1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/10355/socialized-healthcare-vs-the-laws-of-economics/

Socialized Healthcare vs. The Laws of Economics

July 28, 2009 by

The government’s initial step in attempting to create a government-run healthcare monopoly has been to propose a law that would eventually drive the private health insurance industry out of existence. FULL ARTICLE


FTG July 28, 2009 at 7:58 am

At least 1,000 Canadian doctors and many thousands of Canadian nurses have migrated to the United States to avoid price controls on their salaries.

Why, those blood-sucking, greedy bastards – they just want to profit from people’s misery! Well, at least, that is what Bill Maher, in a display of sheer stupidity, mentioned yesterday in his HBO show . . .

Wrote Mr. Brooke, “Few Canadians would recommend their system as a model for export.”

I don’t know if that will be the truth, Tom – there are quite a few stupid (read: left wing) Canadians that think their “free” system is better than the American “free market” system.

Barry Loberfeld July 28, 2009 at 8:03 am

Look at Samuelson: It wasn’t until after the collapse of the USSR that he called socialism the “failed model.” In other words, for many people, they will not be swayed until the Canadians themselves abandon their statist system.

In the meanwhile, the simplest thing we can point out to people is that this is an example of government controls only causing problems for which more government controls are proposed as the solution. Mises gave us the thought-experiment with milk, and as I wrote elsewhere:

Let’s move from milk in theory to medicine in practice. For about a hundred years, America has been a nation of accumulating medical controls. Each new regulation was passed with the same justification made for the previous one: This measure will sufficiently correct the failings of the free market and thus save the free-market system. And the result? Today’s “crisis in health care” — as the welfare statists themselves call this iatrogenic disease. The more band-aids are applied, the more wounds appear! And with nothing but band-aids in their bags, these “liberals” (often the same aging advocates of past regulation) can now prescribe only covering the patient head to toe — i.e., the final move to the outright socialization of all medicine. What this says about the microcosm of medicine is obvious; what it means for our mixed economy is ominous.

I suppose we have to balance theory and history….

Kavius July 28, 2009 at 9:21 am

I have to agree with FTG. As a Canadian, I have heard a lot of people state how glad they are that they do not live in the US, or they would not be able to afford health care. My wife and I were discussing it the other day and concluded that it doesn’t matter how cheap it is if we can’t get it (fortunately we haven’t needed it).

government rationing of healthcare

That statement hits the nail on the head.

I remember my sister receiving a Rugby injury that caused her to loose progressively loose feeling in her right hand when she was 18. She was put on an eight month waiting list for treatment. I believe that if we had not flown her to the US for surgery, she would be paralyzed in her right arm at the age of 18.

Price controls = shortages.

Ben Ranson July 28, 2009 at 10:39 am

I would like to see some statistics and sources for Mr. DiLorenzo’s description of the socialization of hospitals

It appears to me that Mr. DiLorenzo is incorrectly characterizing private non-profit hospitals as government owned. “Friedman noted that 56 percent of all hospitals in America were privately owned and for-profit in 1910. After 60 years of subsidies for government-run hospitals, the number had fallen to about 10 percent. It took decades, but by the early 1990s government had taken over almost the entire hospital industry.”

Private non-profit hospitals are private businesses granted certain special privileges by the government, such as freedom from certain kinds of taxes. Non-profits are also subject to many special restrictions. A famous aphorism about non-profits is, “For-profit companies are run for the benefit of the shareholders; non-profits are run for the benefit of the employees.”

While it is reasonable to criticize the inefficient forms of management to which the industry has been driven, it is important not to confuse non-profit status and government ownership.

Allan Thompson July 28, 2009 at 10:46 am

I live in Canada. I would not trade my social/private health care system for the one I see operating south of the boarder. I deal with my doctor. I can use the doctor of my choice and the cost is paid. A few things are not covered but I can pay for them. I have known people who have been very seriously ill. There are some waiting lists, but there is a system takes care of the most seriously ill first while elective and less seriously ill cases wait longer. This system is not perfect but it it much better than the one I see south of the boarder. Why?

The problem is not with the medics, it is with the insurance industry. When I talk to American friends I hear about insurance companies accepting money for years. Then the person becomes ill and they need care. It is obvious at that point that the “customer” will become a liability. So the insurer goes into “cost control” mode. Maybe the disease can be excluded. Perhaps it can be labeled as a “preexisting condition”. Perhaps they can find a medic who will say the it is not a real disease and that it is all in the mind iif the patient. Maybe the employer can be convinced to drop the individual from employment.

