Health Care Debate – The Public Option Nonsense

President Obama, a few days ago, had the following to say about a public health insurance “option”:

“I am pleased by the progress we’re making on health care reform and still believe, as I’ve said before, that one of the best ways to bring down costs, provide more choices, and assure quality is a public option that will force the insurance companies to compete and keep them honest,” the president said in the statement. “I look forward to a final product that achieves these very important goals.”

Let me explain in real simple terms why this is utter nonsense that should offend everyone’s intellect.

A public option means that the government establishes a group that takes on the task of insuring individuals. This group of bureaucrats will obtain subscriptions by advertising its insurance service to the public. They will be competing with other providers on the market. They will charge insurance premiums and collect money. They will pay out money to clients to the extent that the event that the client suffered is insured under the agreed upon terms. How much money they collect and what they insure has to be based on sophisticated mathematical formulas that ensure that the money collected from the insured is not squandered immediately.

So far so good. There is no big difference in what I outlined above between the group established by the government and any other health insurance company.

But where does the money come from that is used to establish this group? It is of course funded out of tax money, money that needs to be taken from individuals by compulsory means. In addition to that, the public option plan will of course be subsidized. The government will have to levy higher taxes on the people in order to continuously transfer this money to the newly established group. This may or may not enable them to charge lower prices to the consumers.

If it does, then the lower prices have been accomplished by theft via taxation, money that will be missing elsewhere. Money that they may have had to pay for a private insurance whose prices now appear higher than the public plan. But this has nothing to do with competition. This is classic crowding out of private businesses by the means of compulsory taxation.

There is only one way the public plan could possibly be called a public option. And that is if the government were to tell taxpayers: You have the choice to pay us an additional amount of x Dollars in exchange for ownership stakes. This money will be used to establish the new health plan, rent facilities, hire people, etc. And then on top of that, the government would have to guarantee that absolutely no tax dollars will be used to subsidize the newly established group. It would completely have to stand on its own legs. The person in charge would need to be paid out of what is left over after all other individuals have been paid.

You may have noticed that what I outlined above is simply a business, established via voluntarily contributed start up money, kept alive via revenue, and forced to earn an entrepreneurial profit, and potentially suffering a loss.

If this is what Barack Obama has in mind then he is free to get right on it. He could even be the entrepreneur in charge if he so desires. He would not need to summon Democrats and Republicans to his office for discussions, he wouldn’t have to travel through the country in order to hold one speech after another, having to defend his public option.

But obviously this is not what he has in mind. He wants to give us another taste of the inevitable Trouble With Bureacracy. He is thinking of yet another tax funded and subsidized government office. One simple question for Mr. Obama: He is saying a public option will force insurance companies to compete. Who forces the public option to compete?

This is obviously nonsensical … the ability to obtain tax money is the exact opposite of competition. But if the public option is under no pressure to compete, then how can it possibly force the existing businesses to compete?

(Please note that what I wrote above is rather forthcoming to the President’s argument. It assumes that currently we have a private and competitive health insurance market. But this is not the case. We already have a heavily bureaucratized and subsitized health care system. Thus some of the negative effects I outlined above are hurting us already. The Obama plan would merely add to this.)

We don’t need more of the same. We need health care reform, and we need it now.

As I explained before:

… if we truly want to fix the US health care system, that means lowering prices for health care services and products, we need to take those facts into account.

Any proposal that suggests even more government involvement, decrees, and spending than we already have, needs to be rejected unconditionally.

If you want to look for true solutions, listen to those people who recommend the opposite of what we have been doing for the past decades, and in particular the past 8 years, during which President Bush presided over an increase of public health care expenses on the federal level of no less than 100%.

Listen to the people who recommend to get the government out of health care, to spend less on Medicare and Medicaid, and to get rid of government decrees and rules that aim at regulating the market for health products and services.

Only then will the dream of affordable health care for every single American become reality.

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We Need Health Care Reform – Now!

I fully agree with the Campaign for Liberty Statement of Health Care Reform Principles:

Campaign for Liberty agrees that America’s health care system needs serious reform. We applaud the sentiment shared across the political spectrum that action must be taken and believe that our nation stands at an important crossroads.

Since the inception of managed care in the 1970s, excessive regulation and corporatism have damaged the patient-doctor relationship and driven up consumer costs. The problems we see today are the result of a collusion between big government and big business, not of market failure, and it is critical that instead of moving toward even more government and less freedom, America enact the right reforms to empower consumers and doctors.

