Health Care Reform and Existing Regulations

Earlier this week, our President Obama, not knowing the truth to which he spoke, stepped forwards to assert, “Time and again, the American people have suffered because people in Washington played the politics of the moment, instead of putting the interests of the American people first.”

He continued, “That is how we ended up with premiums rising three times faster than wages; that is how we ended up with businesses choosing between shedding benefits or shutting their doors; that is how we have been burdened with runaway costs and huge gaps in coverage.”

The president undoubtedly believes more government involvement in the health care sector can “pressure” America to better-controlled costs, whilst covering an even larger segment of the American citizenry.

When he says, “[T]here are going to be some areas where we want to regulate the insurers a little more,” what is one to gather other than such?

Yet, few in Washington acknowledge--let alone accept any responsibility for--the political catastrophe wrought by decades of shortsighted regulations, instead they seek perpetually to portray this health care situation as a free market failure.

However, government-run health care, if when one views the economic literature, cannot with all its poorly channeled incentives, insulated inefficiencies, and scores of hidden costs provide patients with the quality of care and reasonable prices as well as a well-designed private sector.

With such said though, health economist Patricia Danzon wrote, “The performance of the current U.S. health care system does not provide a guide to the potential functioning of a well-designed private market system.”

She further noted, “Cost and waste in the current U.S. system are unnecessarily high because of tax and regulatory policies that impede efficient cost control by private insurers…”

The health care industry stands as one of the most heavily regulated, and thusly strangled, sectors in the American economy.

Although the multitude of these ill-starred regulations commenced rapidly in the New Deal era and developed ever-increasingly thereafter, America’s economic history has never been as laissez-faire as some, for better or worse, want to perceive.

For example, Congress insipidly mimicked the British in 1789 by funding the Marine Hospital Service by monthly taxation of American seamen.

Health economist Linda Gorman observed, “As U.S. government grew, [politicians] continued passing laws to regulate the kind of health coverage people could purchase.”

These regulations run the gamut from blocking entry into the medical profession to limiting extensively selective options for managed care plans, from artificial cost controls on insurers, hospitals, and pharmaceutical providers to numerous moralistic laws that dictate the very lives of individual Americans.

All these added regulations do not come without their own set of unpleasant economic consequences;--that is, imposed regulatory costs push up health care prices which directly lead to increased numbers of uninsured.

The economic phenomenon, known as “The Regulatory Wedge,” pilots inflation upwards due exclusively to government prescribed regulations.

With the given amount of existing regulation, some health care analysts have reported that the regulatory wedge to be larger than eight percent of total cost spent annually in this sector.

Gorman, also, remarked, “The true cost of health care was hidden from covered individuals. Vast spending increases were the result. The introduction of Medicare and Medicaid in 1965 made the situation worse.”

For example, National Bureau of Economic Research’s Amy Finkelstein discovered that Medicare itself increased real hospital expenditure by some 23 percent within the first five years of the program.

The myriad regulations, broad and minute alike, enforced by government to lessen the weight of costs below the given market equilibrium only distorts the supply-and-demand factors, whilst shifting the true cost to less seen areas.

President Obama, alongside many congressional members, lacks the economic comprehension to understand it requires more than just regulating costs, for prices are signals, or more fitting symptoms, of markets actually working, healthy or otherwise.


Several issues arose with this column. One being that the last paragraph was published without “economic,” “actually working,” as well as “otherwise” was not changed from “not.” Second being that it lacked a certain "smartassness" that I felt the other two in the series had.

Health Care Reform and Gov’t Bureaucracy

Within the past week, House and Senate Democrats delivered Congress two Health Care Reform bills, each meeting the nonsensical guidelines set forth by our President Obama. As well, the president released a statement praising and endorsing the House bill, saying this “proposal will begin the process of fixing what’s broken….”

According to Fortune’s senior editor at large, Shawn Tully, “The two bills [will] require states to establish insurance ‘exchanges’ that [will] offer a variety of plans.” Interestingly, each state’s ‘exchange’ will exist as completely separate markets, not benefiting from national competition--thusly, not benefiting consumers and taxpayers.