The problem is that insurance is an industry ripe with moral hazard. Companies make or lose money based on their ability to control costs and a big part of cost containment is finding a way of getting out of paying when the chips are down. Once a person is ill, they cannot find a new insurer, so they are stuck.

How the Canadian system would compare to a true free market system, I do not know. But the US system is absolutely not free market. It is a mercantile system which rewards those with friends in government. Compared to this, the Canadian system is a dream. I will recommend it to any American wiling to listen.

Nick July 28, 2009 at 11:02 am


Government giving special privileges and gifts distorts the market regardless of who “owns” the hospital itself. These distortions hurt the market in some cases to the point where for-profit facilities are driven out of existence leaving only the non-profit facility in its wake.

Without a profit motive, there’s no requirement to maintain standards and the quality of care goes down resulting in more requests for government assistance to “fix” the problem.

In the end, the only way many of those places stay afloat is *because* of the “special privileges” and “gifts” from government.

In other words, they may as well be government-run.

Lemmywinks July 28, 2009 at 11:08 am

I’ve always been a bit baffled that people cite the UK and Canada as the obvious alternatives to U.S. healthcare. France’s healthcare is ranked as the best in the world (by the WHO), and is a two-teired system, rather than fully socialized. The U.S. has a much better chance of morphing into a hybrid system like France’s, rather than the full government ownership of Britian and Canada.

I understand that a true market-fundamentalist would never accept increasing government controlling of healthcare, but there simply isn’t a good example of a developed country without universal coverage. The only real argument that I can think of, is that the United States government is too incompetent to accomplish what many other countries have managed.

At the very least, when comparing systems, it only makes sense to compare the best example of the alternative. Because I have health insurance, I would prefer to deal with the American system, rather than the UK’s, but I’d switch to France’s in a heartbeat.

Paul July 28, 2009 at 11:19 am

For the guys here who support socialized medicine, let’s see how those systems fare during a deflationary or hyperinflationary collapse. The preceding decades before 2007 has seen nothing but booming economies with rocketing tax revenues. My prediction is that major government programs will eventually go belly up during the next downturn, which I think will be very severe. It will likely be a chaotic mess.

Ohhh Henry July 28, 2009 at 11:25 am

WHO can go ahead and rank country’s health care system first, second, third, or whatever. But to my knowledge there isn’t a single country in the world which offers socialized medicine that is not running large, sustained and increasing deficits. Except for perhaps a few oil-producing jurisdictions, whose budget surpluses will obviously not outlive the exhaustion of their oil reserves.

Therefore there is no “best” government-run system. Welfare programs such as medicare are not sustainable for the simple reason that you cannot take something valuable and make it free. You can cannot defy the laws of economics. You might be able to fake it for a few decades through the use of debt, inflation, increased taxes, price controls and rationing, but that is all.

Probably 95 percent plus of Canadians cannot conceive of living without nanny-provided health care, even the ones who are disenchanted with the current system. They are like overgrown children who simply will not believe and cannot cope with the fact that the socialist fairy tales about federally-funded medicare which they have been fed for the last 40 years are not true.

bobobberson July 28, 2009 at 11:39 am

Dentistry and Optometry.

Those are two complicated and unregulated (as compared to regular health care, but are probably under the FDA rules too) parts of “health care” that seem to be doing just fine w/o the Gov’t. Although one might argue that there is no urgency, as in emergency care. An anti-free marketer would say “Vision is far too important to be left up to the free market!! It must be regulated.” or “Dentistry is far too important to be left to the free market, if not, one unscrupulous company like Coca-Cola would buy up the dentists to prevent them from saying ‘Coke will rot your teeth.’”

But then every elective surgery has no urgency either… hmm

But what about veterinary medicine? That is completely unregulated and has urgent cases, but that seems to be doing ‘fine.’

EnEm July 28, 2009 at 11:41 am

It’s said that Government enacts laws that create criminals; and then they enact more laws to punish those same criminals. What’s needed here is a decision to finally dismantle Crony Capitalism. It has been prevalent since the end of the 19th century and politicians have grown fat from it. Politicians have been going to bed with phony capitalists all along and have been covering their tracks so well that come the time when they have to divest themselves of that relationship, it’s their cronies who have to be shown up as criminals. Health Care corporations and our politicians have been getting fat off of each other for centuries.