Campaign for Liberty will support health care reform solutions that:

• Give Americans control over their health care by giving them control over their health care dollar via tax credits and deductions similar to those outlined in Congressman Ron Paul’s Comprehensive Health Care Reform Act (HR 1495).
• Protect privacy rights by allowing patients and physicians to opt-out of any government-mandated or funded system of electronic health care records, and repeal the federal law creating an “unique patient identifier” by adopting the policies contained in Congressman Ron Paul’s Protect Patients and Physicians Privacy Act (HR 2630).
• Empower doctors by softening antitrust law restrictions on health care professionals when they negotiate with insurers and medical providers. Our current system gives drug companies and cooperate interests all the power.

Campaign for Liberty will oppose any health care reform bill that:

• Raises taxes on any American.
• Forces Americans to purchase a government-approved health insurance plan, imposes fines or tax increases on individuals for failure to purchase health insurance, or conditions the receipt of any government benefit on the purchase or maintenance of health insurance. Instead, Congress should protect Americans from mandatory health insurance by adopting policies like those contained in Congressman Ron Paul’s Coercion is Not Health Care Act (HR 2629).
• Establishes a government-run or taxpayer-financed health insurance system. Creation of a “public health insurance option” is a first step toward the complete nationalization of health care. Government-managed and financed health care will inevitability result in lower standards, waiting lines, and rationed care.

This is consistent with what I wrote before about Fixing Health Care in the US:

Any proposal that suggests even more government involvement, decrees, and spending than we already have, needs to be rejected unconditionally.

If you want to look for true solutions, listen to those people who recommend the opposite of what we have been doing for the past decades, and in particular the past 8 years, during which President Bush presided over an increase of public health care expenses on the federal level of no less than 100%.

Listen to the people who recommend to get the government out of health care, to spend less on Medicare and Medicaid, and to get rid of government decrees and rules that aim at regulating the market for health products and services.

Only then will the dream of affordable health care for every single American become reality.

I may also point out again that already the US Government Spends More on Health Than Any Other Industrialized Nation:

percent of G.D.P. spent on health care, OECD countries
Source: Organization for Economic Cooperation and Development

John Tate sent out a newsletter today, urging Americans to take action:

Dear Friend of Liberty,

Universal health care has long been one of the chief tenets of the big government ideology.  According to its adherents, not only does everyone have a “right” to health care, Congress has the right to make you pay to ensure everyone has access.

President Obama and his allies in Congress believe all they have to do is constantly harp about the “high cost of health care” and American citizens will instantly fall in line behind their scheme to “take care of us.”

Want to opt out of this power grab?  Americans who do not have some kind of health care coverage will be forced to pay a “penalty tax.”

The President and Congress also want to increase taxes on the wealthy (an ever more inclusive definition for the government) and tax employer-provided health benefits to help pay for their plan.

According to Congressional Budget Office (CBO) estimates, Congress’ plans would increase the budget deficit by $239 billion over the next ten years.

It’s enough to make you sick.

Call your representative and let Congress know you want no part of this latest government power grab. Click here to sign our petition.  Urge your representative to take a stand for patients by supporting true health care reform – reform that ends government meddling and unleashes the power of the free market by encouraging competition and presenting real choices.

At Campaign for Liberty, we agree that America’s health care system needs serious reform.  Since the inception of managed care in the 1970s, excessive regulation and corporatism have damaged the patient-doctor relationship and driven up consumer costs.  The problems today stem from too much government, not market failure.

Instead of moving toward even more government and less freedom, it is critical that America enact the right reforms to empower consumers and doctors.

Click here to read Campaign for Liberty’s official Statement of Health Care Reform Principles.  Simply put, we will not support any plan that raises taxes on any American, forces Americans into the new system, or creates a “public option.”

We will support health care reform that gives Americans control over their health care dollars, protects patients’ privacy rights, and empowers doctors by softening antitrust law restrictions on health care professionals when they negotiate with insurers and medical providers.

President Obama is right that now is the time to take action.  It is imperative that we immediately get government out of health care to guarantee real, lasting reform.

Many in Congress and across the country have decided that there’s no point in trying to fight government’s takeover of health care.  They believe it’s a “done deal.”

