Sunday, February 3, 2019

"Socialized Medicine" Vs Free Market Healthcare: A Critique — Part 1

I really, really love debunking viewpoints and arguments that I think are wrong. I mean like really love it. I'd write critiques of views all day long if I could and had the time, but I have this pesky thing called a job which sucks out the day's prime hours.

But on par with my love of critique, here I want to begin a series of posts critiquing a free-market libertarian's defense of market based healthcare. This will also be a learning experience for me. I use critique as a way to better familiarize myself with opposing viewpoints, and I'd highly recommend others strongly consider debate as a form of learning as well.

There's a lengthy blog post called The Real Right to Medical Care vs. Socialized Medicine by Chuck Braman, who's a giant fan of Ayn Rand's views on markets and economics. In it he tries to argue that socialized medicine leads to a crisis and that the best way to fix this ailing problem is "pro-capitalist reform" in the healthcare industry. I'm going to be breaking this down in a series of posts section by section where ever I think it's incorrect (which will be most of it). So here it goes.

Chuck starts out:

For decades the cost of health care, unlike the cost of other economic goods, has risen relative to prices in general and to people's incomes. The cost of health care is now so high that a radical reform is necessary. The current type of reform being advanced by the Clinton administration, however, is an anachronism. It is, to be exact, the enactment of a full system of socialized medicine, a system based on the mistaken and discredited tenets of Marxism, which will aim to reduce the cost of our partially socialized medical system by means of its full socialization accompanied by price controls and rationing.

It's definitely true that the cost of healthcare has gone up far faster than inflation and the cost of other services. But according to an article on investopedia, healthcare costs are going up rapidly because of six primary reasons: (1) skyrocketing administration costs, which by the way "socialized medicine" wouldn't require, (2) not negotiating drug costs, which would save hundreds of billions and which every other developed country does, (3) defensive medicine whereby doctors order unnecessary tests even when they know the diagnosis so they won't get sued, (4) using expensive mix of treatments like mammograms, MRIs and Caesarean sections more often than other developed countries plus an over reliance on more expensive specialists instead of primary care physicians, (5) the wages and work rules that enable high pay-commanding specialists, and (6) branding, which results in an industry where the prices are made up and set as high as they can be.

Having universal healthcare can solve many of these problems because they're caused by for-profit incentives.

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One other thing. "Socialized medicine" is not the same thing as single-payer. In socialized medicine the government owns the hospitals and employs the doctors and nurses. On single payer the hospitals can still be privately owned and doctors and nurses can still be privately employed, just as most of them are now. But instead of paying a private health insurer premiums every month to cover part of your medical expenses, you instead pay the government through your taxes to cover all of your medical expenses. The government is the single payer and in a sense replaces the private, for-profit healthcare insurance companies. If you don't know that distinction, you don't know the first thing about the healthcare debate, or you're deliberately lying to make single payer look scarier. Chuck goes on,

The correct concept of rights is based on the individual's right to life, which right includes the right to take the actions necessary for sustaining one's life. Rather than being a claim to goods to be provided by others, it is an injunction against the whole rest of society to leave one free so that one may produce the values which one's life requires. Such a right can only be violated by the initiation of physical force, so that under such a concept of rights the initiation of physical force is abolished, and cooperation among people is achieved through voluntary trade rather than the forced transfer of wealth from one person to another. On a social and economic level, in a division-of-labor society, this right, the right to life, is exercised by selling one's goods or labor (what one produces) for money to buy another's goods and labor (what another produces). Applied to medical care, this means that the right to medical care is the right to all the medical care one can buy from willing providers. Such a right is exactly what is currently violated by medical licensing legislation and all regulations and legislations that artificially raise the cost of medicine, because all represent different forms of the government initiating, or threatening to initiate, physical force against producers and traders who themselves have not initiated physical force, and thus physically restricting their right to produce and trade.

Here Chuck goes into his Randian philosophy of rights and there's much to say that I do not have enough time to go into. This concept of rights supports Chuck's entire philosophy on economics and healthcare. He says that no one has the positive right to someone else's stuff, like money, or labor, but one only has the right to life. The idea that the selling of one's goods or labor for money to buy another person's goods or labor is a strictly voluntary trade, as if it were two people voluntarily trading baseball cards, is not entirely accurate. Though it often seems this way at first glance to many people, the labor market is one where there are dramatic power imbalances. One's right to life is dependent on them eating, drinking, and having shelter, and that means that laborers can't just chose not to sell their services. No one dies from not having a certain baseball card, but everyone dies by not being able to obtain food. This is especially true when it comes to medical care. When one cannot afford the cost of a necessary exorbitant medical procedure, one's right to life effectively ends.

