Why We Are Angry

Why are conservatives so upset about the Obama health-care bill? Don’t they want medical care for the uninsured? Don’t they want to control the escalating costs of health insurance? Don’t they want people to be able to count on their insurance to be there when it is needed? Well, I am a conservative, by some definitions at least, and I want all those things. And it is pretty close to home for me. I have just undergone a very expensive medical procedure which is supposed to keep me alive. That is a pretty big deal and I didn’t have the money in my checking account to pay for this procedure. I will be paying a small fraction of the cost because I have a good health insurance plan. But I was and am bitterly opposed to the newly passed legislation. Am I a hypocrite? I don’t think so. Let me explain my opposition.

The United States is, more than anything else, an idea. Men sat down and talked about how a nation ought to be run. As they hashed out their ideas, they realized that this nonsense of governments ruling people was a false concept perpetuated by those in power. People are born with an inherent right to live their own lives. There are legitimate reasons to band together and form governments, but the power of that government comes from the people. The corollary is that people can’t legitimately give government power they do not have themselves. That idea created the most powerful and wealthiest nation in history. It also created a nation that evolved to eliminate slavery, insist on civil rights for all people, regardless of race, religion or sex and has been the most magnanimous toward conquered foes of any the world has ever seen. That idea has enabled power, wealth and compassion to spring up from the raw material of a new land and the hearts of a free people in a short period of time, in historical terms.

An integral part of that formula that has worked so well is a free market economy. Men and women have been able to utilize their resources to invent and create. It is a free wheeling process that produces some winners, some losers, and some incredible jackpots of success. There are medical treatments available today because people have been able to invest money in an idea, the idea has worked and made them fabulously wealthy while saving and improving the lives of countless others. That kind of thing can’t work without the possibility of profit to match the risk. Philanthropists can’t do it alone. When you invest money in a mutual fund that invests in a biomedical firm you are part of that process. The risks are high. More drugs fail the screening process than succeed, and each failure is incredibly costly. You invest your $100, or $1,000, or $10,000 because there is a possibility of a medical breakthrough that will cure cancer, or diabetes, or enable the paralyzed to walk again. And if it works, your investment will be returned to you several times over. You are contributing a small fraction of the cost, but your small fraction is pooled with thousands of others and that enables medical breakthroughs to happen. It is expensive, but the payoff is incredible. In the new health-care bill, this is going to be harder to do. The government is going to levy taxes on medical device makers that will make those devices more expensive and less available and therefore less profitable. They are going to have more control on what insurance can cover and how much it will pay. That will negatively impact the cash flow that allows medical breakthroughs. That is one problem.

Insurance companies have been demonized during this process because the Democrats needed an adversary to rally the troops. But the villain is not the insurance companies. It is power. Outsized power is always the problem. The ironic thing is that it has been a powerful government that has been persuading people to give them more power in order to remedy an inequity. That doesn’t work, because power is the problem. Power concentrated anywhere is a problem. But power concentrated in government is, perhaps, the worst kind, because it is so hard to take power away from government once it has it, and government already has the power of law and vast resources of institutions to enforce that power, and to do so violently. What the government should have done was not to take more power upon itself, but to give more power to the people to overrule the insurance companies.

One of the biggest problems with the current system is that it removes the patient from the cost equation. So employers, insurance companies, and drug companies are the only players with a significant financial stake in medical decisions, but the patients are the ones that are utilizing the benefits. There is a disconnect here. The government could have given the power back to the people, by allowing anybody who pays a health insurance premium to deduct it from their taxes, and encourage the use of high deductible medical insurance plans in conjunction with health savings accounts. Remove barriers to cross state purchase of insurance (a version of this is in the bill) and implement tort reform to minimize the incentive for doctors to perform defensive medicine.

The bill requires everybody to buy medical insurance. As I have written before, that is an understandable requirement if you are going to mandate that insurance companies take all applicants regardless of health. But this is the government in charge approach, not the freedom of choice approach. What if we incentivized people to buy high deductable medical plans with health savings accounts? What if instead of fining people who do not, or can’t afford to, comply, we provided a tax incentive to those who do comply by buying an inexpensive form of insurance that makes them more aware of the cost of their care? Why does the government opt for compulsion and control instead of freedom and incentive?