I believe, however, that the Revolution that made Audit the Fed a mainstream media issue, brought the entire Republican Party and nearly a hundred Democrats onto HR 1207 in less than six months, and shocked the political establishment by refusing to back down after Ron Paul’s bid for the presidency ended, is the same Revolution that can successfully fight for real health care reform.

We can stand up to those who seemingly have nothing better to do than think up more ways to interfere with our lives.  Together, we can champion and achieve true, lasting change.

In Liberty,

John F. Tate
President

P.S. President Obama and his allies in Congress are trying their best to make sure visits to your doctor’s office are as pleasant as a trip to the DMV.  Please sign our Stop the Government Health Care Scheme petition and make a contribution to Campaign for Liberty today to help us lead the charge for real health care reform.

Who will stand up for change? Contact your representatives. Tell them you want health care reform, not more of the same. Tell them you will do everything you can to mobilize people against them if they vote for more of the same.

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US Government Spends More on Health Than Any Other Industrialized Nation

Catherine Rampell explains how U.S. Health Spending Breaks From the Pack:

Despite the fact that the United States is the only industrialized nation that does not ensure that all its citizens have health care coverage, the United States spends a (much) higher percentage of its gross domestic product on health care than its peers. It also spends (much) more per person on health care than its peers.

But that hasn’t always been the case.

percent of G.D.P. spent on health care, OECD countriesSource: Organization for Economic Cooperation and Development

The Organization for Economic Cooperation and Development recently released updated historical statistics on health care, showing that health expenditures have risen drastically across the industrialized world.

As demonstrated by the mass of squiggles in the chart above, the United States has generally been at the high end of health care spending. But once upon a time, it was more or less on par with its peers, and at various points even spent less of its G.D.P. on health care than some other countries (namely, Canada, Sweden, Denmark and Germany).

There were also a few years when it wasn’t the biggest spender per capita on health care, in purchasing power parity terms.

health spending per capita in US 2000 PPP dollars, OECD countriesSource: Organization for Economic Cooperation and Development Data shown are in United States 2000 purchasing power parity dollars.

Although you could quibble about the exact trajectories, it seems to have been in the late 1970s or early 1980s that America’s health care spending really broke from the pack.

Since 1980, the portion of G.D.P. that America spends on health care has risen by about 7 percentage points, whereas the average for other Organization for Economic Cooperation and Development countries has risen by 2.3 percentage points. Health expenditures per capita in the United States have likewise more than tripled since 1980, adjusting for inflation. The average for the rest of the member countries, where data are available, has more than doubled.

It is important to point out that the problem is not the fact that not everybody is ensured. The root of the problem is that health care is simply too expensive. I already explained this in Fixing Health Care in the US:

Any proposal that suggests even more government involvement, decrees, and spending than we already have, needs to be rejected unconditionally.

If you want to look for true solutions, listen to those people who recommend the opposite of what we have been doing for the past decades, and in particular the past 8 years, during which President Bush presided over an increase of public health care expenses on the federal level of no less than 100%.

Listen to the people who recommend to get the government out of health care, to spend less on Medicare and Medicaid, and to get rid of government decrees and rules that aim at regulating the market for health products and services.

Only then will the dream of affordable health care for every single American become reality.

Related Posts:

Fixing Health Care in the US

The large majority of Americans hold health insurance. It is estimated that about 15.6% don’t. But out of those who don’t, most are between jobs and not having health insurance remains a temporary phenomenon. About a quarter of the uninsured lack coverage for periods of less than one year.

The health care debate in the US too often focuses on health insurance per se. The real problem, however, is the fact that health care products and services themselves are too expensive. If one had to pay only a tenth or less of current prices for, say, a hospital visit or a doctor’s appointment, one might not even need insurance and could easily pay out of his pocket.

But even if one were to buy an insurance policy, the premiums would be much lower if prices for products and services were lower. Thus, the main objective of health care policy needs to be the lowering of prices along with an improvement of quality of all health care products and services offered.