Health Care expenses in this country are downright criminal. For example, by-pass surgery can cost anywhere up to $200K !! And this is what gives socialists and socialism the upper hand. This is where and why they feel so self-righteous about milking the rich.
The way to work this is to support Bills introduced by Ron Paul and others of his ilk to rid ourselves of lobbies and crooks of every hue (politicians, lawyers and would-be aspiring “capitalists” who have been raised to believe that in order to make money one has to be evil).

The first step is to level the playing field; and Yes, we use socialist ideology if we have to. We can cite scripture as well as the next devil to get rid of his minion. I would suggest that the Australian Model be used to do the leveling. 1% is taken off the Gross yearly salary, irrespective of one’s earning capacity. Government then provides subsidized Medicare which requires that an individual pay $15 for a doctor’s visit and then go and complete a reimbursement form to get an 85% refund. Basic hospital costs are also covered. If one needs additional health insurance it can be bought from health care corporations for as little as $20 per month. Once this is achieved, then government can play the role of watchdog and relinquish its grip on the 1% and at the same time ensure that it does not sleep again with its mistress. Private health insurance costs will go up of course when this happens, but they won’t shoot up to say $400 a month. Another rule should be to Not compel employers to offer health insurance to their employees. If the costs are low and affordable every individual would be able to afford it. This will break the inter-corporation ties and collaborations entered into at the corporate level, designed to rip off the working man.

Nate July 28, 2009 at 11:46 am

Lemmywinks, I’d be careful about using WHO’s ranking of health systems. A good read on the subject of WHO’s rankings, produced by the CATO Institute can be found here.


christopher July 28, 2009 at 11:48 am

I think what everyone fails to grasp is that the U.S. is ever faster approaching the wall of insolvency regarding Medicare/Medicaid. The general aging of our country is partly responsible for this, and the reality is that unless you have a drastic decrease in coverage and an increase in revenues there is no ‘good’ way out of this. Dare I say we are in a catch 22?

John July 28, 2009 at 11:56 am

It is strange that people are so frightened by the possible lose of medical coverage that they resort to irrationality. If I have insurance that covers my health, I will go to the doctor as often as I see fit. Whether its private or government run makes no difference. And resorting to anecdotal stories of how bad the Canadian and European health systems are is silly when their life expectancy is greater than ours. I dislike having CEOs get extravagant salaries and insurance companies make large profits on the medical problems of the citizenry; when they control the drugs, procedures, and medical equipment.

Lemmywinks July 28, 2009 at 12:25 pm

I read the CATO article, and can definitely see why the WHO’s criteria would favor systems with more equal distribution, but it doesn’t seem to suggest that the U.S. would be ranked near the top. I don’t believe that France is one of the best merely because of the WHO, but it provides a quick reference to indicate that the U.S. is certainly unique in our lack universal coverage.

Although a whole paper could be written about it (which I have), Business week summarizes the benefits as:

“France’s infant death rate is 3.9 per 1,000 live births, compared with 7 in the U.S., and average life expectancy is 79.4 years, two years more than in the U.S. The country has far more hospital beds and doctors per capita than America, and far lower rates of death from diabetes and heart disease. The difference in deaths from respiratory disease, an often preventable form of mortality, is particularly striking: 31.2 per 100,000 people in France, vs. 61.5 per 100,000 in the U.S.”

Many of the factors can be attributed to healthier lifestyles, but as it stands, France does not seem to suffer from severe rationing, which is the primary criticism aimed at many other universal systems.

That aside, the main objection that I’ve seen on here seems to be that these universal systems are unsustainable, and are destined to fail when the economy turns. I can’t refute that, since it waits to be seen, but the European systems, ironically enough, have shown a much better record of containing health care costs than the U.S. We certainly don’t have a true capitalist system in the United States, but no one else (except for maybe a few third-world countries) does either.

Econ Guy July 28, 2009 at 12:31 pm

Medicare has already bankrupted the U.S. David Walker (former comptroller) estimates that we need to invest 36 trillion dollars today at treasury rates to cover future Medicare promises. That’s $120,000 for every American. On top of all the problems discussed in this article, we simply cannot afford further socialization of health care.

For more information on Medicare costs, see the documentary I.O.U.S.A and http://www.pgpf.org/about/nationaldebt/

Christopher July 28, 2009 at 1:17 pm

Are there any countries which have a successful single payer system with large trade deficits?

Does the US subsidize the cost of perscription drugs sold in countries which have cost controls?

