Student Publications
University of Houston
151C Communications Bldg
Houston, TX 77204-4015
713.743.5350

©1991-2007
Student Publications,
All rights reserved.

Last modified:

Contact:
ktruitt@uh.edu

Opinion

Take government out of health care

Monica Granger 
Opinion Columnist

The first three articles of this four-part series on health care in America focused on the insurmountable economic and ethical problems posed by socialized, or ‘universal' healthcare, as political charlatans call it. 

We saw how the protectionist medical guild system in the early 1900s was the result of American Medical Association doctors seeking to keep salaries above the decreasing market price subsequent to newly competitive but rapidly developing alternative care options -- including homeopathic and herbal remedies -- and how it effected a prompt, drastic price increase.

Rather than abolishing the failed cartel system, however, self-serving politicians vilified price-increases as the result of greedy doctors and hospitals and passed more legislation.

Health care as we now know it is intimately tied to insurance markets, but not because it was the best way for health care providers to deliver health care services to consumers. 

In fact, health insurance markets (as we know them) are government's coercive response to the price increases affected by government intervention in the first place.

Rep. Dr. Ron Paul, R-Texas is perhaps the only U.S. representative cognizant of this fact. In an August 2006 article, "Lowering the Cost of Health Care," on LewRockwell.com, Paul wrote: "We should remember that HMOs did not arise because of free-market demand, but rather because of government mandates. The HMO Act of 1973 requires all but the smallest employers to offer their employees HMO coverage, and the tax code allows businesses -- but not individuals -- to deduct the cost of health insurance premiums. The result is the illogical coupling of employment and health insurance, which often leaves the unemployed without needed catastrophic coverage."

In fact, government intervention in the health services sector corrupted its insurance markets even earlier than 1973. Dale Steinreich explained in his August 2004 article, "Real Medical Freedom," how health insurance markets first arose in response to demand by workers in high-risk timber and mining industries in Oregon and Washington in the early 1900s. 

True to the discipline of the profit-motive driving all private economic behavior in the free market, though, insurance claims were closely scrutinized to reduce fraud and payments to doctors were kept responsibly low (remember that by this time AMA-government-coerced cartelization had already increased prices of health services and cinched the partnership between them and selfish health care providers). 

Subsequently, a group of doctors collaborated to create another form of "insurance" bearing no rational relationship to the economic function of risk insurance. Instead, these doctors, with the aid of hospitals who blackballed true insurance policies and their responsible stewardship, whined to government.

With government legislation in multiple states at once hampering competitors and aiding the "insurance" promulgated by these doctors and hospitals, Blue Shield was born in 1939.

Steinreich mentioned four ways government intervention in health insurance markets corrupted the system, even unto today. 

First, hospital payments were made on a cost-plus basis rather than based on prices for services rendered.

Second, the nature of insurance as risk abatement died as even routine procedures were covered. A corollary problem here is the moral hazard, or over-consumption, induced by artificially low prices.

Third, unfair "community rating" premiums replaced premiums based on individuals' own risk factors, compelling healthy 25-year-olds to pay for elderly individuals consuming up to four times as much health care. The long-run social and cultural effects of this Welfare State mentality are now obvious in the breakdown of community action and community living.

Fourth, the fiscally irresponsible "pay-as-you-go" system replaced balanced budgets. 

Government intervention, however, and its economic consequences did not stop there, and the solution is in fact much murkier because the creators of Medicare and Medicaid blindly followed these economically ignorant doctors down the garden path. The result is our current, bloated health un-insurance program that automatically sucks a whopping two-thirds of America's budget every year. 

The budget, by the way, is now nearly $3 trillion.

The only way to fix the perversions wrought by government is to remove government from the situation and allow health care providers and consumers to freely exchange their services and goods in an unhampered market. Then, and only then, can doctors and hospitals begin to compete for consumer market share through lower prices and higher quality services. 

If you think presidential hopeful Hillary Clinton will save your health, think again. As of June 28, 2004, her mentality has been "We're going to take things away from you on behalf of the common good." Presidential hopeful Dr. Ron Paul, however, "the taxpayers' best friend," wants you to keep your income, and keep government out of the doctor-patient relationship.

This is the final installment of a four-part series concerning health care.

Granger, an economics/political science senior, 
can be reached via dccampus@mail.uh.edu