Voice For Liberty

Tag: Free markets

  • Health care video fails to make case for universal, “socialized” medicine

    A video that’s getting some viewers on Youtube (235,000 as of this moment) serves as an illustration of how wrong the left is in its diagnosis and prescription for health care reform.

    As a way to diffuse the actual implications of turning over control of medicine to government, the narrator uses the phrase “universal, socialized, whatever you want to call it.” This is repeated several times throughout the short video.

    This is a common technique used to divert attention away from a negative aspect of an argument or position. By using the “s” word — “socialized” — early on, and by using it several times in a dismissive fashion, the speaker hopes to take this issue off the table. It doesn’t work.

    The video makes the case that since many things are already provided by government, why shouldn’t health care also be the responsibility of government? The New York Times’ Nicholas D. Kristof made this same argument recently, and he didn’t do much better. The argument that because government currently provides a service, it means that government does it well, does it efficiently, and is the only institution capable of doing it is a fallacy.

    As to the high cost of being sick, the video states that “very, very, very few people” can afford health care when someone gets “really, really, really sick.”

    (I might have been persuaded if the narrator had used “really” just one more time. This condescending technique of repeating words several times — as if each time adds more truth to the speaker’s position — is another favorite tactic of the left. It doesn’t work.)

    This argument — that it’s expensive if you have a serious illness — is true. But most health insurance plans don’t address this need, which is to provide inexpensive coverage for the relatively rare cases when people need expensive care to get well. Instead, most health insurance plans are really pre-paid medical care plans, where the plan pays for routine, foreseeable events like an annual physical exam, flu shots, obstetrical care for women of child-bearing age, etc. Plans that pay for expensive disasters like a heart attack without paying for routine care are quite inexpensive. These are generally known as high-deductible plans.

    The video states that 10 to 20% of what we pay to health insurance companies goes to administrative costs, contrasting that to the 2% to 3% commonly given for Medicare. The video doesn’t state that Medicare is overrun with fraud because of these low administrative costs. As Malcolm K. Sparrow, an expert on fraud in health care said: “The rule for criminals is simple: if you want to steal from Medicare, or Medicaid, or any other health care insurance program, learn to bill your lies correctly. Then, for the most part, your claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all.”

    The video also condemns “pure profit,” stating that one of the best ways to increase profits is to deny paying claims. Stories of health insurance companies refusing to pay for treatment are common. We need to ask a few questions, however. First, are all these stories true? But more importantly, we need to recognize that most people have little choice in who handles their health insurance, because they receive it from their employer. They can’t shop for health insurance in the way they can shop for auto or homeowners insurance.

    If it became known that an auto insurance company failed to pay the claims it promised to pay in its policy, what do you think would happen? Would customers continue to patronize that company, no matter how clever their advertisements?

    The difference is that since people have to purchase their own auto insurance, companies compete for business on a variety of factors, including price and claims service. That’s not the case with health insurance. The lack of a robust market for personal health insurance leads to this situation. It leads to another problem, too, where the video complains about lengthy, complicated insurance contracts.

    Topping off the video is a ridiculous comparison of health insurance to fire-fighting insurance. The two markets are not comparable at all, especially in the dishonest and disingenuous way this video strikes a comparison. For one, few people set fire to their own house. Yet many people do just that to their health by failing to follow simple health guidelines. Second, fire fighting services are something used only in an emergency, and most people take great care not to need this service. Health care services are used for a variety of reasons, such as annual physical exams, that are not emergencies.

    These are the major problems with the arguments used in this video. It’s simply not credible.

  • Government institutions not role model for health care

    One of the arguments used to promote more government involvement in the provision of health care is this: government already provides so many services, and government provides these so well, that we ought to turn over medicine to it too.

    The New York Times’ Nicholas D. Kristof made such an argument in a recent column, citing, specifically, “fire protection, police work, education, postal service, libraries, health care” as examples of where “governments fill needs better than free markets.”

    This might possibly make sense if the premise of the argument — that government does all this stuff well — wasn’t false. Kristof himself has written several columns in the past year that are critical of public (government) education in America.

    Something that almost everyone assumes that only government can provide — libraries — illustrates how we end up with sub-standard institutions and service. My post Consider the alternative to a public library in Wichita provides additional detail.

    For deconstruction of the myth that there are things — like police protection and the streets and highways — that government provides best, or government can be the only provider of, see For A New Liberty: The Libertarian Manifesto by economist Murray N. Rothbard. In his introduction to this work, Lew Rockwell wrote: “Murray Rothbard was the creator of modern libertarianism, a political-ideological system that proposes a once-and-for-all escape from the trappings of left and right and their central plans for how state power should be used. Libertarianism is the radical alternative that says state power is unworkable and immoral.” For streets and highways, see the introduction to Walter Block’s new book A Future of Private Roads and Highways.