Nick July 28, 2009 at 1:19 pm

Those who favor socializing any part of medicine fail to understand two simple truths:

You can’t get something for nothing.


You don’t have a *right* to healthcare.

The continued attempts to fix medicine by socializing and regulating it, as the federal and state governments have done since the 1960′s, will do nothing more than bankrupt us.

Here’s something to ponder – Claiming you have a right to healthcare means you have a right to someone else’s body and mind. It means that you believe they should work either for free or for a price you and the rest of society agree upon by vote.

In other words, you’re willing to make them a slave to provide you and the rest of society with a product you all lack the intelligence to provide for yourselves.

Or do you honestly think that anyone can be a doctor, surgeon, or nurse?

DD July 28, 2009 at 1:55 pm

Lemmywinks ,

“We certainly don’t have a true capitalist system in the United States, but no one else (except for maybe a few third-world countries) does either.”

You think you can get your Marxist agenda across without detection?

DD July 28, 2009 at 1:59 pm


Good points, but you are preaching to the wrong crowd.

Nick July 28, 2009 at 2:26 pm


Preaching to the wrong crowd?

Not based on my readings of some of the replies to this thread… Unless my understanding is incorrect, and I have no reason to think it is, several of the people replying to this thread – while not openly advocating “free health care” are openly advocating actions to move us in that direction.

Like that moron Orrin Hatch I just saw on teevee claiming that there could be some sort of “bi-partisan healthcare reform to make it affordable for everyone”…

Allowing or providing for that line of thought merely allows people to believe their arguments for some sort of government intervention actually carry some weight. I think sometimes they all need to be reminded that what they’re advocating in the end is slavery, pure and simple.

Also, this isn’t the only place I preach :)

Tim July 28, 2009 at 2:35 pm

Many people cite Sweden, Canada or Norway as the model for a welfarist utopia. They suggest that those nations’ social policies should be emulated here. They fail to notice that all of these countries have extremely small population compared to the United States, with little income class disparity and homogeneous ethnic makeup. If you count the overall life expectancy of prosperous sections of the United States such as Rhode Island, or Connecticut (avg 78 years at birth), then you’ll see they aren’t so far away from the vaunted statistics in Sweden. And taking other factors into account, such as the Americans’ grossly unhealthy lifestyles, this comes at a surprise. Is the quality of health care really the problem, or is it the fact that we have a population of 300 million of which a large portion lives in poverty? Maybe the solution is the improve the economy, rather than subsidizing everyone for a palaise royal treatment at their local hospital.

My point is that the reason why socialized medicine appears to do well in countries like Sweden is because these countries have low crime rates, their peoples are better educated and more civilized, there’s much less corruption in government, and most importantly the income disparity is not so great (which means that they can lead a healthier lifestyle) and the size of the population itself allows a manageable government run social coverage program. Another thing is that these countries’ economies lack a solid production core of their own and rely on trade from the major economic players to fill their gaps. Our economic activity here in America or in other parts of Europe indirectly subsidizes the social welfare policies in these countries.

In America on the other hand, the tax on this new health care plan will be levied on the very richest – the producing segments of the economy. The big corporations which make up this segment will cut their operations and transfer the cost of this plan on the shoulders of their employees – the middle class. As a result there will be even greater poverty as unemployment rises and the state finds less and less money to be gained from taxes. A socialized welfare plan forced on the necks of 300 million people is unmanageable, incalculable and impractical. The government is trying to fill up a bottomless well to sate the thirst of everyone in the country.

Implementing social health care in America is like implementing democracy in Iraq or Somalia. Democracy is something we find to be a given right, a benevolent force of good in “our” world that cannot be questioned. We can’t accept the fact that the conditions in other countries require different systems of government. As a result, this created a lot of problems which we should have anticipated, but now can’t cope with.

Lemmywinks July 28, 2009 at 2:47 pm


I thought that I made it pretty clear that I would prefer to live in a system similar to France’s. They still have some private insurance, but most healthcare costs are government paid, which is certainly socialistic.

Unless I am mistaken, the statement which revealed my “Marxist agenda”, is factually correct. Name a truly free-market healthcare system…

RobertO July 28, 2009 at 2:57 pm

Lemmywinks, you may want to take a closer look at how infant mortality is counted in those different countries.


I Hate Socialism July 28, 2009 at 3:50 pm

Allan Thompson,

“Perhaps they can find a medic who will say the it is not a real disease and that it is all in the mind iif the patient.”