Then there is the cost. Any government entitlement has an inherently unknowable cost. The bill, as passed, utilizes some tricks to control the costs as scored by the Congressional Budget Office. One such trick is that the bill includes a takeover of student loans from the private sector. This has nothing at all to do with health-care, but because it is part of the bill, the profit from student loans is included in the accounting. The bill does not address the “doctor fix”, which is an annual dance congress goes through because Medicare & Medicaid underpay severely for medical care. In the case of primary care the underpayments are so drastic that physicians often lose money on Medicare patients. As a result congress regularly makes an adjustment to the built-in reimbursement cuts to primary care physicians. It is still not profitable for them to treat elderly patients, but the “doctor fix” keeps the losses at a more modest level. Because this routine practice is not addressed in the bill, it is using inaccurate revenue savings to come up with its numbers. These are two of several sleights of hand the bill uses to give the impression it can be fiscally responsible. We have a national unemployment rate of 10%, we are clawing our way out of a long and painful recession, and the Democrats have added to our economic burden.

Conservatives aren’t and have never been opposed to health-care reform. We have been opposed to government taking more control of our lives. Several individual bills that addressed the shortcomings in the existing system could have made a significant difference without undermining a system that has worked well for most Americans and damaging an already damaged economy.

Health-care in 3,200 Words or Less

The Democrats still have the upper hand. If they don’t support a bill it can’t pass, but their total control over the legislative process has been broken by the election of a Republican senator from Massachusetts. So those we elect to represent us now have a choice. What we have had for the last year was World Wide Wrestling. Now it is time for chess. My question is, are the Democrats and Republicans going to play politics or statesmanship?

Both parties acknowledge we need health-care reform. There is a legitimate issue as to whether now is the time to pursue it. We have an unprecedented budget deficit, severe unemployment and a shaky economic recovery to deal with. All three of which are arguably more urgent than health-care reform, unless you don’t have health insurance and are or become sick. On the other hand, health-care is on everybody’s mind now. This may be the time to pass a reasonable plan to improve the health-care environment. But are the members of either party willing to set aside extreme positions and pass something reasonable, at the risk of giving the other party a partial victory? I have a few suggestions.

First of all, there needs to be some kind of tort reform. Between malpractice insurance premiums and the need, whether perceived or real, to practice defensive medicine, the cost of litigation drives up the cost of health-care. Actual damages certainly need to be covered, but there ought to be a limit on punitive damages.

Drop the barriers to cross-state purchasing of medical insurance. Let the money flow to where the best coverage, services and prices are. The market will reward those who do well and punish those who don’t.

Make all health insurance premiums tax deductible to the payer of those premiums.

Make it illegal for an insurance company to drop somebody for other than non-payment of premiums, or to deny coverage.

People need help in paying for medical care, but if they are responsible for the cost of care, they will make better health-care decisions. Therefore, make it easier for anybody to buy a high deductible health insurance policy in conjunction with a Health Savings Account (HSA). For those below a certain income level have the government make an annual deposit into their Health Savings Account equal to the premiums plus a portion of the annual deductible. As their income increases above a certain threshold phase out the government paid deposit into their HSA at the rate of $1 lost for every $4 earned over the threshold. Mandate that health-care providers accept payments at low or no interest from patients below some specified income level. These provisions will address the adverse selection problem posed by the mandate to take all comers, as well as eliminate the need to force people to buy insurance that is in the current bill.

Allow insurance companies a reasonable and generous profit, but require that they pay out a certain percentage of revenue in benefits in order to participate in the cross-state sale of their products.

Get rid of the absurd taxes that have been proposed on health-care devices and insurance plans. If you want to hold the cost of something down, you need to lower the cost, not increase it.

There you go. In less than 3,200 words I have just written a comprehensive health-care plan that addresses cost and availability. It does not put the government in the health-care business and it does not gut a system that has produced many of the greatest advances in health-care anywhere in the world. I don’t know what the cost of this would be. It is possible that it could not be implemented until we get the economy rolling better, but it is a whole lot better than what has been proposed to date.

