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.

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

Power Corrupts

"Power tends to corrupt, and absolute power corrupts absolutely."...Lord Acton

We all have ideas that we believe to be important. For example, here I am writing a blog with the hope that anybody will read it and that if they do, I can change something. I, however, am pretty harmless. I will write what I think, and a few people will read it. Some may agree with me and others will not. There is an outside chance that my thoughts will reach somebody with some influence and power, but even if that happens, they are the ones with the power, not me.

But when we elect people to public office, we empower them to act on our behalf in ways that effect all of us. By electing them, we give them immense power. The higher the office, the more power they obviously have. And they have ideas that they think are important too. The difference is that they are in a position to do something about it.

When our economy was on the brink of collapse, those that we elected rushed to pass a bill to pull us back from the edge. That is what they should have done. But they had some important ideas about how government should run. They thought that as long as they had to pass a bill, they would spend $800,000,000,000 on a lot of things that had nothing to do with rescuing the economy.The economy appears to be recovering and only a fraction of that money has been spent, but it will be spent anyway. Most economists expect a slow and tenuous recovery, and many would attribute that, at least in part, to the policies in Washington.

There is little doubt among those in the financial world that something had to be done. But last November we gave Democrats something they had not had in decades. We gave them the Presidency, a large majority in the House of Representatives and a filibuster proof majority in the Senate. I am not a big fan of the two party system, but that is far superior to a one party system. A one party system is what we gave the Democrats. We gave them more power than any political party has had in a very long time.

Among other things, we have had imposed upon us, in rapid succession, an economic bailout bill that goes far beyond bailing out the economy. The House has passed a Cap & Trade bill that, if passed by the Senate, many believe will not resolve the problems it was purportedly designed to remedy, but will hurt the economy that the bailout bill was intended to fix. Now there is an emergency to pass a health care bill that will give government unprecedented control over our lives and a large chunk of our economy.

Washington DC has a habit of making a mess of things as it is, but when we give one party such unchecked power, we can expect unchecked corruption.

Reagan Republicans?

There are 2 kinds of political conservatives in the United States. There are religiously motivated conservatives. I keep searching for a word to describe them, because they are not all evangelical Christians, but they all share the same moral values. For them, being conservative seems to mean conserving the institutionalization of their value system. I think Social Conservative may be the best description. This group is well meaning, but they seek to enforce their value system through a system of laws. This is a dangerous idea. Your interpretation of morality may be the right one, and the world my be a better place if we all lived by moral laws, as you understand them. But what happens when somebody else is in power who has a different value system. The proper way to promulgate morality is through religion and philosophy. It is not through force or threat of punishment that we change peoples hearts and behavior, it is through understanding and insight. It is through conversion.

Then there are the Libertarian Conservatives. Although Ronald Reagan had a deep sense of Christian faith, he fell more into this camp. Although, he was also socially conservative in many ways, he believed that the less government was involved in people's lives the better it was for everybody.

Reagan left office with a very high popularity rating, he rejuvenated the Republican Party, re-started the American economy, brought inflation under control, re-built the U.S. military and was crucial (some would argue the cause) to the end of the cold war.

The result is that now, everybody running on the Republican ticket claims to be Reagan Republicans. They are not. I haven't seen one since 1989. We need one.