    Yet, many people love these public institutions because they’re free, or at least they seem to be. It doesn’t cost anything to call the police or to check out a book from the library, and enrolling a child in a public school costs only a modest fee.

    But these institutions not free. They cost a great deal. But they seem to be free, and that’s a dangerous illusion.

    Already much of the trouble attributed to our health care system stems from its appearance of being free of cost, or at least having very low cost compared to its actual cost. This is the case for Medicare and Medicaid recipients, and for most people who have employer-provided health insurance.

    When more people begin considering health care to be free, that will truly be a dangerous time. Our government-run schools, post office, and libraries are not institutions that provide good role models.

  • John Stossel to speak in Wichita

    ABC television journalist and author John Stossel will be in Wichita on October 12 to deliver a lecture as part of Wichita State University’s Elliott School of Communications 20th anniversary celebration. The Wichita Business Journal article ABC’s Stossel to speak in Wichita provides more details of this event.

    Stossel is an anomaly in the mainstream media, as he is one of the few libertarians in that business. Milton Friedman wrote this about Stossel’s first book Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media: “Stossel is that rare creature, a TV commentator who understands economics, in all its subtlety. Read this fascinating book to learn — example by example — how the indirect, unseen effects of government policies often dominate the direct, seen effects. Again and again, policies have the effects opposite of those intended.”

    P.J. O’Rourke wrote this about the same book: “There’s nothing matter-of-fact about John Stossel’s fact-finding. He seeks the truths that destroy truisms, wields reason against all that’s unreasonable, and uses and upholds the ideals that puncture sanctimonious liberalism. He loves liberty in a way that goes far beyond liberalism. He makes the maddening mad. And Stossel’s tales of the outrageous are outrageously amusing.”

  • Health care talk gives alternative to big-government reform

    At a recent forum sponsored by the South Central Kansas 9.12 Group, Dr. George Watson of Park City, Kansas laid out a conservative case for health care reform. His message was different than that of most reformers: instead of more government involvement, we need less government.

    “Yes, we need change,” he said. He also said that a public option will result in government takeover of medicine.

    Watson’s plan for reform is this: Each patient or family owns their own policy. There are no mandates and no guaranteed issue. Permit purchases across state lines. Eliminate insurance company clauses that punish subscribers who go outside networks.

    Tort reform is necessary too, he said, and he noted that there is no tort reform in the current proposals by Congress or the Obama administration.

    Watson said he disagrees with rankings by the World Health Organization that place France first, and the United States comes in 23rd. He said that anyone with means comes to the United States for the best health care that money can buy.

    A problem, Watson said, is that “Every patient with a Medicare or Medicaid card has no concern for cost. They think the government will pay for it.” Adding more people to these ranks will drive up demand and prices, he said.

    What is the problem with existing health insurance? The problem, Watson said, is that workers don’t own their policies. The solution is simple: each individual should be free to purchase a health policy just like auto or life policies, he said.

    These policies should be high-deductible policies — $5,000 or $10,000 — he said.

    There are two questions that patients should be asking their doctors, but the current insurance model doesn’t provide an incentive to be concerned with them: What does it cost? Is it really necessary?

    Watson mentioned the organization Association of American Physicians and Surgeons, Inc. as an organization and advocates health care reform that will benefit patients.

    An interesting fact about Watson’s medical practice is that it doesn’t accept health insurance or Medicare. Instead, he says he charges patients a fair cash price. His office has no connection to any health insurance company computer or government computer.

    Watson mentioned Surgery Center of Oklahoma as an example of an organization that takes no government money, insurance, or Medicare. It also posts its prices for surgery on its website.

    I questioned Watson about pre-existing conditions, as this seems one of the thorniest problems to solve. He said that large employers have the clout to force insurance companies to insure all their employees. For individuals, however, it’s a tougher issue. We have to look at health insurance more like auto insurance, where choices that people make play a role in the availability and cost of insurance. Charity plays a role, too.

    He told of how the Wichita Independent Business Association opened up their health care plan to those who couldn’t get insurance. They got many people with pre-existing conditions, and the cost bankrupted their insurance plan.

    He also said that we could tell insurance companies that if you want to operate in our state, you have to take a certain percent of pre-existing conditions, but there should be no mandates. This seems to be a contradiction of sorts.

    Answering a question about our system where employer-based insurance is the way that most people get health insurance, Watson said we should level the playing field with regard to the tax deductibility of health insurance premiums. Presently, employees earn money, but the employer sends it to the insurance company.

    “First dollar” is also an important principle, going back to the two golden questions: What does it cost? Is it really necessary?

    Watson, to be sure, presents a conservative and not a libertarian plan for reform. My question about the elimination or relaxation of medical licensure, a proposal made by Milton Friedman in his work Capitalism and Freedom drew a chuckle from Watson. He said that we must have regulation, and that physicians must be licensed by the states.

