Daydream Believers: Libertarians and Healthcare

July 2, 2007


My old pal Joe Paduda responds to a Cato Institute editorial opposing universal healthcare measures. As the Irish used to say in bar brawls, “Is this a private fight or can anyone join?”

Joe takes on one claim in the Cato piece, which is this: If insurance companies were permitted to charge people according to their expected medical costs, the free market would take care of the rest.

In a sense, the libertarians at Cato are right. The market would take care of one problem – it would blow their ivory-tower ideas about insurance out of the water. Here’s what would happen under a truly libertarian health care policy:

  1. Insurance would become prohibitively expensive for many people who currently have coverage.
  2. The cost/benefit of acquiring that insurance would be such that even some people who could afford it would elect to take their chances. The wave of medically-related bankruptcies would come later, forcing many businesses to accept pennies on the dollar for monies owed.
  3. Insurance companies would undergo significant downsizing.
  4. The resulting chaos would lead to overwhelming support for a single-payer system, which would be implemented shortly thereafter.

While that might be a happy outcome for many, there would be a lot of avoidable suffering beforehand.

Cato authors Michael D. Tanner and Michael F. Cannon get themselves into big trouble before they even get to the pricing issue, however. Here’s what they say early on:

What these politicians and many other Americans fail to understand is that there’s a big difference between universal coverage and actual access to medical care.

Simply saying that people have health insurance is meaningless. Many countries provide universal insurance but deny critical procedures to patients who need them.

In other words, because universal health care systems have occasional failures they are a fundamentally flawed idea. That’s like saying murder should be legalized because so many people get away with it.

Waiting times in the countries they cite are sometimes acceptable and sometimes excessive. Waiting lists can be a form of rationing, but it’s far more humane than denial of treatment through systematic exclusion from most of the health system (which is what lack of coverage means). And while the authors observe that some people on waiting lists are in chronic pain, they fail to note that few if any universal coverage advocates believe that is anything other than a flaw that needs to be corrected.

As always in these arguments, the Cato authors cite the fact that all uninsured Americans effectively have access to emergency care. What they fail to note is that many of Americans would not have needed emergency care had they received proper treatment. That would have saved many of them ongoing pain beforehand, too – the same “chronic pain” the authors lament among Europeans – and would often save money in the bargain.

And let’s not forget that a study by the National Academies’ Institute of Medicine (warning: pdf) estimates that at least 18,000 people die each year from inadequate health coverage. That’s the the equivalent of thirty World Trade Center bombings in the years since 9/11.

Or, to put it another way, that’s the equivalent of a Virginia Tech shooting every day of the year. The market’s not going to fix that. So the question then becomes: Do you care about that, or not?

The authors’ response? “Covering the uninsured comes about as a byproduct of getting other things right.” How, exactly? “… [E]nacting a standard health insurance deduction, expanding health savings accounts and deregulating insurance markets — that could truly expand coverage, improve quality and make care more affordable.”

Wait. It would “expand coverage?” It wouldn’t make it universal? Do you mean the market can’t do everything?

The authors fail to cite a single credible study to suggest that “deregulating insurance markets” or any of their other proposed solutions will work. Until they do, it’s impossible to give any credence to their position. If something sounds too good to be true, it usually is.

The Invisible Hand does many wonderful things, but the notion of the free market as a Universal Solution Machine is closer to theology than it is to economics. The United States has the most deregulated and privatized health system of any OECD country, and we also lag in virtually all major health measures. Don’t think there’s a correlation? Then you have an argument to prove. The Cato authors don’t succeed.

We Americans are a freedom-loving people, which makes Libertarianism is an attractive dream. (You know – don’t fence me in, etc.) But dreams don’t become reality without evidence, and that’s sorely lacking in this Cato editorial.


21 Responses to “Daydream Believers: Libertarians and Healthcare”

  1. […] Waiting lists can be a form of rationing, but it’s far more humane than denial of treatment throug… Great post. […]

  2. Wenchypoo Says:

    I go along with Terrible Ted Nugent on this one–“to have health care, you must first care about your health.” This means proper diet, exercise, and supplementation to avoid having to run to the doctor for every sniffle and cough that comes along…BECAUSE THERE AREN’T ANY!

