A recent L.A. Times column was unusual in several respects. For one, it made a case for free market healthcare – an argument that even the most “conservative” politicians today are reluctant or remiss to do. A second strike against it was quoting Murray Rothbard, an intellectual who has been blackballed in all but the most bold of political conversations today. Finally, it argued that the progression of statism creates a status quo that progressivism does not “progress” in any sense of the word. Incredible, this breach of taboo:
In his 1973 “Libertarian Manifesto,” the late Murray Rothbard argued that the biggest obstacle in the road out of serfdom was “status quo bias.” In society, we’re accustomed to rapid change. “New products, new life styles, new ideas are often embraced eagerly.” Not so with government. When it comes to police or firefighting or sanitation, government must do those things because that’s what government has (allegedly) always done.
“So identified has the State become in the public mind with the provision of these services,” Rothbard laments, “that an attack on State financing appears to many people as an attack on the service itself.” The libertarian who wants to get the government out of a certain business is “treated in the same way as he would be if the government had, for various reasons, been supplying shoes as a tax financed monopoly from time immemorial.”
If everyone had always gotten their shoes from the government, writes Rothbard, the proponent of shoe privatization would be greeted as a kind of lunatic. “How could you?” defenders of the status quo would squeal. “You are opposed to the public, and to poor people, wearing shoes! And who would supply shoes … if the government got out of the business? Tell us that! Be constructive! It’s easy to be negative and smart-alecky about government; but tell us who would supply shoes? Which people? How many shoe stores would be available in each city and town? … What material would they use? … Suppose a poor person didn’t have the money to buy a pair?”
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[I]t’s amazing how quickly status quo bias kicks in. Since the 1960s, it has become a given not only that the government should be more involved in areas like healthcare and poverty but that these problems remain intractable because the government has not gotten more involved . . .
Charles Murray, my colleague at the American Enterprise Institute, notes that the most remarkable drop in the poverty rate didn’t come after President Lyndon B. Johnson declared war on poverty but when President Eisenhower ignored it. Over a mere 12 years, from 1949 to 1961, the poverty rate was cut in half. Similarly the biggest gains in health coverage came when government was less involved in healthcare, i.e. before the passage of Medicare and Medicaid in 1966. Duke University Professor Christopher Conover notes that in 1940, 90% of Americans were uninsured, but by 1960, that number was down to 25%.
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It is a social sin today to state in public that the government should not be [further] involved in health care. This, even in spite of the fact that government spending does not help health care costs – it makes them worse by inflating the costs of a single area of the economy (similar to that which drives the cost of college tuition up):
The federal government gathers tax revenue from the general population and then channels about $2 trillion each year into the health care sector. The big entitlements Medicare and Medicaid account for 46% of health care spending, according to the Kaiser Family Foundation. Moreover, by establishing government as a third party payer for health care services, the entitlements eliminate incentives for individuals to be concerned about health care costs. Employer-provided health insurance has a similar effect. No surprise, then, that health care inflation is currently going up 9% a year, more than double the Consumer Price Index.
Tom Woods provides the coup-de-grace to the fact, citing Allen J. Matusow:
The poor had not fared all that badly prior to Medicaid, thanks to the willingness of doctors and hospitals to dispense charity medicine. In the last year before Medicaid the hospital admission rate for families with incomes below $3000 was 107 per 1,000 families; for families with incomes $10,000 and above, it was only 89 per 1,000 families. Before Medicaid, the average low-income person visited a doctor 4.3 times a year — not dramatically less than the 5.1 visits made by high-income persons. Granted that the poor are more frequently ill, these figures do not sustain a thesis of gross inequality….
Most of the government’s medical payments on behalf of the poor compensated doctors and hospitals for services once rendered free of charge or at reduced prices…. Medicare-Medicaid, then, primarily transferred income from middle-class taxpayers to middle-class health-care professionals.
And that is not even half of the case that can be built around the argument that government is making health care costs worse. In short: Costs rose twice as fast in the decade following the creation of Medicare as they had in the years leading up to it; Matusow reports that “medical price inflation fueled by Medicare itself helped erode much of Medicare’s benefits.” Meanwhile, you have entire states considering single-payer, Medicare-for-everyone type systems, such as Vermont, Massachusetts, and Montana. It won’t work. It never has, no matter the intent of those who wish themselves to be Saviors, Shepherds, and Parents of the Proletariat.
Pertinent questions form: now that we have this system, can we go back? Can we be taught to care for one another and let morality rule now that morality has dwindled and law is why people pay? It doesn’t seem likely to me… Thanks, statism, for destroying social morality forever.
Cash-based medicine would be far better than the system we have now. Your lecture of the week this week is a concise anecdotal analysis why:
[Edit: Another aspect of health care defense of which you should be aware: infant mortality rates and life expectancy in the U.S. are not indicative of poor health care.]