Government controls violate rights, raise costs, cut access
By Brian T. Schwartz
April 28, 2007 Measured by access, survival rates and mortality rates, the United States has the best health care in the world. Yet costs are exploding for care covered by third parties – insurance, Medicare and Medicaid.
Why? Health care is so expensive because patients pay so little for it – just 14 percent out of pocket. Milton Friedman explains: “Nobody spends somebody else’s money as wisely or as frugally as he spends his own.” The cure is to repeal unjust policies that cripple a free market for health care.
These include the tax exemption for employer-paid insurance, mandated insurance benefits and Medicaid. They have disfigured real insurance into expensive low-deductible plans that are equivalent to prepaid health care. For example, requiring auto-insurance policies to cover the installation of life-saving anti-lock brakes sounds absurd, but politicians want to force health insurers to cover life-saving vaccinations. Further, extensive research has shown that patients with high-deductible policies spend much less than those with prepaid plans – with no measurable difference in health outcomes.
Tragically, many proposed cures submitted to Colorado’s Commission for Health Care Reform are the very cause of the disease: government controls that violate our rights, increase costs and reduce access. If implemented, they will perpetuate a vicious cycle in which government controls intended to “fix” a problem cause more problems.
My proposal to the commission, FAIR: Free markets, Affordability and Individual Rights, documents how the Colorado legislature can allow a free market to deliver better-quality, lower-cost health care – just as free markets provide other goods and services.
Medical “coverage,” or third-party funding, does not guarantee medical care, especially for Medicaid enrollees. My proposal shows that by the commission’s own standards, Medicaid fails miserably. Excessive third-party payment also erodes the doctor-patient relationship. Rather than satisfy the patient, doctors must satisfy insurance agents and government bureaucrats, frustrating both doctors and patients.
State-level insurance mandates hurt small businesses, discourage them from offering insurance and drive some insurers from the state. Medicaid crowds out private charities, unfairly competes with those remaining and increases the cost of private insurance.
Mandated benefits, guaranteed issue and Medicaid are inherently unjust because they violate a fundamental right – freedom of association:
• Mandated benefits prohibit affordable plans by increasing premium costs, leaving many uninsured.
• Guaranteed issue forces insurers to cover people who delay purchasing insurance until after they get sick.
• Legislation compels taxpayers to fund Medicaid to the detriment of both their own health care and charities that must earn donations.
More government controls and paternalistic “single payer” plans will do more harm. One’s health is a personal responsibility, and government should protect each individual’s right to cooperate with others to insure it. While the Colorado legislature cannot correct federal controls, it can restore some freedom in medicine.
The legislature should eliminate all state-level benefits mandates and phase out guaranteed issue for the self-employed. It should convert Medicaid from a monopolistic prepaid entitlement program to a voluntarily funded charity that, because it must compete for tax dollars, has incentives to improve care and lower costs. In short, the legislature should work to restore liberty.
This article was adapted from Brian Schwartz’s proposal to Colorado’s Blue Ribbon Commission on Health Care Reform. The full version is online at the commission’s Web site, colorado.gov/ 208commission.