For all of these plans, the federal government will impose across all states minimum standards;--that is, standards “often more stringent and expensive than the existing laws require.”

The Senate bill already has a preliminary menu, including mental health and substance abuse programs.

Tully continued, “A special panel of experts [will] add to that list, and [one] can bet that the additions [will] be substantial and costly.” Noteworthy, added regulations and more bureaucracy have only augmented and exacerbated costs and inefficiencies, never lessening.

The myopic idea that a “public option” will compete squarely against private plans--let alone spur innovation--lacks basic economic realism. Ultimately, this “public option” will spur private insurers thoroughly out of the marketplace altogether.

In the 2005 article, “The Thing Itself,” political economist Michael Munger wrote, “We [cannot] make government more efficient, or more like business, because it insulates officials from such pressures by design.”

Government bureaucracy, or as Calf. Rep. Henry Waxman wants it known as “accountable organizations,” shares not in the incentive mechanisms by which the private sector must abide.

Public options, merely by the inescapable nature of bureaucracy itself, cannot efficiently allocate its resources to meet its demand; from this occurrence, a deadweight loss materializes. With such a loss, we can only expect unparallel shortages and surpluses nationwide, as witnessed in energy markets through the 1970’s.

More so, bureaucracy with its prodigal incentives survives solely by undercutting its inefficiencies and incompetence through government appropriated subsidies at the taxpayers’ expense.

Private insurers, however, lacking such profligate capacity, compete by addressing their allocation of resources efficiently and doing so continually.

By maximizing profits, whilst minimizing costs, they are impelled perforce through competition to provide better benefits at better prices to their consumers, or they simply cease operations, in which freeing up resources for others to use more efficiently.

This--Capitalism--is what spurs innovation, not government monopolies, dancing on political heartstrings at bureaucratic impulses.

As health economist Patricia Danzon explained, “Both economic theory and a careful review of the evidence… suggest that a government monopoly of financing and provision achieves a less efficient allocation of resources to medical care than would a well-designed private market system.”

In addition to the forgone benefits experienced by the consumer, government health care structures and systems harbor numerous hidden costs, unlike free market systems.

However, when by good intentions government gets involved, consumers and taxpayers get taken obligatorily in lordotic fashion by roughshod bureaucrats.

The president, nonetheless, has proclaimed from the stump to the Oval Office: “[I]f you’re happy with your plan… you keep it.” Yet, with the federal government underwriting costs artificially by use of taxpayer subsidies, no private insurer will be able to compete.

Our President Lincoln once said, “You may fool all the people some of the time; you can even fool some of the people all of the time; but you cannot fool all of the people all the time.”

Undoubtedly, President Obama, as most, has heard this hackneyed passage before, yet one must question if he bides by such an overtly honest sentiment.


This my second column in the series on Health Care Reform for Marshall University's campus paper, The Parthenon. It is presently the Featured Article at the Marshall Libertarians website. Links to both site in the top left-hand links' box. The column itself turned out to be better that I thought it might at moments.

Health Care Reform and the Individual

Two weeks back, ABC News hosted, “Questions for the President: Prescription for America”--that is, a Health Care Reform forum with our President Obama.

The president fielded, and vacillated himself through, a number of intentionally severalfold questions. These questions were posed by an array of individuals, representing the medical profession, patients, and just simple taxpayers.

The president attempted, struggling to maintain his notedly disarming ease throughout the evening, to assured his fellow Americans that this reform bears no similitude to big government bureaucracy.

The president reached to comfort some by downplaying their Orwellian anxiety, as he put it, “the whole big brother fear,” by playing up his usual soundbite: “[I]f you’re happy with your plan… you keep it.” Yet, a soundbite only simplifies the complexities of the world at the bastardization of reality.

Nonetheless, one audience member told of her 105-year-old mother and how five years back the mother came into need of a pacemaker.