Democracy As Mob Rule

For all of its virtues, democracy can be a dangerous thing, which can easily deteriorate into mob rule. That is the genius behind the constitution. The founding fathers were concerned about a majority abusing their power at the expense of the minority. That is why we have two houses of congress which are elected in different ways. It is why we have three distinct branches of government, which are chosen differently. It is the reason behind the, often misunderstood, Electoral College, and it is the reason some states refused to ratify the constitution until the Bill of Rights was added. As brilliant as the constitution is, it is not bullet proof. It can still be abused and used to allow a majority to assert their superior numbers and impose injustices upon the rest.

This isn’t as hard to understand as we may like to think. Most of us try to live according to our belief system. That belief system may be skewed by self-interest, but skewed or not it is what we believe. Thus there was a time when many white men and women believed black men & women to be lesser humans, and as such, it was as acceptable to use them as slaves as it was to keep beasts of burden. We may look upon that now and decry that belief system to be barbaric, but people believed it and acted on that belief. The fact that it was believed primarily by people that profited from that belief, only serves to warn us to examine our motives for accepting what we may claim to be obvious truths.

The same holds true of those who believe that it is the government’s role to take care of us. If your belief system is that people can’t be trusted to make responsible decisions, you may logically believe that it is the responsibility of government to make those decisions for them. The obvious pitfall that government decisions are made by people and people who can insulate themselves from the more negative consequences of their decisions is overlooked.

So, here we are with Democrats running both the legislative and executive branches of the government ramming through a health-care bill without regard for the rights, beliefs or protests of constituents at home or Republicans in congress. The arguments originally were that we had to curtail the escalating cost of health-care and provide benefits for the nation’s uninsured. In the headlong race to get something past, we seem to have forgotten the goals.

Republicans wanted to make insurance more affordable, and therefore more available utilizing several methods to achieve that goal. And this without undermining what is arguably working right with the present system.

Much of the cost of medical care today can be attributed to litigation. Between the cost of malpractice insurance, and the need for doctors and hospitals to practice defensive medicine resulting in unnecessary tests and procedures, we are all paying for the jackpot jury awards of the few that call 1-800- SUE-SOMEONE. So it has been proposed that laws be enacted to control outsized medical lawsuits. The Democrats refused to include any such provision in their health-care bill.

Because of an anomaly of wage controls imposed during WWII, medical insurance in our country today is considered largely an employer benefit. This has been codified by the fact that an employer gets to deduct the cost of providing medical insurance as a taxable business expense, without the employee having to declare it as income. Smaller employers often find it difficult to afford to provide health insurance. Even those that can afford it, find that the options available to smaller employers are less attractive than those available to a large employer. So it has been proposed that all health insurance premiums be tax deductible, whether paid for by an employer or an individual or family. The Democrats refused to include any such provision in their health-care bill.

Different states require different provisions in health insurance plans sold in their jurisdictions. The tighter the provisions the more insurance companies have to charge to cover the cost of those benefits. Also, because insurance companies have to apply to each individual state for the right to sell insurance in that state some insurers may decide to market their products in some states and not others. So it has been proposed that we be allowed to buy any insurance policy offered by any insurance company anywhere in the country. This would cause the money to flow to those policies and companies that offered better costs and services, increasing competition and lowering costs. The Democrats refused to include any such provision in their health-care bill.

Democrats have been claiming that they want a bi-partisan bill, but what they apparently mean by that is that they want Republicans to support their bill without using any of their ideas. Their solution is to mandate changes from Washington D.C. Studies have concluded that instead of lowering the cost of health-care, their provisions will increase insurance costs. The Democrats want to provide coverage for all Americans, but they are raiding Medicare, which is already going broke and underpaying for benefits. The Democrats have been vilifying insurance companies, who we can replace with another company if unhappy. Can we expect better from the government which we can’t change and who has the force of law to impose their decisions? The Democrats claim that their bill will not increase the deficit. However, they are using tricks of timing and hiding expenses in other bills to cover their deception.

The majority in congress and the White House are about to take away from us our right to control our health-care. They, aparently, do not think any idea put forth by the minority party worthy of considering. Power does indeed tend to corrupt. Not even the constitution can protect us from all abuses of power if the majority we elect are hell-bent on imposing their rule on the rest of us.

