Voice For Liberty

Tag: Health care

  • Eliminate all health insurance profits, and what’s left?

    Those who advocate government takeover of health care and the elimination of private insurance cite the “wasteful overhead” and “high profits” of health insurance companies.

    There’s a lot in this argument that doesn’t make sense. For one, most companies that are trying to earn a profit seek to eliminate as much waste and overhead as possible. Competitive markets force them to do so.

    It’s puzzling to me that those who rail against greed don’t acknowledge that it is a powerful motive for efficiency and cost reduction.

    While the health insurance market isn’t as competitive as it could be, due to tight regulation by the states, it still exhibits some characteristics of a market. If we would eliminate the practice of nearly all health insurance being purchased by employers, the market would be even more competitive.

    The weakest argument by those who advocate for government takeover is the high profits argument. Reporting in the Wall Street Journal indicates that profits in the health insurance industry are quite low.

    “For every premium dollar that they take in, about 83 cents goes out in medical costs — doctors, hospitals, and drugs,” says Carl McDonald, health insurance analyst at Oppenheimer & Co. The rest is spent on overhead. Net income comes to just a few cents per dollar of premiums.

    Consider WellPoint, the biggest private health insurer on Wall Street, which has about 35 million customers nationwide. Last year, it paid out 83.6% of revenues in expenses. Net, after-tax income as a percentage of total revenue came to a princely 4.1%.

    In other words, simply eliminating profits would only allow the public option to undercut the private sector by 4% or so.

    So much for profits being the cause of the high cost of health care.

    Keep in mind that in free, competitive markets companies can earn profits only when they satisfy customers, and do that efficiently. For a health insurance company, that would mean paying the claims it has agreed to insure at the lowest possible premium cost to its customers.

    The fact that so much insurance is bought by employers instead of the ultimate customers of the policies means that we don’t benefit from innovation and competition in this market.

    For example, one legitimate concern is that if someone is insured through their job and they become sick for a long period, they’re probably going to lose their job and their insurance. This would be at the same time they’re trying to recover from an expensive and debilitating illness.

    In the life insurance industry, policies may have an optional feature called “waiver of premium” or something like that. Under this provision, if an insured person isn’t able to pay their premiums for a covered reason, the policy remains in force.

    Do health insurance policies have this feature? And if so, does my employer offer this?

    This type of innovation is present in the life insurance market because it is relatively lightly regulated, and most people buy their own life insurance rather than relying on someone else to buy it for them.

    We can also look to the automobile insurance market for examples of innovation that aren’t present in the health insurance market.

  • Eugene Robinson doesn’t get it

    “I don’t know if you’d call it passion or manufactured passion … the uproar at these meetings is counterproductive .. and it’s organized, which I think is the most disturbing part of it.”

    That’s the Washington Post’s Eugene H. Robinson speaking today on MSNBC’s Morning Joe.

    Host Joe Scarborough inquired is it disturbing because it’s organized?

    Robinson replied that if he were a Democratic strategist, he’d be tempted to ask unions to send people to meetings.

    Scarborough said unions been doing just this — organizing people to go to town hall meetings — for years.

    The exchange went on for a bit, with Robinson several times chuckling uncomfortably as Scarborough made his points.

    I think that the Left — including Robinson in his role as leftist apologist — simply doesn’t understand the depth of the feelings that people have regarding the government’s attempt to take over control of health care in America. These townhall meetings are useful because they’re letting Congress know.

    Robinson complained that with the meetings being disrupted, people aren’t able to learn the details of the plan and the legislation, his implication being that members of Congress are in a position to be educators. Indications are that few members do, in fact, know what the plan really means. And townhall meetings are really a poor place to educate people on complicated matters such as this.

    The whole specter of the Left painting citizens as dupes of various organizations and interests simply because they speak up at meetings is amusing at the least, and rank hypocrisy at its core. Didn’t our current president serve time as a community organizer?

  • Sebelius takes cover in loving union arms

    “Possibly to avoid any confrontation with concerned citizens who have read the proposed health care legislation in Congress, HHS Secretary Sebelius will hold a conference call on Friday with health care activists and SEIU members.”

    SEIU — that’s the Service Employees International Union — recently called for higher taxes in Wichita through Harold Schlechtweg, its local business representative.

    Now this union will provide a friendly audience for former Kansas governor, now Secretary of Health and Human Services, Kathleen Sebelius.

    Read more background at the Kansas Meadowlark post HHS Secretary Sebelius to use safe SEIU conference call for “myth busting.”

    By the way, why does a union who, on its website promotes itself as “The Union for Kansas Public Employees,” have a leader with the title “business representative?”

  • Profit motive in health care is essential

    Those in favor of government health care often argue that private insurance companies are inefficient, wasting huge sums in administrative overhead that provides no benefit to patients.

    At the same time, the same people blast private insurance companies for being driven by the profit motive.

    I wonder: who has the greater incentive to avoid wasting money on useless overhead? The government, or a private company that can keep the money saved as profits?