    If someone in charge (government, insurance, whoever) would just come out and say to eat more vegetation, less fat and carbs, and trade the produce section for the drive-thru lane, or they get no medical care, there would be a massive shift in the way people care for themselves.

    In short, those who scream most for universal coverage are the ones who need it most. That’s a shame. They’ve abdicated their health to someone else to manage.

    As Michael Moore pounds his podium about universal coverage, doesn’t he look like an absolute poster boy for it? Slovenly, overweight, and probably a heart attack waiting to happen, but as he yells, he’s actually perpetrating a fraud–HE’S got union coverage, and so do his employees. He actually wants YOU to have universal coverage (whether you need it or not), and he wants YOU and everybody not union-related or a member of Congress to pay for it.

    I live my life in such a way as to not NEED universal coverage–as it is, I barely use the coverage provided from Hubby’s job. More people can do this–it’s just a matter of will, mostly the will to stay out of drive-thru lanes and fast food restaurants.

    As for HSAs, why should I have to run all my small expenses through a third-party reimburser, rather than just paying cash directly? The Congress-supplied tax loophole of the savings component, that’s why. I can save my own money just fine without congressional help, and do. I also steer clear of any other “cooking” besides my own. I get my blood and urine checked twice yearly (for any possible heart and liver/kidney problems), and that’s the extent of my medical care–I’m fine, and more people could be too by eating more produce (that’s where the nutrients are).

    I’m not paying for anybody else’s health care costs but my own, and I’m not abdicating my common sense basic health care to anyone but me.

    • m Says:

      What about genetic conditions. No matter what you do you can’t beat the genes. My wife suffers from a condition which won’t kill her but it makes everyday extremely hard. We work hard, take care of ourselves, eat right and none of this will help her manage the pain the way our health coverage does. If I lose my job, we lose our coverage and not a single provider would touch her, we know, we’ve tried before my current employment. How does the free market take care of her lack of available health coverage? Please understand that we do everything you, but under your principles we go no coverage. Put yourselves in someone elses shoes and have some compassion. Not everyone is trying to scam the system, some of us actually need one.

  3. Libertarian & Wise Says:

    There has never been a shred of evidence that the government will not make a mess of healthcare as it has everything else (except the military). Why anyone would believe that all of a sudden the government will become sensitive to customers (the IRS?), effective (need a passport?), or have the ability to deliver a product or service (FEMA)?

    Government run healthcare is a dream of those that hope to get on the government dole/payroll, get big time retirement, provide no benefit and just be part of the black hole that is state and federal government, which sucks resources and emits nothing.

    Let’s hope common sense prevails and we see the bumper sticker; “Healthcare Crisis!” for what it is, big government and lack of choice.

  4. spike Says:

    The VA does pretty well considering the low funding and rising population – or does that fall under the “military exception”?

  5. reskow Says:

    Med body: Thanks!

    Wenchypoo: Ted Nugent’s not only ignorant about health care – he’s a lousy musician! As a guitar player myself, I say when his chops get better I’ll listen to him on health issues. And Michael Moore’s fat so he can’t comment on health care? That must mean FDR was a bad commander-in-chief because he couldn’t march with his troops. Unfortunately, that’s the kind of defense of libertarianism we see too often.

    Spike: The VA’s pretty good, actually, but not as good as they’ve been claiming. They’ve been cooking the books:

  6. pseudonymous in nc Says:

    I live my life in such a way as to not NEED universal coverage–as it is, I barely use the coverage provided from Hubby’s job. More people can do this–it’s just a matter of will, mostly the will to stay out of drive-thru lanes and fast food restaurants.

    How do you summon up the will to stay out of car crashes? Because if you manage to avoid getting t-boned by a drunk at an intersection through sheer libertarian Force of Will, you should be selling your secrets on Oprah.

  7. JasonR Says:

    Richard Eskow,

    Tobacco kills 24 times as many people a year as inadequate health coverage. Reducing the rate of smoking by only a small fraction would save more lives than “universal health care.” So why don’t you focus your efforts on that? Or on improving Americans’ poor diet and physical inactivity (which kill 20 times as many people as inadequate health coverage)? Or on getting Americans to reduce their consumption of alcohol (which kills 4 times as many Americans as inadequate health coverage)?

    Even adverse prescription drug reactions kill more people than inadequate health coverage.

