Category Archives: rights

Germany, the United States, and Mandatory National Healthcare

Posted on by
Reply

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.

Mind Sets

Posted on by
Reply

One of President Obama’s jokes at the recent Correspondents’ Dinner was along the lines of

I want to thank all the members [of Congress] who took a break from their exhausting schedule of not passing any laws to be here tonight.

So, says the Progressive-in-Chief, Government’s role is to pass more laws, to be more intrusive and controlling.

Others have an alternative mind set.

[A] part-time Congress.  Cut their pay in half, cut their time in Washington in half, cut their staff in half, send them home.  Let them get a job like everybody else back home has.

Then they could have a productively busy schedule.

This is Promising

Posted on by
Reply

Fox News reported over the weekend some excellent news concerning the Mojave Desert Memorial Cross, also known as the WWI Mojave Desert War Memorial.

A veterans group can restore a memorial cross in the Mojave Desert under a court settlement that ends a decade-old legal battle….

The [National Park Service] will give up the acre of land [the hilltop area known as Sunrise Rock on which the cross had stood for decades before thieves stole it after losing a court battle to have it removed legally] in exchange for five acres of donated property elsewhere in the 1.6 million acre preserve….

Justice Anthony Kennedy, siding with the 5-4 majority, wrote that the cross evokes more than religion.  “It evokes thousands of small crosses in foreign fields marking the graves of Americans who fell in battles, battles whose tragedies are compounded if the fallen are forgotten[.]”

As part of the settlement,

[o]nce the swap is complete, the park service will fence the site, leaving entrances for visitors, and post signs noting that it is private land. A plaque will be placed on the rock noting that it is a memorial for US war veterans.

No small amount of credit goes to Liberty Institute, who fought the legal fight for so long, and to Henry Sandoz, who worked so hard and so long maintaining the cross—keeping a promise he’d made those decades ago to his dying friend, Riley Bembry, who had erected the original cross in 1934—and producing the replacement that will go up when this all comes to fruition.

It’s not time to celebrate, yet; the land swap isn’t completed, the cross hasn’t been emplaced, and in the event, we still need to be alert for a repetition of the theft that prolonged this case.

Some Thoughts on “Health” Insurance

Posted on by
1

Dr Alan Blinder demonstrates an amazing lack of understanding of insurance and of welfare for a Princeton professor and erstwhile vice-chairman of the Fed.  “Health-care reform,” he writes, “the impossible dream that seemed to become a reality in 2010, is now in mortal danger.”

As he acknowledges, this is no small matter, impacting as it impacts one-sixth of our nation’s economy.  He also correctly recalls a bit of history: “our country was founded on the idea that the rights to life, liberty and the pursuit of happiness are inalienable.”

Then he demonstrates his lack of understanding of any of this by adding this false premise to his argument:

Access to affordable health care is surely essential to two of these three rights, maybe to all three.

Then he conflates the Patient Protection and Affordable Care Act—a mandated health “insurance” program that’s much broader in its sweep than just the Individual Mandate—with affordable health care itself.

As John Adams so rightly put it, Happiness is this:

All men are born free and independent, and have certain natural, essential, and unalienable rights, among which may be reckoned the right of enjoying and defending their lives and liberties; that of acquiring, possessing, and protecting property; in fine, that of seeking and obtaining their safety and happiness.

There’s nothing in there that puts government at the forefront of doing for us—we’re responsible for our own outcomes.  Of course there’s also nothing in there that prevents government from helping, either, and there is a proper role for government in this arena.

Let’s look at Blinder’s view of that role.

We are…the only rich country that fails to insure all its citizens.  The Patient Protection and Affordable Care Act of 2010 seeks to end that.

Aside from the fact that it isn’t government’s role to inure us from the exigencies of life, this position confuses insurance with welfare.  Insurance is a voluntary contract between two parties: one with a risk he wishes to mitigate and the other willing to accept some or all of that risk for a fee.  But the exchange doesn’t work unless the fee charged actually is commensurate with the risk—that is, the insurer must be able at least to break even over time and across many such contracts for the exchanges to be feasible.  To make a business of this, the insurer must be able to make an actual profit.  This applies even to governments as “insurer.”  Adam Smith understood this.

