Time for Conservatives to turn on the lights.
2014 is fast approaching. Time keeps ticking away as we are all faced with the conundrum of addressing Obamacare on the state level, and at each passing day the inflammatory rhetoric seems to reach new heights. In my little corner of the country, the discussion has hinged on a common and rather unfortunate conservative narrative that rails against some vague perception of “expansion”. Frankly, it’s a false narrative, and it’s surprising to realize how deeply attached my counterparts are to it. Worse yet, it paralyzes genuine progress from a conservative standpoint. It’s a narrative that is damned determined to neglect the fact that this country had huge healthcare issues long before the Patient Protection Act was instituted. So here’s the skinny…American healthcare was a socialist-inspired, anti-market industry, centrally-managed, regulated and funded, BEFORE Obamacare.
Gasp? Indeed. After you catch your breath, have a gander at the data from the Centers for Medicare and Medicaid Services (cms.gov), which only begins to elaborate the point I hope to make. It’s somewhat deceptive until reviewing the second pie, which shows the breakdown of public and private insurance plans within the bigger pie. When the assorted public wedges are all added together, roughly 50% of all national healthcare expenses are funneled through government agencies that are funded by taxpayer dollars.
The other 50% is not a pretty picture, either. About 20% of privately-funded services provided by hospitals, specifically, go uncompensated. This is largely a result of a federal regulation called the Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986. Under this act, the vast majority of ER’s can’t refuse emergency services based on ability to pay for anyone whatsoever. When you consider the ramifications of potential malpractice lawsuits in light of this law, or the risk of much greater uncompensated expenses if the patient can be treated relatively cheaply before an illness becomes an emergency, the scope of the law necessarily broadens. The bureaucratic waters are further muddied by expansions of the law since 1986, not to mention the expenses that would be incurred in attempting to determine an uninsured patient’s ability to pay, even in a clear non-emergency situation, considering that charges can’t be assessed until after services have been rendered. The ultimate result is that ER’s have become over-burdened. The poor and uninsured often use these hospitals as their primary care providers for all sorts of ailments and injuries. Many of these hospitals now hire full-time staff to network their waiting rooms for potential Medicare/Medicaid recipients in hopes of recovering a greater portion of treatment expenses. Of course, this exploration hasn’t yet touched the moral consideration of refusing emergency treatment to those in need. We’ll get to that in a moment.
What remains is the “payers”, and the payers are corralled into a private insurance market that’s not only skewed by federal and state regulations, but nearly divorced from the forces that drive an efficient free market, among them competition, individual choice, consumer incentive, and price. Fueled primarily by employer group plans, the market has catered to a few large insurance providers. In turn, employer-provided plans have generally tended to cater to people that make bad health choices, charging them the same premiums as people who don’t. All the while, providers and employers deny all employees the opportunity to accept compensation in lieu of insurance that could be applied toward individual plans, lest competition gain a stronghold. There are 3 entities involved in group plan contracts–the supply (insurance providers), the middleman (employers), and the demand (employees), yet the current structure doesn’t even permit the employees, those who are actually paying for the services, at the negotiation table. (Not unlike public sector union negotiations.) Prices are driven by the fog of this disconnect in combination with what amounts to government price-fixing under Medicare/Medicaid.
I must take a moment to reiterate here that employers DO NOT “share” your healthcare expenses. Milton Friedman argued the same point regarding social security taxes which employers and employees supposedly share. Any expense that an employer incurs as a result of hiring someone is a direct reduction of what that employee could have otherwise been paid in wages. Employer insurance is an expense that’s bundled in your compensation package, and employers go to great pains to portray it as such. Yet if employees can’t afford to buy into an insurance group plan for their part, or simply choose not to, they’re not compensated for that portion their company would have paid out. The narrative suddenly flips, and employers are perceived as offering a service strictly out of generosity and concern for their employees’ health. As such, if you should have to decline it, they certainly should keep their “share”. It’s a racket that benefits the employer and the insurance provider to the detriment of the healthcare market. Don’t forget, too, as part of your compensation package, there is less incentive for an employer to compete for your labor in a high unemployment market, and hence, to broker a good healthcare package for you. God forbid you might be diagnosed with some long-term illness. In an instant, your “preexisting condition” may leave one feeling very limited in their employment options. Where’s the freedom in that?