    Further: private health insurance companies operate in competitive markets. Those companies that spend needlessly on overhead that doesn’t add value will go out of business. That’s the neat thing about competition and free markets, as realized in the form of profits and losses: these forces help companies learn the best way to organize and how much to spend on the various things that make their businesses run.

    Companies that make unwise decisions will see their profits suffer or will incur losses. This is a signal that other companies are more efficient.

    Government, on the other hand, is immune to the forces of competition. It can waste whatever it wants with little consequence. Once in a while people notice and vote someone out of office, but this doesn’t happen very often.

    For those who point to Medicare’s low overhead costs, here’s a blog post that explains: Busting Medicare’s “Low Overhead Advantage” Myth.

  • John Stossel covers Canadian health care

    John Stossel covers health care, particularly health care in Canada, on the ABC television news show 20/20. Why anyone would want to bring this to the United States is a mystery. Click on Health Care: Does Canada Do It Better? to view the video. Reaction from viewers is at Reaction To Healthcare Segment.

    By the way, pets in Canada can get advanced treatment faster than humans can.

  • How will government run our health care?

    An excerpt from “Why Government Can’t Run a Business” by John Steele Gordon, from the May 21, 2009 Wall Street Journal:

    The Obama administration is bent on becoming a major player in — if not taking over entirely — America’s health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government’s track record in running economic enterprises. It is terrible.

    In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.

    When the plant was finally finished, however — three years after World War I had ended — it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

    Or take Medicare. Other than the source of its premiums, Medicare is no different, economically, than a regular health-insurance company. But unlike, say, UnitedHealthcare, it is a bureaucracy-beclotted nightmare, riven with waste and fraud. Last year the Government Accountability Office estimated that no less than one-third of all Medicare disbursements for durable medical equipment, such as wheelchairs and hospital beds, were improper or fraudulent. Medicare was so lax in its oversight that it was approving orthopedic shoes for amputees.

    These examples are not aberrations; they are typical of how governments run enterprises.

  • The right to health care

    Is there a right to health care in America?

    If you believe in liberty, the answer is no.

    Back in the days of the Clinton administration and the attempt at health care nationalization, Leonard Peikoff delivered a lecture titled Health Care Is Not A Right. It’s well worth reading.

    Speaking of the Declaration of Independence, the beliefs on which America was founded, Peikoff wrote:

    The term “rights,” note, is a moral (not just a political) term; it tells us that a certain course of behavior is right, sanctioned, proper, a prerogative to be respected by others, not interfered with — and that anyone who violates a man’s rights is: wrong, morally wrong, unsanctioned, evil.

    Now our only rights, the American viewpoint continues, are the rights to life, liberty, property, and the pursuit of happiness. That’s all. According to the Founding Fathers, we are not born with a right to a trip to Disneyland, or a meal at Mcdonald’s, or a kidney dialysis (nor with the 18th-century equivalent of these things). We have certain specific rights — and only these.

    Why only these? Observe that all legitimate rights have one thing in common: they are rights to action, not to rewards from other people. The American rights impose no obligations on other people, merely the negative obligation to leave you alone. The system guarantees you the chance to work for what you want — not to be given it without effort by somebody else.

    Sometimes we see the term “positive rights,” meaning that they can be granted only if provided through positive action taken by someone else. That’s the way it is with health care: If you are to have a right to health care, it usually means that I’m going to have to pay for it.

    What are properly known as rights are absolute. They are not given to you by someone else; they belong to you because you are human.

    As a practical matter, the right to health care is fuzzy and fleeting. Yesterday there was a small gathering of citizens expressing their concern over the direction of health care. There was a smaller group across the street with a different opinion. I had a conversation with one lady, part of which went like this:

    She said “Nobody asks to get a disease. It’s not by their choice.”

    I asked her to notice my obvious condition of being overweight and the risk it carries for me to develop various health concerns. Is this not a choice I make, to be in this condition?

    “Well, okay, some of that. You could argue that to a certain extent.”

    I then mentioned that people voluntarily engage in risky behavior such as rock climbing. They expect government to rescue them when they fall and to mend their broken bones.

    “Maybe they should be required to buy extra insurance,” she said.

    So already the idea of a right to health care is starting to be qualified in several ways.

    Would we accept such qualifications and conditions on our fundamental rights? I’m afraid to say that many people would — if they could get free health care, for example.

  • In Wichita, concern shown for direction of health care

    Today, about 30 activists gathered in Wichita to express their concern over the possible takeover of health care by the government.

    I’ve assembled a slide show of photographs taken by me and others. Click here to view it.

    For me, what I will remember from today is the story told by Wendy Aylworth about the death of her cousin’s daughter. The video of Wendy speaking is below. A narrative written by Wendy is at Canadian health care: a personal story of tragedy.

    Related: Government Health Care Protest at Congressman Dennis Moore’s Office from the Kansas Meadowlark.

  • Health rations and you

    Normally I shy away from using humor when discussing such a serious issue as health care. But this is a humorous look at what lies ahead if we’re not diligent. It’s from The Health Administration Bureau, a project of the Sam Adams Alliance.