…the tax code incents employer…. For another, we have somehow decided that the state should provide anyone age 65 or older with health insurance, while everyone younger should fend for themselves. I’d hate to have to explain either of those choices to the proverbial man from Mars.

So the right answer to this is to increase taxes and other costs in order to force us all into a program that not all of us want.  Interesting, that.  Another answer would be simply to flatten the tax code and to remove the incentives, health-related subsidies, deductions, et al., from the code for both employer and employee.  Of course, to best work, this also would require government to get out of  the way of the health insurance and health care providing industries (mind, these are separate industries), and place them into actually competitive environments, for instance, allowing health insurance policies to be sold across state boundaries.  There are other pro-competitive moves needed, also, but they’re outside the scope of  this post.

The “everyone younger fending for themselves” bit is a distortion of the actual situation.  I’ll come back to that.  We may have thought it a good idea for government to provide seniors with health insurance 50 years ago, when there were 5, 6, and 7 workers for each senior/retiree, but as we’re learning today, we cannot afford it any longer (if we ever should have tried to) either economically or demographically.  That’s because, like Social Security, the senior health insurance programs—Medicare and Medicaid—are not programs where those seniors’ Federal Medicare (and Medicaid) taxes were sequestered against their eventual attainment of senior-ness for their own use, but were paid out to current seniors in a pay-as-you-go manner.

Which brings me back to “everyone younger.”  Today’s far fewer younger (there are only a bit over 3 workers per retiree today) are not allowed to fend for themselves—they’d be better off if they were.  Instead, their take-home pay is reduced by those medical payroll taxes, which are immediately transferred to others; these younger are not allowed to put that money into their own retirement health program.  Indeed, the government limits who is allowed to have their own Health Savings Accounts to those wealthy enough to afford Very High Deductibles in their insurance policies, and this same government caps how much “everyone younger” is allowed to put into one of those accounts in any given year.  Blinder’s precious health care reform does nothing to redress this.

Finally, metaphor aside, I care not a farthing for what the man from Mars might wonder—my business is mine, not his.  Nor is it the business of any earthly government.

Why does the law require people to purchase health insurance?

Like most forms of insurance, health insurance is plagued by potential adverse selection.  Pick any price, and riskier customers—the people more likely to file claims—will find the insurance policy more attractive than less-risky customers.  So in health insurance, in particular, insurance companies expend huge resources trying to screen the bad risks out and the good risks in.  One obvious way is to exclude people with pre-existing conditions, but there are others.  All this effort adds to national health expenditures, improves insurers’ profits, and hurts the bad risks (e.g., sick people).

The essential bargain made in 2010 starts by using the individual mandate to create a huge pool consisting of (almost) all Americans under age 65—just as Medicare now does for the 65-and-over population.  With that pool created, the law can then require private insurers to cover (almost) everyone, including those with pre-existing conditions.  In return, insurers get a lot more customers and a lot less adverse selection. They also save a ton of money on screening.

Here is Blinder’s misunderstanding of insurance made manifest.  I’ll leave aside the sophistry in his claim of a bargain in 2010, unique in its utter rejection by the American people.  It’s certainly true that customers with risks will seek to lay them off, for a fee, onto an entity willing to accept that fee for assuming that risk.  But as I said above, for the exchange to work, the fee must be commensurate with the risk.  Moreover, both the customers and the insurers must be able to enter freely into their own agreements, without government mandates of premiums or coverages.  Both parties must be free to exercise their own pursuits.  This necessarily pushes the risks into homogeneous groups—like risks are accepted for like fees.  This is not “adverse selection,” but economically sound segregation of the risks and the fees that are economically sound for transferring those risks.