I’m from Khanada too and I was told the same thing by public doctors, that it was not a real disease and all in my head.

I then went to pay a private doctor and I could get a real diagnosis and real treatment.


“and most importantly the income disparity is not so great ”

The income disparity in Bangla Desh and Nigeria is not so great either. In fact everybody is equal…in poverty. Yet they are extremely miserable, how could that be if they are all equal ?

Could it be that income equality is not the panacea you think it is ?

Those like you who favor equality at the expense of quantity and quality end up creating havoc in the economy.

Plus, the USA is not a democracy, it’s supposed to be a constitutional republic.

I Hate Lemmywinks July 28, 2009 at 3:54 pm


“Name a truly free-market healthcare system…”

So because all healthcare in the world are being pillaged and over-ruled by governments, this means that free-market healthcare is wrong ?

Hey everybody, Lemmywinks thinks that free-market healthcare is illegitimate because all governments in the world are acting like dictators when it comes to healthcare.

Hey Lemmywinks. Most people are poor and ignorant, does this mean that the rich and knowledgeable should strive to be poorer and dumber like everybody else ?

I Hate Socialism July 28, 2009 at 3:57 pm


“In other words, you’re willing to make them a slave to provide you and the rest of society with a product you all lack the intelligence to provide for yourselves. ”

If I was a doctor I would pack my bags and leave the USA. I would go to Hong Kong where I could conduct my private business and make money without government interference.

Lots of doctors will either retire, leave or change work fields.

Obama care will create an instant doctor shortages.

fundamentalist July 28, 2009 at 4:40 pm

Obama’s healthcare plan is the next logical step in the progression towards full-blown socialism in the US. We don’t have a free market in healthcare in the US today. The differences between UK socialism in healthcare and US socialism are very small. The fight over Obama’s healthcare plan is one between socialism and socialism-lite. No one is considering the real solution–free markets.

Americans find it impossible to learn from the mistakes of others. We have to experience every failure for ourselves. Moving to full socialism in healthcare is what we need to convince people that it doesn’t work.

DD July 28, 2009 at 5:23 pm

Lemmywinks ,

Implying that third world countries have Capitalism is what makes you a Marxist, not your dumb question.

Only hard-core marxists believe that the poverty in Africa or India is due to Capitalism.

Paul July 28, 2009 at 6:19 pm

I think Obama knows full well the ramifications of what he is doing. He is a radical left. He WANTS to turn us into a socialist state. This guy has had communist influences his entire life – his parents, Alinsky, Ayers, and Wright to name a few.

Lemmywinks July 28, 2009 at 6:37 pm

I left out the third-world, because I did not plan on looking up the specific health care systems of every country. I was not trying to imply anything, other than the consistent trend of countries with decent quality of life standards to have government provided healthcare.

I am a utilitarian, but I come to this website because I agree with most of the articles. I don’t feel any reason to strictly adhere to any ideology, merely to look at what works in the world, and what doesn’t.

As a thought exercise, I try to think about how a truly free market system would work:

My own healthcare costs would be much cheaper if we did away with medicaid, and free (though not actually free) emergency room care for the uninsured. Also, medical unions like the AMA lobby to restrict competition from foreign doctors, allowing medical practicioners to benefit from protectionism.

At the same time, I don’t really expect the uninsured to simply go ahead and die if they have a treatable illness. Desperate people render desperate deeds, and I selfishly, would like to live in a country with a low-crime rate, and the least amount of desperate people. This probably isn’t a concern for most people on here, for philosophical reasons, but since the consequences of a health-care system with zero safety-net is unnacceptable to me, I’m much more inclined towards moving in the direction of countries that manage to get more healthcare per $.

With all of the talk of slavery, the freedom to pay a consistently increasing portion of income to get a decreasing amount health coverage is not a freedom that I actually want. Between being a “slave” to the government, or the insurance companies, I really can’t say what is better. I’d prefer my money go towards paying for actual healthcare, rather than administrative costs though.

On the bright side, the United States will likely never obtain socialized healthcare, and if we did it would probably turn out worse than most other countries. I guess there’s always that…

I suppose I must apologize for offending the more sensitive members of this thread with my Marxism tainted words.

Ohhh Henry July 28, 2009 at 7:30 pm

“Many of the factors can be attributed to healthier lifestyles, but as it stands, France does not seem to suffer from severe rationing, which is the primary criticism aimed at many other universal systems.”