The Ecology of Economy

In my college days I learned how a hunting restriction on a deer herd in Southern Utah resulted first in a spike in the number of deer and then the collapse of the population due to overgrazing and starvation. It turns out that people had eliminated the natural predators and than eliminated man as a predator. We had thrown that ecosystem out of balance. By trying to do a good thing, people had caused more harm.

The economy is much like a natural ecosystem. When we try to tamper with it, we are more likely to mess it up than help. There are just too many moving parts and too many unknown nuances to keep track of.

That is why attempts to manage the economy so often backfire. Whereas minor tweaks designed to influence it can help, efforts to control it often end in disaster. There are just too many variables, and therefore too many things to go wrong when we get involved in the minutia.

When the financial system teetered on the brink, the proper response was to cut taxes and let the freed up money flow to those who would use it to buy goods, pay down debt, and invest in projects that would produce jobs and rescue the system. Directing the flow of money by the federal government, is subject to political favoritism and ideologically motivated efforts to send the money where the politicians think it will do the most good. But where it will do the most good is, as often as not, unknowable. Before there was a Microsoft or an Apple, nobody knew these companies would emerge to revolutionize the computer industry.

When trying to remedy the health-care system, the proper response is to facilitate the competitive pressures of the marketplace to determine the best use of health-care dollars. Demonizing insurance companies, as the administration and many in congress have been doing lately is political gamesmanship. Of course you can find examples of abuse by insurance companies. What makes us think that the government will be more beneficent? Does anybody think the IRS is full of virtue and light? The answer is to regulate the abuses (i.e., an insurance company ought no to be allowed to cancel coverage on somebody undergoing treatment), and permit more insurance companies to compete for the business by removing barriers to buying medical insurance across state lines. When you do that, more creative solutions to the problems will be found because there will be more people and companies looking for ways to compete for the business.

Those that want government to solve economic problems want to cure inequity. But we can’t. There will always be inequity. Government isn’t a scalpel. It is a chain saw. It is big, unwieldy, and loud. It is a fine tool for what it does well. But surgery is not what it does well. We should let the government do the work of freeing up markets. Allow money to flow to the entrepreneurs who will think of ways to employ it that the beurocrats and politicians won’t. Not that they aren’t smart enough. I’m sure some of them are, but we limit the opportunities to succeed when we try to use the government to manage the economy. Bill Gates developed software, a politician didn’t. Henry Ford developed a way to mass produce cars, a bureaucrat didn’t. The government’s job is to provide very broad rules and free up money, then get out of the way

Shades of Things To Come

Like me, you may have thought it was about better statistics on breast cancer detection and survival. It wasn’t. It was a cost benefit analysis. Stay with me on this, because this article is not about breast cancer or mammograms, but we need to go there to get to the point.

It turns out the U. S. Preventative Services Task Force, which had recommended in 2002 that all women over 40 receive screening mammograms decided last week that only women between 50 and 75 should receive the tests unless there is an underlying history to indicate otherwise. Routine mammograms have reduced the incidence of breast cancer in women by 30%. According to the Wall Street Journal, 40% of patient years saved by mammograms are for women under 50, but it takes 1,904 mammograms to detect one case of cancer for women in their 40s and only 1,339 to detect a case in a woman in her 50s. Of course the number would decrease for a woman over 75, but the task force decided that she was so close to the end of her life that we would be wasting money on her. According to the op-ed article in last Thursday’s Wall Street Journal, the task force has no oncologists or radiologists, but they decided that the cost was too great to have women in their 40s or over 75 undergo the tests.

We should all make medical decisions based on our own cost benefit analysis. There are a whole host of tests and procedures that we don’t do because the cost and inconvenience of going through those tests doesn’t compute for us. But we make those decisions with our own lives and our own money. What we have here is a panel whose decisions are generally accepted by Medicare making that decision.

President Obama and many of his fellow Democrats in congress have been assuring us that there would be no rationing with their version of health-care reform. But there will have to be guidelines adhered to. It may not be unreasonable to weigh the cost of a procedure against its potential benefits, but when we put an impersonal government agency in charge of determining costs, benefits and eligible recipients of care, we are putting our vary lives in the hands of a government that does not know us personally. When that happens, you can count on sacrificial lambs as budget deficits increase and resources become scarcer.