The effort about which Binder worries is driven by the need to find ways to fund risk assumptions when those risks are mixed, which means the insurers must find ways to get low risk customers to pay higher fees than warranted in order to pay for the losses to higher risks that are getting too-small fees.  A properly free market will inevitably result in higher fees for higher risks, but then coverage will exist for those higher risks.  Moreover, were consumers able to buy their own health insurance policies in the interstate commerce of a free market, so that they could take their policies with them from job to job, the incidence of Binder’s pre-existing conditions would be greatly mitigated.  And the ability of an insurer to claim a fee commensurate with the realized risk of a real pre-existing condition would produce policies for these conditions, rather than a blanket effort not to cover at all.

But this demands that customers be allowed to exercise their own choices under their inalienable rights, not those choices convenient to government.  See below.

Thus, the answer to Blinder’s question of “Why does the law require…?” is, “Because the law requires it.  There is no economic reason.”

“Rights are nice, but…,” he wrote early on in his op-ed.  This is the key; this is the truth behind Blinder’s argument.  Individual rights are nice to have, but when they become inconvenient to government, he says, it’s entirely appropriate for government to limit—even abrogate—them.  It’s entirely permissible, too, Blinder holds, because rights flow from government; they are not inherent in our being.  Our rights to life, liberty and the pursuit of happiness are conveniences of government, inalienable only for so long as government permits it.  This is how government is able to arrogate to itself what is inextricably bound up in those rights—our obligations to be the primary source of our own welfare so as not to present ourselves as burdens on others’ rights to their lives, liberties, and pursuit of their happinesses.

The result is that, under the present “reform,” under PPACA, people with low risk—those young and healthy, who also have other uses for their money and so do not want health coverage—are forced, in a loss of their individual freedom, to subsidize the insurance of those with high risk.  PPACA in essence, by forcing an inherently uneconomic mixing of risk pools, converts what should be a free market risk transfer industry into a privately funded, Federally mandated welfare program.  This is another aspect of the erosion of our individual liberties.

No.  Our rights are not “nice;” that’s a non sequitur.  Our rights simply are.  They are as bound up in our existence as are our very lives.

There is a legitimate argument to be made for improving our nation’s health care industry as it stood ante 2010.  It is cynical, if not outright dishonest, to insist that PPACA is the only way to achieve this.  This is particularly so with the empirically demonstrated destructiveness of the program these last couple of years as it starts to come on line—even before its taxes start to come on line.

In the meantime, the proper role for government is to create an environment within which we are free to pursue our own ends, our own happiness.  This requires a free market, not a centrally managed one.

A Partial Victory

Posted on by
Reply

And from the 9th Circuit Court of Appeals, yet.  From an Associated Press article carried by Fox News, we learn that Arizona’s voter identification law has been upheld in important parts; although another important part has been struck down.

A 12-judge panel, rehearing an appeal from a 3-judge panel, upheld that prior panel’s ruling: that Arizona can, indeed, require identification from prospective voters at the polling stations before they are allowed to vote, but that the state cannot hold out for proof of American citizenship before registering to vote and getting that voter ID document.  On the latter, the Court held that the Federal government’s National Voter Registration Act, which does not require proof of American citizenship, overrides Arizona’s attempt to do so.

Arizona’s Attorney General Tom Horne expects that the US Supreme Court ultimately will have to resolve the question of whether Arizona can require proof of citizenship as a condition of voter registration.

The people of Arizona have a right to request that people registering to vote show some evidence they are citizens, and we fully expect the US Supreme Court to uphold that.

Indeed.  Critics argue that the voter ID law violates the rights of those denied registration to Constitutionally guaranteed equal protection.  However, those critics ignore, and the Supremes will have to consider in order to put this question finally to rest, that the equal protection rights of American citizens are violated by allowing non-citizens to vote and thereby dilute—and even override—the votes of those citizens.

Plainly, a state can allow non-citizens to vote in state and local elections, if it wishes.  However, they also can insist that only American citizens be allowed to vote in Federal elections conducted within the state.  They also can insist that only citizens of the state be allowed to vote in state and local elections.  Beyond the 14th Amendment’s equal protections guarantee (which, just by the way, carries its own requirement for voters for “electors for President and Vice-President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof” to be “citizens of the United States”), the state and local choice questions are matters covered under the Constitution’s Article I, Section 10, which is carefully silent on this matter, and under the 10th Amendment.