuarial model:”  government’s role is not to manage healthcare provisioning and healthcare insurance (i.e., telling everyone what care to provide, how much to charge for it, how much should be reimbursed by insurance, etc.), it is simply to provide financial support for those who need it and then get out of the market’s way.

Specifically, 100% of all support provided by government to the less-fortunate or through Medicare should be in the form of vouchers, redeemable only as scrip usable for payment for healthcare services or healthcare insurance.   More specifically, the “get out of the market’s way” part is  simple:

  • a total lifting of all legal prohibitions (federal, state, or local) upon interstate offerings of individual or group healthcare insurance – in other words, create a truly national market (and thus a truly competitive market) for all healthcare insurance;
  • elimination of all differences between the federal income tax treatment of group insurance and the federal income-tax treatment of individual insurance – no more favoring of group policies at the expense of people holding individual policies – again, this re-introduces competition into the insurance market;
  • tort reform – Texas is a great model for this, and as a result, we have had large increases in the number of healthcare providers and large decreases in their cost of obtaining malpractice insurance, not to mention reductions in the enormously wasteful practice of excessively defensive medicine – we must get Ralph Nader out of healthcare; and
  • getting the government completely out of the business of controlling the pricing of healthcare products and services – this has to begin with turning Medicare  into a voucher model rather than a ‘free care’ model.   Every citizen should have the option to buy as much, or as little, insurance as he/she wants, in a competitive market, and those who cannot afford it (or who have preexisting conditions that make them uninsurable at reasonable rates) should be governmentally-subsidized through vouchers.   Citizens should be able to buy whatever healthcare products and services they want, from whatever provider they want;  in the case of Medicare recipients and others on a voucher system, they could apply their vouchers to buy healthcare directly and/or to buy as much (or as little) insurance as they saw fit.

You do all this, and, presto, the cost of healthcare sinks like a rock as market competition is brought back into the pricing model.  If people want to spend more of their savings on obtaining lower deductibles and co-pays under their insurance, that is their privilege.  Couple this with some common-sense reform of the FDA and sit back and marvel at what we accomplish.  And watch as Dr. Sanghavi slinks away and gets to look for an honest job as a real doctor rather than a fake economist.




Leave a Reply

Your email address will not be published. Required fields are marked *