Monday, February 22, 2010

Socialized Healthcare Fallacies

The Democrats are back at it again with a kamikaze-mission to bring socialized healthcare to the American people, stealing the model of medicine from the likes of Russia, Cuba, Canada, and Great Britain. Am I being tendentious and overly simplistic lumping in the healthcare system of those states with the one proposed by the Democrats? No, because the same failed Marxist philosophy underwrites them all.

Marxists argue that profit is the great sin of capitalism because it is the exploitation of labor, following the debunked labor theory of value. This theory basically means that the value of all commodities, including commodified "labor," is derived from labor. Therefore, if one hires out labor to perform a service or manufacture a good, and one turns a profit, then one is inescapably exploiting one's fellow man.

Marx's theory is a tendentious one - it overlooks the investment of time, labor, and risk of the person or group that provides the means of production. Additionally, it is impossible to derive all value from labor. Marx ignores that value is based on individual preferences that cannot be explained by his method of dialectical materialism (the value of those commodities whose "utility" is largely based on aesthetics, such as diamonds, for example).

Furthermore, Marxists propose to end the system of exploitation by eliminating capital and private property. Now how does this relate to healthcare? Because:

1. Supporters of socialized medicine misperceive that doctors who profit in the healthcare industry exploit those less fortunate. But what of the time, labor, and resources the doctor needed to invest in order to properly care for the patient? If a doctor trades his time to care for a patient "at cost," in other words if his labor is traded directly at the same rate as the patient he is providing for, then what of the time and effort the doctor invested preparing to treat the patient, who is, let's say, a burger flipper? Is the dismissal of the doctor's time, talents, and expertise "fair"? It is not an accident that socialist systems tend towards mediocrity, and a very low quality mediocrity at that. Socialists crush the incentive for people to invest time and effort in themselves.

2. What of reinvestment in new medicines, treatments, and medical equipment? In a competitive environment, care providers are driven to modernize or else lose patients to the hospital next door. Governments that provide healthcare are generally insulated from such pressures, because they are a form of monopoly within their respective sovereign territories.

3. In a state-run system, the emphasis is not on improvement and modernization, but on the management of "problems." From a bureaucratic point of view, people are the problem. This is a doubly worse implication for healthcare, since people's health is directly tied to the sympathetic provision of care. When the government becomes a monopoly provider, and even worse, one with an army, inefficiency inevitably results from a lack of negative consequences for the bad behavior of bureaucrats.

4. Those who back a "healthcare reform" bill at all costs readily conflate the control of prices with the control of costs. This is true whether one advocates a "government option," a single-payer plan, or price controls. Whether or not one measures costs in money, there are still costs to any human endeavor tied to the allocation of scarce resources. A government option seeks to obfuscate these costs by burying them in a sea of government-printed or taxpayer money. The government cannot add thirty million or more to the healthcare system and lower "costs." In a single-payer plan, the government can seek to devour prices by internalizing them, but this will only create an inefficient system where the administrators fly blind.

The ultimate result of government intervention into healthcare is one of a number of things: Driving medical workers out of the field through suppressing wages; decreasing the quality or quantity of equipment, pharmaceuticals, or other resources; or implementing a totalitarian system where individuals are coerced to provide their labor or else. This last scenario cannot be laughed off, since the implementation of socialized medicine typically sets off a chain reaction of nationalizations.

Finally, price controls are simply window dressing that obscure the real costs of services or goods. The prices of goods or services not only reflect their cost in the present, but the past, due to investment; the future, through accounting for natural and human-demand caused uncertainty, which cannot be controlled by the state; as well as the need to reinvest and repair; not to mention the sustenance of the life of the individual or individuals providing the good or service.

5. Regulation as such cannot lower costs or prices, it cannot only create barriers to efficiency, because an economy is most efficient when supply is freest to meet demand. There is already legal recourse for those in a contractual relationship with an insurance company that breaks a contract, for example. Law based on contracts and individual rights is the best insurance against fraud, and a company that engages in fraud is penalized by the market over time, leading to brand deterioration and a window for competition to enter the market. Insurance companies do not need to be penalized by virtue of them being insurance companies. Bad companies are punished, and good companies are rewarded over time. The idea that corporations naturally collude is simplistic; "greedy" companies are always looking for ways to take market share from their competitors.

Given the above, what are our real-world solutions to "reform" healthcare?

1. Tort reform. Courts should not be able to exact arbitrary damages on negligent doctors by fiat. This intervention into the market and distortion of it carries a high cost. One should not be awarded lottery settlements for having the poor luck of having an incompetent doctor. A maximum award should be levied to restrict judges and trial lawyers from abusing the property rights of doctors and the companies that insure them.

2. Intrastate regulations should be lifted in order to free companies up to tailor plans to meet the needs of their clients. This will result in more choice: From bare minimum plans for low-income earners to those dreaded "cadillac" plans for those who can afford them and want more protection.

3. Interstate commerce should be regularized by opening up the market to citizens buying out-of insurance coverage. This radical idea would entail a pro-capitalist solution and the use of the Interstate Commerce Clause for what it was intended. Such an action would increase competition and lead to the lowering of prices and the improvement of care.

The Democrats' healthcare plans are pitched to the most ignorant and the most power-hungry among us. Unfortunately for the Democrats, those with insurance are happy where they are, including the upper middle class who purport to be altruists. The great majority of American people are against the socialized healthcare plan, except only those with no stake in the system, and therefore nothing to lose.

If the Democrats truly cared about the American people, they would find ways to lower costs by getting out of the way and thereby expand access within the market system that has evidently shown itself to be superior in quality to that of Russia, Cuba, Canada, and Great Britain. Those who believe that America is exempt from the laws of economics can scoff at the suggestion that the market can provide superior quality at a lower cost than the government can. They are simply following the primrose path to ruining one of the greatest healthcare systems the world.

1 comment:

Reaganx said...

=Given the above, what are our real-world solutions to "reform" healthcare?=

1) Medicare and Medicaid should be abolished
2) Health insurance mandates should be abolished
3) Hospitals should not be forced to provide care to those who can't pay for it (I mean these emergency dept regulations)
4) An artificial taxation and regulation system favoring non-profits over for-profit hospitals should be abolished. That way, hospitals will become normal capitalist businesses. They'll be engaged in M&As and trade on stock markets, just like any other businesses (now it's rare, as far as I know).
5) An artificial taxation and regulation system favoring insurance coverage over out-of-pocket funding should be abolished.