The mother’s general physician was honest about the apparent unlikelihood of the procedure after one arrhythmia specialist claimed the patient was just too old, yet he sent the mother to another arrhythmia specialist. This specialist, however, taken aback by the mother’s “joy of life” agreed to perform the operation.

After this situational explanation, the questioner poised her query: “[I]s there any consideration that can be given for a certain spirit, a certain joy of living, quality of life? Or is it just a medical cutoff at a certain age?”

The president joked and bloviated through his response to finally conclude: we cannot “make judgments based on peoples’ spirit,” noting that to “be a pretty subjective decision.” Clarifying simply, he said, “[W]e have to have rules…”

However, when pushed by the same questioner, President Obama stated, “[I]f we’ve got experts… advising doctors across the board that the pacemaker may ultimately save money, then we potentially could have done that faster.” The potentiality of government efficiency has not been backed by the numbers and/or by history.

One cannot escape pondering, who shall these “experts” making these “rules” be?

The answer austerely remains the same even amongst Washingtonian doublespeak. These “experts,” no matter political titles, are bureaucrats.

How can this Health Care Reform be patient-based, when the individual is left out?

When the president claimed these decisions cannot be based on so-called subjectivity, he simply should have mentioned it as it is: decisions cannot bear on individuality.

However, no physicians cannot acknowledge that each patient comes with a different medical background, a different attitude, a different “quality of life.” This is where doctors, along with patients’ guidelines, make the final judgment based on these individualities.

What is lost upon advocates of this type of Health Care Reform is that all patients and doctors are making the cost-and-benefit analysis. When we outsource these analyses to government bureaucrats under compulsory laws, we cannot expect but to out-ship patients, as did Norway several years back, by sending patients to private, foreign hospitals.

“I don’t want bureaucracies making [the] decisions,” the president told the audience, “but understand… [the] decisions are already being made….” He cited that they are “being made by private insurers.”

The president fails jejunely to recognize the individual element. Individual patients are individual consumers in the health care market, in which goes medical insurance. And under a free market system, as Disney CEO Bob Iger said recently, “The consumer is king, not us the content provider and not you the distributor.”

This discussion is not solely societal, political, economic, or even medical. It is all of these and as well a philosophical one. We must be willing to ask ourselves some deeply rooted questions about our own individuality, such as where does the individual stand when against the collective.

The answer historically is in a line with a number.


This column is the beginning of a series on the issue of Health Care Reform. I find the topic interesting, yet more so it seems in need of serious and thoughtful discussion.

Batman and One's Moral Philosophy

Firstly, the most dynamic of heroes and villains must be neither contrived solely of evil nor good, of black nor white, yet exist within the myriad greys of life for a viewing audience to relate. No longer the starkly poised construct of idiosyncratic foiling will pass simpleton critique. The fundamental distinction, however, arises in that the villain finds meaninglessness in the grey reality of the present world of circumstance, while the hero develops out of this chaotic veracity a moral paradigm wherein a black-and-white system must evolve, separating the blurring shades into two demarcated groups.

Secondly, an example of this is shown in our mythology of Batman. Here is a man who is struggling for order out of an arbitrary world, where his foes find only the opposite. What divides him from the rest simply is that he strives for a moral philosophy, while the rest accept none. A world without man is a world without moral philosophy, for only he can rein in his environment;--it stands so for his survival. So, the mental fitness of man basically is all with which he is equipped.

Finally, once I would have agreed with the relative nature of morality, yet coming away from that stance wherein I developed (as we all must) a personal philosophy, mine being of productivity. In so saying this, a society grows and prospers where the morality is steered by personal property, personal responsibility, personal choice, etc. Myths and folklore find little space, if any, in the era of science and reason. I can justify many actions founded on a cost-benefit analysis, due to personal responsibility, yet no form of rape can be justified, for it attracts personal property and personal choice;--thusly, undermines the very fabric of efficient and productive civilization.


This is a cleaned-up YouTube reply I penned several months back. I find interesting in some fashion. I hope it is enjoyed.