So I disagree with Chuck's starting point. I see no reason why it is immoral for a legitimate government to take a percentage of one's earnings to spend on things that are good for the entire population, like healthcare. Without that you'd get a system where market forces would end up killing millions of people like senior citizens, those who are sick and who have rare or expensive medical needs, and the poor—who will never be a part of any company's financial best interests to insure or treat since they have little money and will often have the highest costs to the system. Chuck's system of totally private and unregulated medical care could only ever lower costs by kicking out the people who need it most and leaving the healthy population left over. That means senior citizens and those who are sick and who have rare or expensive medical needs will be routinely denied. That's every insurance companies dream and it would be made possible by severing all governmental oversight of the industry.

Then Chuck explains how the Clintonian view on medical care is a "needs based" system where the runaway medical costs were created by three cornerstones: (1) medical licensing, (2) wage and price controls, and (3) Medicare and Medicaid.

Medical licensing increases the costs of medical care by lowering the supply of medical providers. Historically, it has been supported by doctors because it is a means of increasing their wages by virtue of creating a monopoly. As to the extent that is has actually raised the standards by which medicine is practiced (which is limited, since the qualifications imposed by licensing are largely arbitrary), it is through the means of reducing the number of options available to consumers. This is because instead of the market offering a full range of skilled practitioners offering various services at various prices, it essentially must now offer only a higher range of skilled practitioners offering this same range of services at a higher range of prices to fewer people. As a result, it primarily victimizes the poor, thereby playing into the hands of those who advocate socialized medicine.

Here Chuck is literally arguing that we should have no legal standards for practicing medicine. Literally anyone with any experience should be able to prescribe medicine or perform surgery. I suppose the free market alone will determine who's reputation suffers. Where is the evidence the standards are arbitrary? In New York State, where I live, the standards seem pretty rational: complete 60 semesters in a NY State program or equivalent, graduate from a medical program registered by the NY State Education Department, supervised clinical clerkships, proof of education, post grad training requirements — you know, basic assessments of one's competence in the medical field.

Chuck would throw all that out the window and legalize the ability for anyone to call themselves a "Dr." People would be able to perform surgery in their homes after watching YouTube video tutorials. What could possibly go wrong Chuck? Saying that medical licensing reduces the number of doctors is like saying that drivers licenses reduces the number of drivers. Yes it does, and for good reason. We shouldn't allow 8 year olds to drive. I'd assume Chuck isn't for 8 year olds driving, but who knows. He's pretty libertarian and the serious ones do think driver's licenses are absurd.

The second step towards socialized medicine in the U.S. resulted from a string of events following the government imposition of wage and price controls during World War II. It occurred because the government made a single exception to its prohibition of wage increases during this period by allowing employers to pay for tax-free medical insurance for their employees. Because this was the only possible means of increasing wages (and therefore the only possible means of competing for employees), and because the individual employee's alternative to this insurance was taxed by the government, the scope of coverage offered by this form of insurance, as opposed to the traditional private insurance offered up to that point, was artificially encouraged to be made comprehensive rather than to being limited to providing only for emergencies. (In current dollars this form of comprehensive insurance costs the equivalent of $5000/year per family, whereas in current dollars the cost of coverage limited to medical emergencies costs about $2000/year per family.) 

Here Chuck describes how during WW2 the US government made companies freeze wage increases due to high inflation. Companies were raising wages because the supply of labor had decreased during the War. So companies offered comprehensive healthcare as a way to lure workers. This is why in the US healthcare is tied to employment. I'm critical of this era of US history too, but only because we should have enacted universal healthcare like almost all other Western countries were doing at that time. Chuck's view would entail that the government let wages (and thereby inflation) increase to whatever level the market would allow, even if that resulted in millions of people unable to afford food or basic needs.

Following World War II, coercive labor unions made such insurance a standard part of their contracts. The effects resulting from such employer-provided comprehensive insurance are (1) a psychological mindset among employees, akin to that which exists in socialist countries, that medical care is a right of employees that can be provided essentially for free, and (2) an economic situation, akin to that which exists under socialism, whereby all costs are borne collectively by a group rather than by individual people.

The way insurance works is by spreading risk. The costs are borne collectively by a group rather than by an individual person by pooling people together. That's how it works. Chuck here seems to not understand the basic purpose of insurance, much like Paul Ryan. So here Chuck seems to take issue with the idea that companies offering healthcare to employees made employees think healthcare was a right given to workers. He seems to prefer the idea that only individuals should buy health insurance and that even employee sponsored health insurance is bad. Wow! Chuck also thinks most people should just buy catastrophic coverage instead of comprehensive coverage, and have no price controls on drugs whatsoever, as we basically have now. On top of that he's arguing that anyone should be able to practice medicine with no requirements. This will ensure most people either cannot afford insurance, or afford enough insurance, or will go to cheap and unqualified people to perform surgeries or diagnose illnesses, which will inevitably lead to people dying or being injured through of malpractice. That's Chuck's solution to the status quo. Brilliant.

This wraps up part 1. Stay tuned for part 2 of this critique shortly.

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