The contemporary debate in America
over national health insurance is ultimately a debate over the future character
of the country. Shall America be a nation of free peoples who are
primarily responsible for themselves and who fulfill their needs and desires
through voluntary, market intercourse with their fellow citizens, or shall
America continue to move further down the path of political control and
state intervention in the affairs of everyday life?
For more than a hundred years,
this, more than anything else, has been the continuing controversy in public
discourse in the United States. The contrast between these conceptions
of the good society was already explained in 1887 by J. Laurence Laughlin,
founder of the economics department at the University of Chicago, when
he wrote:
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Socialism, or the reliance on the state for help, stands in antagonism
to self-help, or the activity of the individual. That body
of people certainly is the strongest and happiest in which each person
is thinking for himself, is independent, self-respecting, self-confident,
self-controlled, self-mastered. Whenever a man does a thing for himself
he values it infinitely more than if it is done for him, and he is a better
man for having done it. If, on the other hand, men constantly hear
it said that they are oppressed and down-trodden, deprived of their own,
ground down by the rich, and that the state will set all things right for
them in due time, what other effect can that teaching have on the character
and energy of the ignorant than the complete destruction of all self-help?
They begin to think that they can have commodities which they have not
helped to produce. They begin to believe that two and two make five.
It is for this reason that socialistic teaching strikes at the root
of individuality and independent character, and lowers the self-respect
of men who ought to be taught self-reliance. Self-help leads to activity
in production and healthy exertion. State-help tends to make all
individual energy weak and flabby, because it teaches one to rely on an
outside power. The danger of enervating results flowing from dependence
on the state should cause us to restrict the inteference of legislation
as far as possible.... The right policy is a matter of supreme importance,
and we should not like to see in our country the system of interference
as exhibited in the paternal theory of government existing in France and
Germany. [Emphasis in original.]
When he wrote these words more than
one hundred years ago, Professor Laughlin was still expressing the beliefs
of most of the Americans of his own time. These beliefs in individualism
and self- help were taken for granted by the vast majority of his countrymen.
They were considered the foundations for what made America great as a free
and increasingly prosperous nation. But there were new clouds forming on
the horizon, blown by an ideological wind from Europe. From across
the Atlantic there was arriving an old idea in new clothing: political
paternalism under a now name, “the welfare state.” And it was the storm
clouds of collectivism, socialism and the welfare state that people like
J. Laurence Laughlin were trying to warn other Americans to beware of.
And, now, a hundred years later,
that welfare state dominates the world, including America. Even now
with the end of most of the totalitarian regimes of the 20th century, in
this post-communist era, the ideology of the Intrusive State, the Interventionist
State, the Welfare State still remains the prevailing political philosophy
of our time. And what has it created in place of America's original
system of individual liberty and economic freedom? Sociologist Jack
D. Douglas has summarized its result in his book The
Myth of the Welfare State (1989):
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America today is ruled by an immense imperial state bureaucracy headed
by an imperial president, imperial legislators, and imperial courts, all
of which strive mightily every day to extend their powers over our lives.
We have drifted blindly, in the quest for the deceitful lures of utopian
ideals and greed, into the tyranny of the majority which the founding fathers
saw as the greatest danger to the System of Natural Liberty. America
today is a government-dominated society in which all of us are controlled
in innumerable ways directly and, far more, indirectly by vast and still-proliferating
regulatory agencies issuing a torrent of administrative laws, by untold
thousands of planning commissions and committees, by soaring police powers,
by a tidal wave of legislative laws and activities, and by a tumultuous
sea of injudicious court decisions in which revolutionary ukasi are masked
in the rhetoric of constitutional precedents, rational interpretation,
and due process. Interlocking layers of our huge government bureaucracies
now dictate minute details of our lives and enforce these dictates with
vast police powers. There is literally no realm of life that is still
free from massive intrusions by government legislative, regulatory, and
judicial fiat.
But while many in contemporary America
may admit and even express concern over the growth of state power due to
the welfare state, they also often now believe that there is no alternative
to governmental paternalism. The problems of old age, medical insurance
and health care preclude “individualistic” solutions of self-help, it is
claimed. How can people provide these things for themselves?
Surely, whether we desire it or not, the state must act as the provider
and regulator of these essential “social services” for the good of all
in the society. There is no turning back, it is said. All we
can do is try to make the welfare state as humane and cost-efficient as
possible. A free society cannot effectively supply those basic and
vital services that the vicissitudes and uncertainties of life require
each person to be concerned about for himself and his family.
But contrary to this view, before
the modern welfare state made its appearance in the late 19th century,
first in Imperial Germany and then in the rest of the Western world in
the 20th century, voluntary associations of mutual aid had arisen among
free men. And these provided the voluntarist, market solutions for
the supply of those “social services.” In the Great Britain of the
late 18th and 19th century, they were known as “friendly societies.”
In his monograph The
Welfare State: For the Rich or for the Poor? (1982), David G. Green
summarized the workings of and the services provided by these mutual aid
societies, and it is worth quoting Mr. Green's summary at length:
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In the main, the friendly societies originated at the end of the 18th century
and early in the 19th. Initially they were local voluntary associations
established to make provision against the hardship resulting from the death
of a relative or from illness or accident which prevented the breadwinner
from supporting his family. The death of a man, wife or child meant
not only an emotional loss; it also meant that the cost of the funeral
fell on the survivors. And however poor they were, few were prepared
to arrange a "cheap" funeral for a loved one. If it was the husband,
or breadwinner, who had died, the problem was, of course, even more acute
for the widow and the orphaned children.
Each member of a friendly society paid regular contributions into a common
fund used for four main purposes. First, if a man became ill
or had an accident he could draw a weekly allowance, sufficient to keep
himself and his family from extreme privation. Secondly, the
fund would meet the cost of medical care and medicines for the member.
Thirdly,
if either a man or his wife died, the surviving partner could draw a fixed
sum from the fund sufficient to meet the cost of the funeral. Fourthly,
the fund would be used to support the widow and orphans of a deceased member.
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These were the main benefits which
men banded together to provide in the early years. Later they began
to provide additional services for themselves. Some friendly societies
arranged facilities for small savings to be accumulated and for members
to borrow small sums. Many offered other forms of insurance; endowment
assurance, life and even fire insurance. Some provided mortgages....
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The typical member of a friendly society
was a skilled working man in one of Britain's industrial regions.
Apart from the obvious advantage of mutual insurance against some of life's
hazards, he might be attracted by the convivial side of the societies:
social activities, weekend outings, and annual conventions. Or the
moral aspect of the movement might appeal to him: the commitment to self-reliance,
self-improvement, self-education, and hostility to government interference.
For many, membership provided opportunities for leadership lacking in the
workplace.
And in his recent book, Reinventing
Civil Society: The Rediscovery of Welfare Without Politics (1993),
David Green explains that by 1910, the year before the British government
passed the 1911 National Insurance Act, there were 28,877 registered friendly
societies of these types providing medical, old age and accident insurance,
with memberships totaling 6,623,000. But Mr. Green also points out
that there were many more friendly societies providing the exact same services
which chose not to be officially registered with the state. And these
had a total membership of around another 3,000,000. Thus, the British private
sector, before the First World War, already provided “welfare” services
for more than three-quarters of the work force of Great Britain.
And these privately funded services were not reserved for the skilled and
middle-income members of the British work force.
Today, America is faced with one
of the greatest proposals for extending the welfare state and governmental
dependency in this century. The Clinton administration has called
for the nationalization and the politicization of the entire health-care
and medical insurance industry in the United States. Regardless of
the rhetoric used and “news bites” created to rationalize what is being
advocated, national socialism in medical care is the essence of the Clinton
plan.
The perversity in the arguments
made by the administration's spokesmen for national socialist health care
is that they claim that theirs is an attempt to remedy the shortcomings
and failures of private health care in the United States. But what
has created many of the cost problems in medical care in America during
the last years is precisely the fact that the state has intervened in the
health-care industry and generated incentives that have reduced or eliminated
many of the normal behavioral constraints on demand and price in a free-market
economy.
This is exactly what government
medical programs such as Medicaid and Medicare have done. Joseph
Bast, Richard Rue and Stuart Wesbury have explained the process in their
book Why
We Spend Too Much on Health Care (1992):
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The manner in which government funds are spent on health care also fuels
health care inflation. For example, Medicaid beneficiaries make small
payments toward their medical expenses, giving them an incentive to overuse
health services and little incentive to comparison-shop for lower-cost
therapies or providers. Prior to 1983, health care providers were
paid the estimated cost of the service plus an agreed-upon profit.
This “cost-plus” pricing encouraged providers to expand the range and volume
of services they delivered and increase the prices they billed the government.
With its huge market share, changes in the federal government's reimbursement
policy are immediately felt by other players in the health-care field.
The cost-plus payment system under Medicare forced other health care buyers,
who bid against Medicare for health services, to pay higher prices.
The heavy traffic of consumers for whom health care was nearly or entirely
"free" made it more difficult for those consumers who were still cost-conscious
to have any effect on prices.
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Serious cost-containment efforts finally
started in 1983, when the federal government changed Medicare and Medicaid
reimbursement from cost-plus to predetermined payments for medical procedures
grouped into diagnosis related groups (DRGs). Direct government financing
of capital spending continued, with the federal government assuming 80
percent of capital costs....
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Starting in 1986, hospitals began shifting
the cost of treating Medicare and Medicaid patients onto patients with
private health insurance. Jack Meyer, Sharon Silow-Carroll and Sean
Sullivan describe the results- “As Medicare and Medicaid have tightened
their payment policies, providers have naturally tried to shift some costs
to private payers. The cost shifting may not cause total health-care
spending to be any higher, but it increases the tab for many private employers
and individuals.”
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...Government's entry into the health care
market has dramatically expanded the volume, intensity, and price of health
care. By first bidding up the price of health care with a payment
system that encouraged excessive utilization and spending, and then imposing
cost-containment measures that led to cost-shifting, government has inadvertently
increased the cost of health care to other buyers and changed the way health
care is delivered. In so doing, government has contributed to a process
that has priced health care and health insurance out of the reach of millions
of Americans.
Yet, the advocates of national socialist
health care insist that the rising costs and less-than-satisfactory care
is the fault of the private sector, when in fact it has been the state's
intrusion into the private health-care market that is behind practically
all of these undesired effects. Having distorted and disrupted the
health-care market with one set of state interventions, the government
is now proposing to fix its own mistakes with comprehensive state intervention
and regulation over the entire medical industry. No clearer road
to disaster can be proposed.
How have the critics of the proposal
for national socialist health care responded? Their analyses of the
Clinton plan and its likely consequences have usually been insightful and
penetrating. They have effectively pointed out many of the negative
effects that would result in terms of the availability of medical care,
the costs of the proposed system in terms of taxes and insurance premiums,
the degree of loss of freedom of choice that would occur, and the retarding
of medical and pharmaceutical research that might follow from its implementation.
And, yet, almost all of the opponents
of national socialist health care refuse to challenge the fundamental principle
behind the Clinton plan: That the state has the right and responsibility
to intervene into the provision and regulation of the health-care industry.
Many of them have accepted the underlying premise that the individual cannot
be trusted or allowed to care for himself and to peacefully arrange for
provision of his needs and desires through mutual and voluntary contract
and association with his fellow men in society. And in this sense, they
have accepted the foundation of all collectivist thinking in our age.
This problem was already discussed many years ago by the Austrian economist
Ludwig von Mises in his book Liberalism
(1927):
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It is universally deemed one of the tasks of legislation and government
to protect the individual from himself. Even those who otherwise
generally have misgivings about extending the area of governmental activity
consider it quite proper that the freedom of the individual should be curtailed
in this respect, and they think that only a benighted doctrinairism could
oppose such prohibitions....
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We should see that as soon as we surrender
the principle that the state should not interfere in any questions touching
on the individual's mode of life, we end by regulating and restricting
the latter down to the smallest detail. The personal freedom of the
individual is abrogated. He becomes a slave of the community, bound to
obey the dictates of the majority. It is hardly necessary to expatiate
on the ways in which such powers could be abused by malevolent persons
in authority. The wielding of powers of this kind even by men imbued
with the best of intentions must needs reduce the world to a graveyard
of the spirit....
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The propensity of our contemporaries
to demand authoritarian prohibition as soon as something does not please
them, and their readiness to submit to such prohibitions even when what
is prohibited is quite agreeable to them shows how deeply ingrained the
spirit of servility still remains within them.... A free man must be able
to endure it when his fellow men act and live otherwise than he considers
proper. He must free himself from the habit, just as soon as something
does not please him, of calling for the police.
Separate from the problem of the present
costs and availabilities of medical care and health insurance, and even
if the advocates of various forms of state intervention in the health-care
process could be convinced that most of the problems they are concerned
with could be solved by fully freeing and privatizing the medical and health-care
industries, our century remains a prisoner of the idea that the individual
must be secured through political action from any errors and omissions
on his part in unthoughtfully planning for his own future needs. Every
individual must be protected from his own actions. He must be prohibited
from making the “wrong” decisions and regulated and controlled to assure
that he does the “right” things with his life and resources. We live
in the era of the security state.
And it is the idea of the security
state that must be opposed if the proposals for national socialist health
care are to be defeated root and branch. The Future of Freedom Foundation
was founded five years ago with this purpose in mind: To demonstrate the
fundamental dangers and disasters that may follow from all further extensions
of collectivism—whether it be called the welfare state, the mixed economy,
interventionism, socialism, “liberalism” or social democracy—and to make
the moral and economic case for rolling back and repealing all forms of
collectivism in our society.
The present volume, The Dangers
of Socialized Medicine, has this purpose in mind. The authors
all share in common a belief that the implementation of any form of national
socialist health care in the United States would create medical catastrophe
for the people of America. In their contributions, they demonstrate
both the undesirable consequences that would follow from instituting any
form of such a system and why the only hope for a sound and efficient health-care
system in America lies in the radical repeal and denationalization of all
existing state interventions in the health-care industry.
The essays originally appeared
in the Foundation's monthly publication,
Freedom Daily, most of
them in the January, February, and March 1994 issues. It is hoped
that they will add an important dimension to the case against national
socialist health care and that they will serve as a guide for rethinking
the premise upon which the welfare state has arisen in 20th-century America.
Nothing less than the future of freedom is at stake. |