  8. jaybird Says:

    >I live my life in such a way as to not NEED universal coverage

    Well, goody for you. So did I. Unfortunately, I was diagnosed a couple of years ago with a genetic autoimmune disease (arthritis). I’m now uninsurable as an individual. It must be because I’m a bad person.

    • daniel Says:

      Same here. But anytime I try to explain to people that the ‘free market’ won’t sell me insurance for ANY price, they just ignore that point or tell me I am a unique case. Sometimes they say ‘oh, so you want the rules changed so they’ll pay for your pre-existing condition huh?’ Then they really get flummoxed when I reply ‘no, I’ll take the year long waiting period before they cover it. I would like to know I’m covered in case of a car accident, a broken leg, etc. in the meantime.’

      • Joshua Says:

        Where do you get off telling people that you’re owed health insurance? If you’re looking for charity, then go look for it from people who give charity. Don’t hide behind government as you vote to extort it out of people who bear no responsibility for your condition.

  9. […] Daydream Believers: Libertarians and Healthcare « The Sentinel Effect Waiting lists can be a form of rationing, but it’s far more humane than denial of treatment through systematic exclusion from most of the health system (which is what lack of coverage means). (tags: medicare healthcare) […]

  10. In short, those who scream most for universal coverage are the ones who need it most. That’s a shame. They’ve abdicated their health to someone else to manage.

    This is one tired ass line we keep hearing. Because some of the people who advocate universal coverage are unhealthy, that must be the only logic for it? I’ve seen a lot of fat ass health insurance agents advocating private health insurance too. Why do they do it? Their paycheck depends on it.

    I’m a health insurance agent who gets paid a lot of money from private insurance companies. I also exercise a LOT, eat an (almost) vegetarian diet, no fast food, and get tested regularly. I’ll be happy to put my blood/urine tests up against yours, I’ll put my time in a bike race, running race, mountain unicycle race, (or whatever activity you choose) up against yours. Maybe then we can put this stupid argument to rest that the only people advocating universal health care are the ones that need it most.

    The reason the argument is there is because it provides more logic than the private, free market system.

    • Joshua Says:

      Except that socializing anything beyond what is absolutely necessary for the system to be maintained is completely illogical and dehumanizing. Individuals are worth protecting because we are sapient creatures, and our rights spring from our intrinsic self-ownership and ability to self-designate a purpose. To imply, or even outright declare, that an individual is born with a moral duty to serve the will of others (by funding their health care in this case) is to invalidate the very basis for human rights, and therefore human value, making health-care an amoral pursuit anyway.

  11. Chris Says:

    If that is the logical conclusion of insurance markets – why do all of the other – non-health – insurance markets work so well?
    The answer is that all medical procedures are required and that when consumers are forced to actually weigh the costs/benefits they choose not to get the best and/or every procedure done.

    The current system is completely screwed up, the best place to start is to stop paying for 1st dollar coverage.

  12. […] Daydream Believers: Libertarians and Healthcare […]

  13. It’s not true that “all uninsured Americans effectively have access to emergency care.” ER doctors are not trained in all medical fields. There are serious serious problems they will tell you point blank it’s not their purview. And if you can’t get in with a specialist (like try without insurance!), what to do? ERs ONLY treat accidents, heart attacks, bleeding, and act as admissions for people needing surgery. That’s it.

    There’s a huge gap between being able to afford your own insurance and qualifying for public help. There have been times when I didn’t qualify for public medical, but certainly couldn’t afford my own medical insurance. Who could?? Even though I’m employed fairly well now, I still couldn’t afford my own insurance!!

    And don’t even get me started about how small companies can’t afford prescription coverage or dental coverage, because the premiums for less than 20 employees are so outrageous that a small company with less than 20 employees can’t afford it, and their employees certainly can’t.

    Not to mention the fact that dental care is just as expensive and just as important as medical care. Just look at what happened to that 12 year old boy that died because he got a tooth infection, had no insurance, so it spread to his brain, and cost the taxpayers $250,000 in brain surgeries, and then he died anyway. Talk about saving money in the bargain. That’s a perfect example of waste of life & waste of money, because if he had gotten “regular” health care, he wouldn’t have needed “emergency care”. I don’t think there should be a difference between “regular” care and “emergency” care. It’s illogical in this day & age when we know how to catch things early & prevent things.
    Quite frankly, I think the only people who think things are okay are those who are fortunate enough to not have needed much medical care.