Of course, all of these disconnected and centralized planning efforts have created problems. The central planners themselves sought to capitalize on it, pushing for even greater centralization via Obamacare. But don’t kid yourselves. Expansion has been long established. Socialization was already in place. So the bigger point is this…simply rejecting Obamacare is not the grand victory you’re clinging to. Furthermore, if this is the route you lobby for, you may be missing a far greater opportunity.
Thanks to Supreme Court Justice Roberts, the states can breathe fresh life into the healthcare debate. That’s right…thanks to Judge Roberts. This is the part where I confess that I was among those very few conservatives who, after the initial shock, decided his decision was pure brilliance…inspired, actually, even as it placed me at odds with favorite commentators and close friends. Then again, I was also concerned, before its passage, when conservatives were howling at Obamacare, especially the mandate, as being both a “tax” that was “unconstitutional”. In my head, I thought “Shhhhh…congress has the power to tax.” Then the same conservatives who would rightfully dismiss flawed precedents, like Dred Scott and Roe v. Wade, were desperately clinging to it regarding taxation when the Obamacare decision was delivered.
Unfortunately, narratives are not always accurate and reality is certainly less convenient. Congress has the power to tax, and the check on this power is the American electorate. The framers knew this and lamented the day when our citizenry might not be so wise, turning to pursue that dangling carrot as so many civilizations before them have. To say that we have taxation without representation is almost laughable. The truth is much harder to swallow…as a nation, a voting majority did not honor our American values and failed our country at the voting booth. It is still up to us to fix it, and Judge Roberts delivered a wild card. He reigned in the commerce clause and handed the states a huge bargaining chip in the process: We can’t be financially penalized for declining this administration’s modus operandi, Medicaid expansion. We have leverage. So what are we going to do with it?
As noted earlier, many argue that we should simply nullify Obamacare. It’s also not uncommon that these tend to be the same people that balk at the GOP rally cry to “Repeal and Replace”, operating on the false grounds that the healthcare market functions fine and free as is. On the contrary, merely rejecting it not only fails to resolve the pre-existing condition (pardon the pun), it actually tends to put responsibility for the entire predicament right back in the feds lap, again. It kicks the can down the road. The states have a grand opportunity right now to grab the helm of the healthcare Titanic and do more than just dodge the immediate iceberg. They can begin the arduous task of steering us out of this choppy water, and I would hate to see any of them squander it over shortsighted political rhetoric.
The only other route that many conservatives may immediately call for is even more purist and idealistic. I, too, personally advocate for a system with minimal government intervention, management, or funding. I believe it would provide the most modern, most efficient and affordable services to the greatest number of people, more so than socialized care. But to demand it in some sweeping short-term move is also absurdly unrealistic. For one, if you believe in the inherent success of free market principles, it’s just insanely naive to expect that we can start with the kinds of healthcare reforms that would actually deny services to people who can’t afford it while the rest of the economy is still ailing under the burden of leftist policies. We contributed to this problem in that while economic freedom across the board was being eroded over decades, we have somehow managed to draw our line in the sand at a point where real people and their families are dealing with matters of life or death, even if that’s also precisely why we take it so seriously. It’s just a sad consequence of our complacence as a nation in failing to steward freedom in the rest of the economy. Healthcare has become our albatross.