France is suffering from severe and probably unrecoverable problems because of government medicare and other socialist policies, but you are unable to see the forest for the trees. Those hundreds of cars which are burned whenever their immigrants are rioting? They brought in all those immigrants and stacked them in ghettoes because their socialist medicare system has too many patients and not enough slaves, er, I mean taxpayers, but they’re so damned socialist they have no idea what kind of work the immigrants should do. In France they ration jobs. Remember when thousands of people, mostly elderly, died in the heat wave a few years ago? In France they effectively ration housing, electricity, AND medical care. France cannot balance its budget, the Euro zone is going to be torn apart because of the member countries’ ridiculous fiscal extravagance and because of their hatred and fear of free markets, and France as you know it will not exist in 50 years. To what age do you think the average Frenchman will live then?

And most ironically, it was a Frenchman named Bastiat who first articulated the problem from which you are suffering – the inability to differentiate between what is seen and what is not seen.

I’m not defending the US system. It’s socialist, it’s lousy, it’s unsustainable, and it is probably going to get very rocky. It’ll get even rockier and it’ll blow up a lot sooner and get a lot messier if Obama has his way and accelerates the country in the wrong direction – toward France and Canada.

Tim July 28, 2009 at 7:34 pm

To I Hate Socialism:

“The income disparity in Bangla Desh and Nigeria is not so great either. In fact everybody is equal…in poverty. Yet they are extremely miserable, how could that be if they are all equal ?

Could it be that income equality is not the panacea you think it is ?

Those like you who favor equality at the expense of quantity and quality end up creating havoc in the economy.”

It seems that my message was horribly misunderstood. The mistake lay in the choice of wording in that earlier post, which seemed to suggest that I was advocating the idea of income equality. Nothing of the such. It’s not income equality which is the solution, as much as the raise in living standards. The reason why Bangladesh is different from Sweden is that the average income and the living standard of the average Swedish family is incomparably greater than his counterpart living in Bangladesh. Technologically, socially and industrially, Sweden is far more developed than Bangladesh, and its people are far better off, this is not a concept that needs a great deal of explaining in the context of this discussion.

By income disparity, I meant that as the unemployment level rises and as the economy implodes thanks to the unintended consequences of the state health care bill, more and more people would find the value of their holdings falling compared to the prices of goods, while the tax levied on them will be perfectly adjusted to this inflation. Therefore their living standards will drop and they won’t afford some of the basic necessities needed to lead a healthy life.

The only way to raise living standards is to raise the average family’s income in terms of real wealth, that is wealth backed by productive value. Unfortunately as countless historic examples clearly demonstrate, every government attempt to stimulate an industry, to create jobs, to control prices and salaries and to otherwise redistribute wealth only leads to the reverse effect. The best way the government could directly fill the citizen’s pockets with well earned money is by well, stop taking it away from him through social redistribution schemes. End the income tax, stop the global empire, pull the plug on the bureaucratic Zeppelin, and then people will have the money to afford that insurance coverage plan. The solution for this problem lies in the total restructuring of the role that the American government plays in our lives.

I’m somewhat surprised by the kneejerk reactions of some of the commenters here. Had they only bothered to read the rest of my message, they might have deduced that the position they assumed I making from the start was never on my mind in the first place.

Woodchuck July 28, 2009 at 8:45 pm

If it is true that the US hospital industry is 80+% socialized, why does it compare so favorably to Canadian hospitals in the penultimate paragraph?

Bennet Cecil July 28, 2009 at 9:08 pm

There are winners and losers in any health care system. The most interesting fact in the universal health system is that union workers and others with excellent medical insurance who voted for Obama will be pushed into an inferior system. The overexpansion of government will crush prosperity. Unemployment will rise. Interest rates and inflation will rise. If the dollar collapses, everyone will suffer except for the very wealthy.

Why not let individual Americans pay premiums to Medicare and enroll in that system if they choose? That could be the public option.

Higher taxes, fewer choices, less freedom and a stagnant economy are here for many years. Health care reform will likely make it worse.

Paul July 28, 2009 at 9:59 pm

Lemmywinks, I don’t think people will let those who are uninsured die and rot on the streets. People by nature are generous want to help other people. Charitable organizations do exist for people in need. Charitable givings would be significantly more if we didn’t have to pay so much in taxes. Just look at the outpouring of donations during Katrina.

Steve July 28, 2009 at 11:08 pm

Don’t you love people like Mr. Thomas DiLorenzo “The Non-Sayer” who is like a mouthpiece of the Republican politicians in Washington. They all see what is wrong with the proposed health reforms, but none offers any solutions to present crisis. Looking at the feedback from fellow Canadians, it looks like Mr. Di Lorenzo did not do his homework.

What bugs the hell out of me is the fact that intelegent people including many of the comentators here do not see the difference of health care reform and health care financial reform. People… get it through yor heads; it’s not that you will have not able to choose your doctor buit it’s who is going to pay him for his services. That is what it is all about.


Thinker July 28, 2009 at 11:52 pm


I cannot speak for Mr. DiLorenzo, but I very much doubt that he’s on the Republican payroll; the Mises Institute isn’t exactly pro-Republican, to put it mildly.

As for a “solution”, how about this one:
Liberalize and remove incentives for particular methods of paying for health care. Basically, bring back the free market so that people can get whatever kind or quality of health care someone is willing to give them.

As it happens, many of us “intelegent” people do know what were talking about, and even without specifics, we can usually come up with several very good arguments against government meddling in anything. We’ve read our Rothbard, Mises, and Hayek.

Bryan Edds July 29, 2009 at 1:59 am

The health care system is currently managed by the government through subsidies and regulation. This has caused the increase in cost and lowering of quality. The suggestion is to make the health care system monopolized by the government. From government management (fascism) to government ownership (socialism). Anyone with a basic understanding of economics can see that this will make things even worse. The only answer is to separate government and medicine (liberalism). Hopefully people will someday understand this.

Chuck July 29, 2009 at 4:48 am

Next time you hear some shill advocating government healthcare listen carefully. They almost always demonize the health insurance companies, but never the pharmaceutical industry.

The real force behind this healthcare “reform” is the (prescription)drug industry and the AMA. The health insurance companies actually try to keep healthcare costs down so they don’t have to pay out as much in claims. The drug companies want people to spend MORE on healthcare.

The so-called reform will not surprisingly increase healthcare costs to the benefit of drug companies and doctors at the expense of patients.

Lemmywinks July 29, 2009 at 9:50 am

Speaking of things which generally make health care prices rise….

What is the general consensus here about pharmaceutical patents? Especially internationally recognized patents.

James Farrell August 4, 2009 at 10:07 am

Dear Professor,
Is it safe to assume that Loyola provides you with a gold-plated health care plan? Were you ever to lose your tenured position through some fluke of free-market justice, do you think you would be able to get health care from a private insurer at any price in today’s market? Not bloody likely.
Let’s not pretend that this is a battle between the free market forces of the insurance industry and the corrupting power of the government. It is, in fact, a serious argument about how best to regulate an industry that currently fails badly on efficiency, equity, and adequacy of coverage.
See http://jpfarrell.blogspot.com/2009/08/health-care-reform-takes-shape.html for a fact-based discussion of the proposed, imperfect legislation.

Lord Buzungulus, Bringer of the Purple Light August 4, 2009 at 10:15 am

“Is it safe to assume that Loyola provides you with a gold-plated health care plan?”


Michael A. Clem August 4, 2009 at 10:17 am

James Farrell,
Get real. As other commenters have already pointed out, “today’s market” is far from any kind of free market health care system. Thus your argument is a straw man. A thorough investigation of the previous interventions that have led to our current health care system would take more than a blog entry to cover, though.
Those who want to regulate health care need to first explain why all the previously existing regulations have failed to have the desired effect, instead of pretending that we have some kind of unregulated, free market health care system that needs to be reined in. Furthermore, they would need to explain how any new regulation would fix the problems of the old or current regulations.

James Farrell August 4, 2009 at 12:45 pm

Mr. Clem,
Of course we have a highly and imperfectly regulated medical care industry. That is the point. The current situation, in which private insurers are allowed to refuse service to willing buyers is unacceptable and contrary to the most fundamental principle of market regulation.

The government insurance option is at best a second-best solution, but having no solution at all is unacceptable. So, what should we as a nation do to fix the problem?

One principle to consider would be that regulated industries work best when government sets the rules, but the administration is handled by regulated firms. The Medicare Advantage plan was designed to do this. And, the government still handles Medicare administration for members who have not opted to go with a private Medicare Advantage plan.

The dreaded “government plan” option is similar to Medicare, except that it would also cover people who are not eligible for Medicare but who have been turned down by private insurers.

Would it accept others as well? That is an important detail that the Congress still has to work out. There are many such details. For example, what measures will the medical industry take on its own behest to reduce its strain on the national economy?