Why are prices for health care so high in the US? It is simply because there exists no sector in this country with higher government involvement than health care. One look at the most recent budget shows us:

  • Department of Defense and international expenses (spending on wars and occupations) will go up from $666 billion to $673 billion (under President Bush it grew from $316 billion to$666 billion)
  • Other appropriated programs will go up from $613 billion to $695 billion (under President Bush it grew from $298 billion to$613 billion)
  • Social Security expenses will go up from $662 billion to $695 billion (under President Bush it grew from $406 billion to$662 billion)
  • Medicare expenses will go up from $425 billion to $453 billion (under President Bush it grew from $216 billion to$425 billion)
  • Medicaid expenses will go up from $259 billion to $290 billion (under President Bush it grew from $117.9 billion to$259 billion)
  • Other mandatory program expenses will drop from $673 billion to $571 billion (under President Bush it grew from $290 billion to$673 billion)
  • Net interest will go up from $139 billion to $164 billion (under President Bush it dropped from $222.9 billion to$139 billion)
  • Disaster cost will go up from $4billion to $11 billion (under President Bush it went from $0 billion to$4 billion)

In fact, public health care spending in the United States is higher than in most other large western countries. The Trouble With Bureaucracy is that always and everywhere it leads to higher prices and lower quality.

Every expansion of governmental powers (…) will inevitably lead to a bureaucratic misuse of the scarce factors of production available, an increase in poverty, and a lower standard of living for everyone.

The Montreal Economic Institute points out some interesting fact about the US health care system in Two myths about the U.S. health care system:

A totally private system?

Another big myth presents the U.S. health care system as totally private, or almost. It is true that most health care establishments are private – either for profit or non-profit – and that private health insurance systems generally run on a forprofit basis (apart from Blue Cross and Blue Shield). But it is incorrect to suggest that public health care spending is low or that no public health insurance system exists in the United States. The U.S. very clearly has public health insurance systems, Medicare and Medicaid. Heavy public spending also goes toward various areas such as public hospitals or Department of Veterans Affairs facilities.

With everything taken into account, public health care spending in the United States is higher than in most other large western countries (see Figure 1). Public health care spending as a proportion of GDP is 6.6% in the U.S., putting it ninth among the 30 OECD countries. It should be noted that the U.S. comes just after Canada, where public health care spending accounts for 6.7% of GDP. Moreover, per capita government spending is higher in the U.S. than in Canada – $2,364 compared to $2,048 at purchasing power parity, based on OECD data.

(…)

The corollary of this myth is that the health care market in the United States is completely free and that unbridled capitalism runs rampant. In fact, the U.S. health care market is highly regulated at several levels, leading to distortions in the use and supply of care. This explains in part the difficulty that millions of Americans face in paying for private insurance. Standards set by state governments and by federal authorities are ubiquitous in the insurance field, limiting the introduction of cheaper, more accessible policies. Regulations specify, for example, which medical procedures an insurance policy must cover. Private health care supply is also tightly regulated, both by the medical profession and in the management and financing of health care establishments.

(…)

Conclusion

Contrary to myths that have been going around, only a small minority of Americans are involuntarily uninsured on a long-term basis, and even these people generally have access to free health care. Public health care spending is higher in the United States than in most other OECD countries, and the U.S. has sizable public health insurance systems.

The problems of the U.S. health care system largely result not from its private character but rather from the heavy regulation to which it is subjected and from the way the insurance system functions. The tax treatment of insurance and the very low degree of direct involvement by policyholders in controlling health care costs are partly responsible for bloated insurance premiums and for the presence of a certain proportion of uninsured people.

As with public financing, when the payer is a third party, costs tend to run wild. In this regard, it is not very surprising to see that the most innovative solutions proposed for reforming the U.S. health care system resemble those suggested for dealing with problems in the Canadian system. These solutions involve the assumption of greater responsibility by patients receiving care and a liberalization of supply mechanisms, whether in terms of care or its financing.

One highly promising suggestion involves health savings accounts, established in 2003 with slightly over a million accountholders across the United States by March 2005. These accounts enable individuals to build tax-free savings for coverage of health care costs while purchasing insurance policies with fairly high deductibles but lower premiums. Be that as it may, a more realistic perspective of the advantages and flaws of the U.S. health care system would lead to a more pertinent debate than the repetition of unfounded myths.

… if we truly want to fix the US health care system, that means lowering prices for health care services and products, we need to take those facts into account.

Any proposal that suggests even more government involvement, decrees, and spending than we already have, needs to be rejected unconditionally.

If you want to look for true solutions, listen to those people who recommend the opposite of what we have been doing for the past decades, and in particular the past 8 years, during which President Bush presided over an increase of public health care expenses on the federal level of no less than 100%.

Listen to the people who recommend to get the government out of health care, to spend less on Medicare and Medicaid, and to get rid of government decrees and rules that aim at regulating the market for health products and services.

Only then will the dream of affordable health care for every single American become reality.

Related Posts: