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Laissez Faire Health Care

The mixed economy of the United States is riddled with downfalls. Like philosopher Ayn Rand says, “Mixed economies only go one way. Either more capitalist or more statist.” Too often throughout history it is the good aspects of our society, the capitalist aspects, which are blamed for our countries anguish. Like our economy, our health care is currently mixed with the free market and government controls. When health care costs raise beyond affordable range the people misguidedly look toward the government for help, and blame the free market. Americans will often implore for more regulations, expanding of licensing requirements, and universal health care, by asking the government to commit theft by taxation to fund their “right” to health care.

Medicare, Medicaid, and HMO’s represent some of the government controls that are embedded into our current health care system. Medicare and Medicaid are cost intensive to the taxpayers, result in loss of freedoms for patients, render substandard care and fail to show any validity for the need of such programs. In Michael Cannon’s book Healthy Competition, it is conservatively estimated that $405 billon of our tax money goes into funding these tasteless programs each year. Michael Cannon also points out the immense loss in patients’ freedoms. Not only are the amounts of choices a patient is allowed, in regards to choosing health plans and doctors, restricted, but also if a senior opts out of Medicare they forfeit their past and future Social Security benefits. A classic example of just how substandard health care become when government gets involved is the fact that Medicare was based off the 1965 Blue Cross/ Blue Shield insurance coverage. When private insurance companies decided to cover outpatient prescription drug coverage in the 1970’s, Medicare needed an act of Congress to allow such coverage, which was passed in 2003. The evidence for the need of these government controls in health care shows the exact opposite. Historian David Beito points out that in the 1920’s the health insurance arena was dominated by mutual aid societies, which were societies that would finance medical care. According to Sue Blevins, president of the Institute for Health Freedom, “In the 10 years before Medicare’s enactment, the number of retirees with health insurance nearly doubled.” OBGYN Dr. Ron Paul reminds us that, “Before 1965 physicians and hospitals strove to charge the minimums; because payment now comes so largely from third parties, they instead charge the maximums.” Dr. Paul goes on to point out that, “HMOs have become corporate, bureaucratic middlemen in our health care system, driving up cost while degrading the quality of health care.”

One of the biggest travesties to happen to health care is the development of the Food and Drug Administration. The FDA takes unreasonably long to certify new drugs, at times passes dangerous drugs into the medical field, encourages people to be less self-reliant, and probably increases morbidity. It now takes well over 15 year to certify new drugs that could potentially save lives. By the 1970’s economist Steven Wiggins projected the increasing costs of regulations would reduce the amount of new drugs by 60% a year. Market based certification certifies “off label” use of drugs at least 2 ½ years before the FDA. Dale H. Gieringer with the CATO Institute shows that 10,000 lives are saved by FDA regulations, while up to 120,000 lives are lost due to FDA regulations. Cannon illustrates the different types of errors made by the FDA. Type I errors occur when the FDA passes a dangerous drug, which causes them to be directly ridiculed. Type II errors occur when the FDA takes too long to pass a new drug causing people to suffer. Type II are less known to the public, and consequently is the more preferred by the FDA to avoid type I errors.

Government monopolies, regulation and licensing requirements cause wastefulness, needless deaths, and reduce quantity of doctors. David Bergland describes in his book Libertarianism In One Lesson that in the early 20th century the American Medical Association lobbied and got the governments backing to monopolize on medical schools. The government declared that any medical school that was not associated with the AMA was not allowed. The results did nothing for the quality, yet hindered the quantity of doctors. Government regulations act as a hidden tax. Christopher Conover of Duke University approximates that regulations provide $170.1 billion of benefits, however costs $339.2 billion. The result is $169.1 billion in a hidden tax. The Institute for Medicine estimated around 18,200 people die annually due to lack of health insurance. However, Conover estimates 22, 200 people die due to government regulations. Currently the government restricts payment for organs to be above $0 resulting in fewer donors and more deaths. Another dangerous aspect of government controls is licensing requirements. Conover estimates $6.5 billion is the cost Americans have to bear each year due to medical licensing requirements. Milton Friedman wrote, “I am myself persuaded that licensure has reduced both the quantity and the quality of medical practice… that it has forced the public to pay more for less satisfactory medical services, and that it has retarded technological development both in medicine itself and in the organization of medical practice.”