Personally, I vote for some reform, even imperfect reform if the alternative is the current sad state of affairs in which even the willing and the well off can be turned down for insurance coverage. That is the worst kind of market failure.

Oppositional politics won’t cut it anymore. Either we become part of the solution or we remain part of the problem.

Lord Buzungulus, Bringer of the Purple Light August 4, 2009 at 12:57 pm

“The current situation, in which private insurers are allowed to refuse service to willing buyers is unacceptable and contrary to the most fundamental principle of market regulation. ”

Probably the reason for this situation has something to do with a minor point you omit: the price at which the sellers are willing to sell is rather different than the price at which buyers are willing to buy. Once you’ve demonstrated you grasp that basic point of economics (i.e., the price system), perhaps intelligent conversation will then be possible.

Michael A. Clem August 4, 2009 at 1:09 pm

The current situation, in which private insurers are allowed to refuse service to willing buyers is unacceptable and contrary to the most fundamental principle of market regulation.

Reform legislated without understanding the problem will only cause more problems. Have you looked at the current regulations that affect insurance companies? Why do you think they refuse service to some people? In a free market, a business is free to refuse service to any customer, although, in general, they usually don’t because that customer will go to one of their competitors. Now you say we have a situation where people are refused insurance coverage, but why have they done this? Is it too much to realize that health insurance is already regulated as is much of the rest of health care? These regulations make it more difficult and more expensive to provide health care coverage, putting a greater burden on insurance companies than they would otherwise have to face.
For that matter, the various and sundry regulations on health care in general have led to higher health care costs than we would have otherwise, also contributing to the insurance problem.
Proposing regulation without fully understanding the results of current legislation is mere folly, not reform. Do you even understand what insurance is? Insurance where everyone is included isn’t insurance at all, but cost redistribution.
I’m not suggesting we take no action at all, but rather, that we undo previous legislation instead of simply layering on more legislation like bandages layered on top of bandages. I’m not at all convinced that proposed legislation even understands the problems of health care, much less that such legislation will actually have a beneficial effect. Forcing people to do things against their will is not only morally troubling, but generally creates perverse incentives and unintended consequences, i.e. more problems. Now, who’s really part of the solution and who’s part of the problem?

James Farrell August 5, 2009 at 10:14 am

Here are the facts. Prove me wrong.

Go to an insurance broker, ask for private insurance, and describe your medical history. You will be asked to fill out a multi-page form to describe your medical history and usage of prescription drugs. It will be scrutinized for any hint of a chronic condition. At that point, you may be approved at the advertised rate; or you may be approved at a higher rate; or you may be approved with exclusions for anything related to a pre-existing condition, either for one year or indefinitely; or you may be denied coverage outright. If you are denied coverage, you will need to report that to any other insurance company to which you apply. Once you have been denied coverage (and believe me, it doesn’t take much), you will find it impossible to get insurance at any price from any private plan. Some states offer insurance for people who have been denied coverage and, while this is very expensive, you will find many people in those plans. The “government plan option” would offer that same service to people nationally.
By the way, if you omit to mention anything requested on the application form, and you are then granted insurance, your insurance can be revoked if that omission is discovered. It is common practice for insurance companies to investigate medical records of the newly ensured when they make a claim to see if the claim is related to a pre-existing condition, whether or not it was previously disclosed.
Note that I am not trying to demonize insurance companies nor the people who work there; they are simply following the regulations as they are written and trying to do the best job they can for their companies.
In most regulated industries in the U.S., companies licensed to provide essential public service, such as transportation companies and utilities, are required to provide services to anyone willing to pay for them, without discrimination. This principle is called the “common carrier obligation.” In the U.S., medical insurance carriers are not subject to the common carrier obligation and this failure of regulation must be addressed.

Lord Buzungulus, Bringer of the Purple Light August 5, 2009 at 10:32 am

James Farrell is apparently shocked to learn that pooling of risk is what insurance companies actually do, as opposed to simply paying for the health care of anyone who wants such care paid for. What a tool.

Horst Muhlmann August 5, 2009 at 10:50 am

I Hate Socialism wrote:

“If I was a doctor I would pack my bags and leave the USA. I would go to Hong Kong where I could conduct my private business and make money without government interference.

“Lots of doctors will either retire, leave or change work fields.

“Obama care will create an instant doctor shortages.”

I already know people who otherwise would have that are not going into medical school in the first place.

Comments on this entry are closed.

Previous post:

Next post: