For those on the left side of the political spectrum, single-payer health care — a system in which the government, rather than private insurers, pays for all health care costs — is one of the most popular policy proposals in America. But the recent Hobby Lobby decision is reminding some liberal technocrats that giving the government full control over health care funding also gives the government control over what medical services will be funded.
Sally C. Pipes, president of the Pacific Research Institute, is interviewed at National Review regarding her new book, The Cure For Obamacare. NRO’s Kathryn Jean Lopez interviews Pipes about what Obamacare means for the US, and whether or not there is a better way.
KATHRYN JEAN LOPEZ: What’s the best answer to the question of what Obamacare means for the life of America?
SALLY C. PIPES: Obamacare has just celebrated its three-and-a-half-year anniversary. This is the federal government’s largest entitlement program since President Johnson’s Great Society, which he introduced in 1965. That was the year that Medicare and Medicaid were born.
Obamacare puts more control of our health-care system in the hands of the federal government. It is a program that moves this country on a clear path to European socialism.
It is my belief that Obamacare will not lead to universal coverage or bend the cost curve down. In fact, the CBO has recently announced that 33 million Americans will still be uninsured in 2023 and the cost from this year to 2022 will be $1.8 trillion, double the original estimate and the president’s goal of $900 billion over ten years.
Many politicians have talked of repealing the Patient Protection and Affordable Care Act (“Obamacare”). Mitt Romney has said nullifying the healthcare law would be one of his first actions if he was elected president. However, rather than just repealing the law and going back to the status-quo, with minor changes, the American people should demand true reform.
In 2001, Milton Friedman, the famed, Nobel-prize winning economist, published an article titled “How to Cure Health Care.” (Although worthy of serious consideration, Friedman’s analysis does not contain any explicit moral message, and is simply a policy analysis on healthcare. For a more in-depth look at the moral dimension of healthcare reform, visit Acton’s special section on healthcare)
In his essay, Friedman stated that, “The United States spends a mind-boggling percentage of its GDP on a health care system that virtually everyone agrees is a disaster,” and that was in 2001. Spending has only increased over the past decade. In fact, according to the Department of Health and Human Services Center for Medicare and Medicaid Services, the United States spent 17.6 percent of its GDP on healthcare in 2009, and this figure is expected to grow over time.
In addition to out of control spending, studies in the United States and Europe at the time were showing “…public dissatisfaction with the increasingly impersonal character of medical care.” Recently, a 2010 Gallup poll showed a majority of Americans are satisfied with the quality of healthcare they receive (62 percent rated quality as excellent or good), but only 39 percent rated the availability of coverage as excellent or good.
How did this happen? How has massively increased spending led to unsatisfactory coverage?
In four words: the government got over-involved.
Friedman explained, “In other technological revolutions, the initiative, financing, production, and distribution were primarily private, though government sometimes played a supporting or regulatory role.” However, in healthcare, the government decided to intervene and regulate extensively.
It all started at the onset of World War II when, due to wage and price controls enacted during the war, “firms competing to acquire labor at government-controlled wages started to offer medical care as a fringe benefit,” which was not recorded as part of their salary due to the wage-controls. As a result, employees came to expect healthcare from employers as part of their compensation.
The IRS eventually wised up to this and, wanting more revenue, started to tax the contribution. Workers raised an uproar so Congress passed a law, The Revenue Act of 1942 (Section 127 specifically), allowing, in Friedman’s words, “… medical care expenditures to be exempt from the income tax, if, and only if, medical care is provided by the employer.” This system, according to Dr. Donald P. Condit in his Acton Institute commentary “Should Business Be Responsible for Employee Health Care?”, “effectively punishes taxpaying citizens who are paying for health care benefits with after-tax dollars.”
Thus, if an employee paid directly for healthcare, this was added to their taxable income, but, if they went through their employer, it was not, setting up a large incentive to get insurance coverage from one’s employer. Condit states “medical spending has increased with this ‘tragedy of the commons’ scenario, wherein resources [health care dollars] are overconsumed with the perception that someone else [the company, the government] is paying.”
Friedman similarly demonstrated the result of this and other policies dealing with healthcare with a simple example: “In 1946, seven times as much was spent on food, beverages, and tobacco as on medical care; in 1996, more was spent on medical care than on food, beverages, and tobacco.” In 50 years, healthcare went from a minor expenditure to the major expenditure of most people, and, during this period, spending by individuals and government on healthcare approximately quadrupled.
Friedman explained, “On the evidence to date, it is hard to see that we have gotten much for quadrupling the share of the nation’s income spent on medical care other than bureaucratization and widespread dissatisfaction with the economic organization of medical care.”
What can be done?
For starters, Friedman said: “If the tax exemption were removed, employees could bargain with their employers for higher take-home pay in lieu of medical care and provide for their own medical care either by dealing directly with medical care providers or by purchasing medical insurance.” This would make families more responsible for their own healthcare and they could adjust accordingly, either spending less/more on healthcare or taking more/less in wages. (It seems that most would probably spend less on healthcare and take more income in light of this National Journal article).
This kind of reform would help by “reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes,” rather than using insurance to pay “for regular medical examinations and prescriptions.”
This sounds great, in theory, but how would such a drastic change actually be accomplished?
Friedman advocated for medical savings accounts. He stated: “A medical savings account enables individuals to deposit tax-free funds in an account usable only for medical expense, provided they have a high-deductible insurance policy that limits the maximum out-of-pocket expense.” This way, employees, not employers, would be responsible for their own healthcare spending, hopefully eliminating the third-party problem, while allowing the wages contributed to still be tax free.
Several companies, including Forbes, Quaker Oats, and the Golden Rule Insurance Company, tried out medical savings accounts instead of employer provided insurance and found that healthcare costs were lower and both management and employees were more satisfied than under the old employer provided system.
Friedman stated, “Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary.”
This puts responsibility back on the individual to care for his or her family and brings to mind the words of 2 Thessalonians 3:10: “If a man will not work, he shall not eat.” Modern healthcare is obviously not comparable to biblical food, but the concept of individual responsibility has largely been lost with employer provided healthcare. This reminds all that a family is better served caring for itself rather than relying on someone else to make choices, including healthcare, for them. Condit, in his essay, says as much: “Employer, or any third party, involvement in providing health care can interfere with an employee’s ability to make his or her own decisions and distort individual responsibility.”
Also, allowing families to manage their own healthcare costs would allow for greater efficiency by means of more efficient spending. For instance, instead of using insurance to pay for a doctor visit due to a cold or a small prescription, one could pay out of pocket. If most people paid out-of-pocket, the cost would likely go down because what individual would pay $80 (like my insurance company does) for a 20 minute doctor visit? By putting people in control and not insurance or government bureaucracies, one could expect people to “shop around” for quality doctors. Then, doctors’ offices would likely offer better care to compete for patients, instead of expecting an $80 to $100 payout from the insurance company or the government.
In addition, Friedman advocated for the abolishment of Medicare and Medicaid, which sounds rather radical. However, he said the government should “…replace them by providing every family in the United States with catastrophic insurance (i.e. a major medical policy with a high deductible).”
That way “the family would be relieved of one of its major concerns – the possibility of being impoverished by a major medical catastrophe – and most could readily finance the remaining medical costs.”
This should satisfy the concern that impoverished citizens would not get adequate coverage. Even if a small portion of the population is chronically ill or unable to pay their medical bills, these people would be covered by a government catastrophic care policy.
It is a citizen’s duty to care for those individuals in their communities who simply cannot help themselves. Condit states, “Christians, and others, are expected to fulfill a service obligation, with a preferential consideration for the poor and underserved.” This corresponds to the principles of subsidiarity and sacrifice seen throughout Catholic and Christian teaching.
In Luke 3:11, John the Baptist states: “The man with two tunics should share with him who has none, and the one who has food should do the same.” Jesus himself said, in Luke 14:13, “when you give a banquet, invite the poor, the crippled, the lame, and the blind.” Again, in Jesus’ and John’s teaching, the focus is on “you”, the individual, caring for ones neighbor, rather than an entity such as the government (or a corporation). The government, naturally being more impersonal and disconnected, could provide support in the severest cases, when communities and individuals could not support their own.
Rather than harming the less-fortunate and marginalized, this kind of health reform could free up time and hospital beds (many families would spend much less time and money on care) to help those chronically ill individuals who truly need the best care and doctors available. Friedman’s approach does not solve all the problems of healthcare (how do I know this doctor/hospital is reputable or provides good care since there is no rating service, what about those that refuse to or cannot pay out of pocket, etc.) and this is only a basic analysis, but it does offer a seldom discussed approach to improve care, allow for greater individual independence, and decrease costs.
Despite a promise of “complete and fair coverage of health care for everyone for free,” the Greek state-controlled system is broken and corrupt, the Athens daily ekathimerini.com reports. Predictably, Greeks have taken it upon themselves to build a private health care sector:
Despite hikes in Greece’s health spending between 2000 to 2008 being among the highest of all OECD countries, this has not been matched by growing life expectancy rates, the report added. Turning to the hospital system, corruption has grown due to poorly run operations and an improper organisation structure with about one in five Greeks admitting to having paid a bribe in order to receive medical treatment at a state hospital. These problems have contributed to growth in the private healthcare industry which provides crucial services but also enjoys the benefit of not having any competition, the report added.
In the UK, the National Health Service has been using hospital beds as housing for senior care, to the detriment of people who actually need hospital beds. From the Telegraph:
If current trends continue, almost 100,000 of 170,000 NHS beds will end up being filled by elderly people who are well enough to be in residential care. This will cost the health service millions of pounds and throw its day-to-day operations into chaos, says the report by Bupa, the health insurance and care provider. It blames the looming crisis on a “17-year legacy of under-funding in the care home sector”. The next few years will see the problem getting progressively worse, the report’s authors predict, despite a Coalition pledge that local authorities will have an extra £2 billion to spend on adult social care over the next four years.
For more on this issue, see Acton’s Health Care resource page.
Dr. Donald Condit joined host Drew Mariani on the Relevant Radio Network to discuss the positives aspects of end-of-life planning as well as the troubling issues surrounding end-of-life care under government health care systems. Dr. Condit is an orthopedic surgeon and the author of Acton’s monograph on health care reform, entitled A Prescription for Health Care Reform and available in the Acton Bookshoppe; he has also authored a number of commentaries on health care for Acton and other organizations; his most recent commentary can be read right here. And don’t forget to check out Acton.org’s special section on Christians and Health Care for a wealth of related information.
To listen to Dr. Condit’s 20 minute interview with Drew Mariani, use the audio player below.
Among the warnings sounded as the Democratic health care reform bill was being debated was that the federal insurance mandate included in the bill—even though not national health care per se—would essentially give the federal government control of the insurance industry. The reason: If everyone is forced to buy insurance, then the government must deem what sort of insurance qualifies as adequate to meet the mandate. This piece of Obamacare promises to turn every medical procedure into a major political fight, with special interest lobbying rather than objective medical expertise being more likely to determine what kind of health care gets covered and what kind doesn’t.
The problem goes beyond ugly politics, however, and into the realm of moral repugnance. The contention has already started, as the Catholic bishops have formally protested the pending inclusion of contraception and sterilization among items that must be covered in every American insurance plan.
Whether one agrees with Catholic morality is beside the point. The point is that this is no way to deal with a major economic sector in a free, pluralist society. Some medical doctors think chiropractors are quacks; some chiropractors think medical doctors are quacks. Some people think marijuana is an excellent pain killer; others think it is an immoral drug. The goods and services that the 300 million people in this country consider to be effective—or objectionable—instances of health care vary, sometimes dramatically, according to geography, culture, religion, and ethnicity. Now a single institution, the national government in the form of the Department of Health and Human Services, is charged with arbitrating which goods and services make the cut and which don’t. Those who lack the political clout to get their preferences included will pay coming and going: their insurance premiums will cover things that they don’t want and they’ll have to pay out of pocket for things that they do.
The variety offered by a medical market is a beautiful thing. Monolithic medicine mandated by a law that most Americans opposed is not.