  • Privatization of Wichita city parks

    In a post concerning the possible privatization of City of Wichita parks maintenance, I called for, in a rather oblique way, privatization of city parks. A commenter picked up on this and wrote “I’m wondering how the parks would be decided by the market. Wouldn’t the parks have to charge an entry fee in that case?”

    It’s a good question. Broadly, what would happen if the City of Wichita decided not to provide public parks? Would there then be any privately owned parks? What would these parks be like, if there were any?

    As there are very few examples of privately-owned parks in America, we don’t really know how privately-owned parks would work. But that’s no reason we shouldn’t consider this idea.

    The first thing we need to do is to dissuade ourselves of the false notion that the present system of municipal parks means free parks. They aren’t free. They seem to be free — or nearly so — to those who use them, because there is no admission fee charged.

    One way that private parks might work is that their owners would charge an admission fee. This doesn’t necessarily mean that there would be an impenetrable fence surrounding the park and a toll gate at the single entrance. There could be other ways to collect admission fees.

    Another way that a private owner might generate revenue and potential profit through owning a park is by the selling of concessions. Besides the obvious selling of food and drink, some other examples come to mind. A vendor might rent lockers for the storage of bicycles, so that it would be convenient for people to drive to the park and use their bicycles.

    Vendors might rent roller skates. I rented these in college on the KU campus, and it was fun. Other things could be rented too, even paddle boats on the Little Arkansas River, as in the old days.

    A private park might offer nanny service, so parents could drop off their young children for a session of supervised play.

    A private park would probably provide security services so that its patrons feel safe. Would people be willing to pay for that?

    A private park might sell advertising or sponsorship. Philanthropy could play a role, too.

    So there could be many ways in which private parks could operate.

    While the goal of private park owners would usually be to attract many people to patronize their parks, private owners would be able to exclude people from the park. Advocates for the present parks workers say that the workers clean the public parks of needles and syringes. This indicates that at present, the parks are used for activities that most people, especially families, don’t want to be around. Would a private owner of a park have an incentive to keep his park free of illegal drug users? Absolutely — and much more so than it appears the Wichita police do. And being privately owned, the owner would have the right to exclude drug users, noisemakers, smokers, beer drinkers, panhandlers, fornicators, proselytizers, sidewalk preachers, politicians, and others from his park. He could even impose a dress code.

    (Which reminds me of a joke: A conservative said, “I am distressed by the idea of fornication in public parks.” The libertarian replied, “I am distressed by the idea of public parks.” )

    Privately-owned parks would bring benefits, the nature of which we really can’t foresee and predict. Entrepreneurs are highly motivated to discover and meet consumer wishes and demands. They can experiment to see what works. The costs of their failures are born only by them. When public officials take risks and fail, they’re criticized for wasting public funds. This is a reason why little innovation comes from government.

    By unleashing entrepreneurial creativity, there might be a tremendous diversity of parks springing up with features we can’t even dream of now.

    Entrepreneurs don’t have to go through plodding approval of long-range plans as Wichita recently did with its Parks, Recreation, and Open Space (PROS) plan. This plan, according to its brochure, took 18 months to develop. How will it be funded? According to a memo accompanying the plan, “Present funding levels are insufficient to adequately cover the costs of the Department’s current facilities and programs.” I don’t sense much groundswell of support for raising revenue to increase this funding. So are we left to conclude that the method of public funding of the parks is failing? It seems so.

    Back to my post from the other day: Another commenter wrote that the views I hold are those of “free-market extremists.” To which I reply: thank you for noticing.

    This writer also wrote: “Hence, if there is no market or capitalistic value for parks, then why have them at all.”

    This is my point. If people don’t value parks enough to pay for them as they use them (or let private owners profit in ways that I described above, or in other ways), then we’re faced with the situation we have today: First the government taxes everyone. Then politicians, bureaucrats, and a small group of enthusiasts decide how much recreation the people should have, and where and in what form.

    I ask you: could anything be more extreme — not to mention counterproductive — than this?

  • Wichita budget hearing reveals fundamental problem with government

    At yesterday’s public hearing regarding the City of Wichita budget, the attitude of Wichita’s public employee union became clear: more tax revenue is needed.

    Speaking to the council, Harold Schlechtweg, business representative of Service Employees International Union Local 513 suggested that the city consider raising taxes by raising the mill levy (property taxes). “We don’t believe taxes are too high in the City of Wichita,” he said.

    This illustrates a fundamental problem of government: in order for the employees in Schlechtweg’s union to be paid anything at all — much less to receive a raise in pay — the city must levy taxes. (The city collects some revenue in fees, but most revenue is taxes.)

    Furthermore, if the city is to levy taxes in order to provide services such as public parks, the city must figure out how many parks to provide, where those parks should be located, and what features those parks should have.

    Even a simple matter such as the level of parks maintenance is a difficult question. Presently the city is considering replacing all or most of the workers with contract workers by outsourcing the work to a private-sector contractor.

    Schlechtweg, who represents parks workers through the union, expressed concerns with “[the] accountability of contractors, quality of work that can be expected, and whether contract labor can efficiently do all the work expected of city employees.”

    He and other advocates for parks workers believe that the present workers provide services that contract workers will not. The claim is that the present workers provide, as I termed it yesterday, a gold-plated level of service to the people of Wichita.

    The problem the city faces, as do all governments, is that it really has no idea how many parks (and related details of those parks) the people of Wichita would like, and it has no way to answer this question.

    That’s because the decisions about parks are made in the realm of politics. The politicians and bureaucrats making the decisions aren’t spending their own money, except for the very small portion of their own taxes that go to the parks.

    The people who take the time to get involved and testify before boards and commissions are a small group of enthusiasts. They’re quite happy for taxpayers across the city to pay for something they themselves make great use of, but the average taxpayer uses only infrequently.

    The parks workers and their union, of course, depend on a high level of parks spending for the livelihoods.

    This illustrates the nature of many government programs that I mentioned in yesterday’s hearing: Many government programs have a small number of beneficiaries, but the cost is dispersed across a large number of people. To the large number, it’s just a few cents here, a few dollars there. But to the small group that benefits, it’s a job or a nice park near their home with gold-plated maintenance.

    If the small group — the special interest — works hard enough, they can get what they want. Many times no one else notices what’s going on.

    So how can the city learn the number of parks (and details about these parks) that people really want? How does the city figure out how many McDonald’s restaurants or movie theaters are needed in Wichita? And what movies would these theaters show? The answer is that it doesn’t. It leaves decisions about these matters to markets.

    The city could do this with its parks, too. It could let people and entrepreneurs decide how many parks are needed, where they should be, and what features the parks should have. Through the market process, we’d then know that we have the types of parks that people really want.

    As government extends its reach into more areas of the economy, it’s getting harder to find examples where markets are free to work. The movie theater example above: there’s not really a free market for movie theaters in Wichita. The city council has decided to subsidize a movie theater in Old Town, thereby intervening and overriding the decision the marketplace made.

  • Flint Hills Center adds more staff

    In the following press release, Wichita’s Flint Hills Center for Public Policy announces yet another addition to their staff. Under the leadership of its president Dave Trabert, the Flint Hills Center has added several talented people to its staff in just the past few months. I’ve not met Ms. Harris, the subject of this press release. When I do meet her, since she’s a graduate of George Mason University, I need to ask her if she knows Walter Williams, who is a hero of mine.

    (Wichita) — Grace Harris has been named Government Transparency / Operations Manager at the Flint Hills Center for Public Policy. Harris will lead government transparency projects which will make government data more available to Kansans. Along with government transparency, Harris will organize day-to-day operations for Flint Hills.

    Harris assumed the position July 16, 2009. In her past experience, Harris monitored newspapers to identify misrepresentation of statistics and scientific studies through a nonprofit media watchdog group. She co-authored three published assessments with the Director of Research, one which was published in a college writing textbook. Harris graduated with a bachelor’s degree in Applied Mathematics with an economics minor from George Mason University in Fairfax, VA. While at George Mason University, Harris founded the Job and Internship Committee and co-founded the Math Club. Flint Hills policy studies and other information are available at www.flinthills.org.

    Flint Hills Center for Public Policy is an independent Kansas-based think tank that provides research and initiates reform in education, fiscal policy and health care. It is dedicated to the constitutional principles of limited government, open markets and personal responsibility, which it believes are essential for individual freedom and prosperity to flourish.

  • AFP “Defending the American Dream” summit announced

    Americans For Prosperity has announced its third annual national summit. It’s on Friday and Saturday, October 2 and 3, in Arlington, Virginia. On Friday there’s a rally and news conference at Capitol Hill.

    I attended the event last year and had a great time. I renewed past acquaintances and met new free-market activists from across the country. The speakers are great. I also served as a panel member, too.

    It’s a libertarian-friendly event with speakers like John Stossel featured in the past. I plan to attend this year, too. Get more information and register at DefendingTheDream.org.
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  • Ballotpedia and Judgepedia move to new home

    From the Lucy Burns Institute.

    The Lucy Burns Institute is delighted to announce that effective July 1, 2009, it became the official sponsor of Ballotpedia and Judgepedia.

    Since the Sam Adams Alliance was established in 2006, it has organized, nurtured and spun-off several important projects, including Common Sense with Paul Jacob, American Majority, and Texas Watchdog.

    For the entire press release, click on Lucy Burns Institute is the new sponsor of Ballotpedia and Judgepedia.