Universal or socialist health care is the complete opposite direction our health care system needs to go. It is due to government involvement that our current system is in disarray and by furthering the involvement of the government we would deepen the travesty of our current system. The fact is that the US is more socialized than other nations that claim to be socialized. Over ¼ of Americas health care system is currently financed by the government. A glimpse of universal health care can be seen in our current VA hospital quagmire. The VA has a terrible reputation for substandard and prolonged health care. Some have said it’s like they haven’t any health care at all. You can also see socialized medicine in other countries. At any given time 1 million British are waiting to be admitted into the hospital. In Sweden heart surgery is a 15 – 25 weeks wait. Canadians have to wait an average 17 ½ weeks for care. Central planning by the government on what Americans need is impossible. Technology and the needs of consumers change to swiftly, and the only tool up for the job is the free market. The price tag attached to universal health care is probably the most shocking aspect of universal care. The average Canadian family pays 47% of its income in taxes largely due to universal health care. Dennis Kucinich estimated universal heath care would cost $6 trillion in the US. Another aspect to look at is when people don’t pay for health care, they tend to overuse it, buy name brand prescription drugs rather than generic, and take less care of themselves. If everyone felt the cost burden of health care people would be less inclined to smoke and eat fast food. The common fallacy is that people have a “right” to health care. The fact is your rights end where someone else’s begins. You cannot have a “right” if it infringes in someone else.

The free market is the best tool to bring quality health care to the most people without being immoral. Cannon reveals the best problem-solving tool is competition. Competition drives down costs while increasing quality. Doctors would operate in more transparency and maintain their pristine reputation to gain the most consumers. The consumers would be more self-reliant in deciding which doctor to see. In areas of our current health system that allow for more competition, such as over counter drugs, we see better prices compared to other countries. The type of competition we often see is on the wrong level. Rather than having providers competing for patients, we see hospitals and health plans competing for bureaucracies that provide care for the patients. Technology also increases on the free market. Likewise, when government controls society technology actually regresses. This is the reason that the US has 65% more CT scanners, 4 times as many lithotriptors, and 3 times as many MRI scanners than Canada. An attempt for the free market to break through the government controls in this country was the sprouting up of specialty hospitals. Specialty hospitals could focus on specific areas and afford to over pay their staff. However, Congress stepped in and impeded the growth of the specialty hospitals after the larger hospitals lobbied Congress. A helpful proponent of the free market system is the health savings accounts or HSA. The HSA allows people to save for future major medical expenses. The only current problem with the HSA is that government has put extensive control measures limiting freedoms and choices. These control measures hinder the original intend if HSA’s.

Our current system is flawed due to government controls, and the only remedy is the free market. A free market health care system would drive down costs and make health care more affordable for more people without sacrificing the quality. For those people who can’t afford healthcare, you’d have charitable hospitals and church based hospitals that would operate for free. Under this system prescription drugs would also be legalized and sold over the counter. This way you wouldn’t have to go to the doctor just to get a prescription filled. By allowing people to take charge of their own lives and make their own decision, more people will prosper. Universal heath care isn’t free. It brings about substandard quality, wastefulness, and immorality. It would be wise to take heed from the warnings given by Ayn Rand and Ludwig von Mises, "If man speculates on what "society" should do for the poor, he accepts thereby the collectivist premise that men's lives belong to society and that he, as a member of society, has the right to dispose of them, to set their goals or to plan the "distribution" of their efforts." – Ayn Rand. “A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism: is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.” – Ludwig von Mises

- Brandon Burks