    And the idea of “deregulating” just seems astonishing. I mean the insurance companies refuse to pay for so much necessary stuff now. If they were allowed to make decisions willy-nilly… Yeah, they would collect their premiums always, and probably NEVER pay out for anything, until everyone refused point blank to get coverage. There’s no way they’d suddenly become more altruistic if they were allowed to do more self-serving things! That just makes no sense at all. A leopard doesn’t change its spots.

    It sounds like some people want some kind of dog eat dog world of social Darwinism. If all the 12 year old boys with tooth infections died without the brain surgery, I suppose they’d consider that a success of human kind.

    As for the complaints of socialized medicine… How about socialized insurance? I’ve never heard anyone hold Australia up as an example of problems with universal health care. And I’ve certainly never heard an Australian complaining about their health care. Indeed, I’ve known wealthy people who’ve gone to Austrailia to get advanced surgeries they can’t get in the U.S., because the insurance companies won’t pay for them, and so the doctors aren’t very good at them here, if they’d even attempt it.
    How about the prostate cancer surgery that is available that doesn’t cause impotence or incontinence, but most (if not all) American insurance companies won’t pay for it, so many people in the U.S. don’t even know there is such a procedure, they think they have to be incontinent & impotent in order to survive prostate cancer.

    And as far as “government screws everything up” arguments… I just think of something I heard in the documentary, “The Corporation”:
    “People who say they fear their government. I really hope that they understand that they’re allowed to participate in their government; they’re not allowed to participate in anything the corporations do. So don’t fear the government, help it be the government you won’t fear.” — Susan Gayolos

    But then, money talks, and as long as the insurance companies have the big bucks, they’ll keep persuading the government to continue the way that benefits them. I sometimes wonder if I live in a free society at all. It sometimes feels like a surfdom, with insurance companies and some other large corporations as the feudal lords.
    Have we really come that far at all?

  14. Ron N Says:

    Here in Massachusetts we the poison pill that former governor Mitt Romney left us, a mandate that every citizen of the Commonwealth buy health insurance. They’ve even created a new quasi-public agency to administer this nightmare, the Health Care Connector. Essentially, the middle class is being ordered to buy low quality, high deductible policies or face substantial fines. This sell out to private industry is pure fascism. Insurance companies are not altruistic agencies concerned about policy holders’ welfare. They are profit engines founded on fear and human misery. Their chief responsibility is to produce profits for their shareholders, as such, they enhance the bottom line by denying people access to care. We will never achieve the goal of universal access until we take these greedy, parasitic corporations out of the health care equation!

  15. European Libertarian Says:

    For those of you who think socialized healthcare is so wonderful, you should probably realize that we in Europe are running away from such systems. But hopefully we’re not running toward the crappy American kind.

    I’m being facetious of course. American docs are wonderful and actually have higher levels of education than most of ours. In most socialized systems, the minimum qualification is a Masters (or Licentiate). That means the ‘doctor’ who’s waiting for you at the health clinic might be, say, 25-years-old???

    It’s only logical, considering that a socialized system’s first priority is to save money! —even on education. Simply put, saving money at the patient’s expense works great for the system. Our per-capita costs are indeed lower than yours.

    But aside from lesser-qualified staffing, also consider that salaries are lower in Europe, so it further makes us look more ‘cost efficient.’ Try cutting your own purchasing power by about 30%, then we’ll compare costs again.

    However, the American system does rather suck financially, as seen from the consumer’s point of view. It can make you poor, whether you live a healthy lifestyle or not. There must be a better solution…

    In my opinion, it’s simple: Get government out of the healthcare business. The only functions it should serve, is to enforce contracts between insurers, doctors, hospitals and clients. No more subsidies, no more corporate-friendly laws.

    Instead, give people stipends for their medical care. But DON’T force them to actually buy medical care with that money. Medical care providers should compete for business, by convincing patients that treatment is better than a shopping spree.

    This is the only way that you will ever achieve the goal of high-quality Universal Healthcare. Everything else is just a placebo.

  16. Mark J. Says:

    Libertarianism is not a monolith:

    A Conservative Case for Universal Health Coverage:

  17. acai order Says:

    Very good article. Insightful and entertaining as always!

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