Germany, the United States, and Mandatory National Healthcare

Miriam Widman, writing last week in Spiegel Online, points up the fallacies of government-mandated national health insurance, although this wasn’t her intent.  Her lede:

In Germany, people are baffled by how hostile a country as religious as the United States can be to the principle of mandatory healthcare insurance.  Not even conservatives question the system, which businesspeople say gives Europe’s largest economy a competitive advantage.

Let’s look at her argument and German bafflement.

First, a minor point:

[Germans] also question the continued portrayal of US President Barack Obama and his health reform backers as socialists and communists, noting that healthcare was introduced in Germany in the 19th century by Otto von Bismarck, who was definitely not a leftist….

Terms like “Left” and “Right,” “Liberal” and “Conservative,” are terms whose meanings evolve over time—as they must.  No one would confuse today’s conservative, for instance, with the 18th century conservative who insisted on the supremacy of monarchist governments over the people they ruled; nor would anyone would confuse today’s liberal with that same century’s liberal, who demanded a limited government subordinate to, and responsible to, the Sovereign people who hired it.  Widman’s remark here is simply a non sequitur, borne of a sloppy conflation.

Moving on,

[M]andated coverage is something that is simply not questioned in Germany.  Furthermore, even the most pro-market politicians wouldn’t dare to dismantle the country’s health insurance system.

This is a trap into which Americans simply are loathe to fall, for the reasons outlined below.

The requirement that everyone buy health insurance is based on a simple concept, healthcare experts agree.  Allowing healthy people to opt out of having health insurance destroys the insurance community and leaves insurers covering only the sick.

Leaving aside the careful elision of who these “experts” are, this claim simply demonstrates a complete misunderstanding of what insurance is.  I’ve written here and here about the nature of insurance—a risk transfer industry—I won’t repeat that here.  I’ll just point out that what the Germans have, and what Obamacare is, are simply welfare programs.  Their connection to insurance exists only via a commonality of names.

America’s Health Insurance Plans…filed an amicus brief with the Supreme Court in January saying the required coverage mandate cannot be divorced from Obama’s healthcare reforms.  …it wrote: …

“A wide range of experts has consistently agreed that enacting guarantee issue and community rating has severe unintended consequences unless they are paired with a strong commitment to achieve universal coverage through an effective and enforced personal coverage requirement.”

In plain English, this means that if only sick people sign up for insurance it is impossible to insure people regardless of pre-conditions, or to limit insurance companies’ ability to set prices based on an individual’s history and risk.  Everyone has to take part—sick and healthy people—for the system to work.

AHIP is right on this.  However, with respect to “set[ting] prices based on an individual’s history and risk,” this is exactly what insurance is.  MOreover, as Milton Friedman showed in a 1991 Wall Street Journal article on the effects of federally inflating health care demand through government mandated participation in Medicaid, our first universal health care welfare program, such mandates simply inflate the cost of both health care and of the “insurance” that claims to cover those costs.

The right answer here is to allow free market forces to govern both a true risk transfer industry and the health care provision industry (an aside: these two industries too often are erroneously assumed to be one and the same).  Just as the breakup of the world’s best telephone system—Ma Bell—led to lower prices to consumers and an even better suite of communications services, so competition will lead to lower insurance—risk transfer—costs for the consumer, lower medical costs to the consumer, and an even better suite of services in both industries.

Widman cites a private business proprietor, who extolls the virtues of an employer providing at least some of her employees’ health insurance:

“As an employer I would never question hiring somebody and not insuring them,” says Seattle native-turned Berlin café owner Cynthia Barcomi. … The American entrepreneur said she’d offer health insurance to her employees even if she weren’t required to by law…because people are more productive if they think their employer cares about and believes in them.

Indeed.  This is one of many sound business solutions to a question of employee productivity.  For government to mandate that this particular solution must be used by all businesses, though, regardless of those business’ individual, unique circumstances is both immoral and inefficient.  It’s immoral because it takes away the responsibility of the business owner for the outcomes of her business decisions and arrogates that responsibility to government.  It’s inefficient because it mandates a one-size-fits-all solution whose costs of implementation—costs driven in part by the artificial demand created by the mandate—prevent that business owner from implementing other solutions that might be better in his business’ circumstance.

Then Widman plays the religion card.

“For me the US is a very religious country. It doesn’t matter which religion I look at—love thy neighbor is a very, very important point in religion,” [National Health Insurers Association spokeswoman, Ann] Marini says. … Wolfgang Zöller, a member of Bavaria’s conservative Christian Social Union party, argues that Christian principles support a national healthcare system and both are compatible with capitalism.

Here, too, the larger point is missed.  It’s certainly true that our Judeo-Christian ethos and morality levies on each of us individually a requirement to look out for the least among us.  But this is not a mandate on government to absolve us of that individual responsibility by arrogating the obligation to itself and applying a universal mandate to all of us.  That responsibility is levied by our Creator on each of us individually because each of us is unique and in unique circumstances.  The manner in which we satisfy our obligation must, therefore, be individual—even though many of us may adopt similar means.

Then, on what basis does government presume to dictate to each of us what our religious practice must be?  On what basis does government dictate to any of us how we must carry out our religious practice—or that an atheist or agnostic must carry one out at all (oh, wait—government has already made these arguments here and here)?

That larger point, though, is irrelevant to Marini, Zöller, and their ilk.  Zöller makes this clear:

The question of health insurance is a humane question.  I want every person—independent of age, independent of income or pre-existing conditions—to have the possibility to be helped when he is sick.

This is certainly a discussion we all should have.  But what Zöller is describing isn’t insurance at all—it’s welfare.

In the end, Americans and Germans must answer for themselves two questions.  First, we must answer definitively the question of whether we want insurance or welfare.

And then we must all answer the question of whether we want government to impose a one-size-fits-all solution (to a thus far misunderstood problem) on all of us, regardless of where our individual choices, our individual situations, might take our private businesses, or us.

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