Yet, conservatives generally fail to even notice the weight of that dead bird hanging around their neck. A little perspective is long overdue. The Heritage foundation recently released their “Index of Economic Freedom” for 2013. It’s surely disappointing, but the U.S. does not fall into the coveted category labeled “Free”. We rank #10 in the world, falling into the “Mostly Free” category along with most of our “Eurotrash” socialist friends across the pond. If even Canada, with their blatant socialist single-payer system, ranks higher than us in overall economic freedom, how can we continue to cling to the notion that our healthcare at least, must be vastly superior to theirs. Hong Kong is actually #1, and as such, individual liberty is also correspondingly high. What conservatives might find shocking is that in spite of this ranking, Hong Kong has a fully-nationalized healthcare system. Singapore (#2) and Switzerland (#5) are also considered “free”, yet both have universal coverage that provides healthcare subsidies for the poor regardless of age, and both include an individual mandate. Their healthcare systems also happen to be the most market-oriented, and as a result, are considered to be among the best in the world, not just as far as cost is concerned, but in services as well. I’m not necessarily suggesting that we jump to model ourselves after these countries. But I am saying, without a doubt, that these countries prove that universal coverage is not, in itself, the singular death knell to quality, affordable healthcare or individual liberty that many conservatives have declared it to be.
And to repeat myself, yet, again…if attempting to pursue a more market-based option can honestly be equated as “de facto Medicaid expansion” based solely on the presence of universal coverage, as many conservatives critics have claimed regardless of the means or methods, then WE ALREADY HAVE de facto Medicaid expansion. It also happens to be among the most expensive in the world, 2nd only to the Netherlands. Conservatives need to quit speaking in such shallow platitudes. Not to mention, some liberal bullhorns eat it up, partly because they’re snots, but mostly because they’ll jump at any opportunity to steal this feather for their hat, especially if some form of this private option plan passes and proves successful. That’s what masterful manipulators do. Our failure to speak in terms of reality only hands it to them on a silver platter.
We should certainly do everything feasible to inject market forces back into healthcare, but we must make it an a much bigger priority to shift the rest of the economy toward free market ingenuity if we truly hope to address individual financial access and nurture genuine healthcare freedom…especially if we are going to ponder a policy that would actually require that people be turned away from the services they need when they can’t pay, even in light of the successes of other nations who have declined such an approach. Furthermore, I would contend that any conservative who isn’t personally prepared to stand in an ER or doctor’s office and decline treatment to anyone in need is much softer on this specific issue than their speech would convey. We are not cruel. We simply object to necessities, such as our health and our liberty, being corrupted by bureaucracies. Too many conservatives want to address that concern with a chainsaw, when a scalpel would be far more effective.
Here in Arkansas, we are blessed to have a handful of conservative legislators who have taken up the burden of the scalpel. I don’t envy them. The intricacies of the law, the number-crunching, the forecasting, and the theories behind it all are an incredible undertaking. When I began writing this, I intended on a much briefer piece, but the information, the commentary, and the uncertainty are utterly overwhelming, and it shifts like sand beneath your feet on a daily basis. One moment, they’re being criticized by one conservative Arkansas blogger for not acting right away, and two months later they’re accused of rushing. Conservatives have railed against Medicaid expansion, which is cheaper because of reduced quality and government price-fixing, only to turn around and reject the private option because it’s forecast to be more expensive, at least initially. (FYI, there are 2 estimates. Arkansas’ DHS released more encouraging numbers than the CBO.) You can’t have it both ways, for cryin’ out loud. Do you want to clear the hurdles for a market-driven system, or not? If none of the above is an acceptable resolution in the right direction, what magic rabbit are you prepared to pull out of your hat in its stead? Or what suggestions and concerns can be offered for the plan that’s on the table without resorting to demagoguery or conspiracies?
The hallmark of successful conservative economics, as described by one of our favorites, Henry Hazlitt, is the act of consciously choosing long-term gain over the short-term. Yet, the reaction for such thoughtful deliberate consideration in this instance is often angry constituents and undeserved labels. Thankfully, these legislators’ motivations seem to be rooted much higher, as it should be for any representative who seeks simply to do the right thing, irrelevant of the multitude of pressures that might prompt others to hold a wet finger in the wind. I don’t have a simple answer and I’m certainly no expert, although others may allow you to presume either, or both. Indeed, I’m only confident that there is no simple answer… …and that conservatives should quit dancing in the dark.
Musing Liberty 