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© 2007 Daniel J. McLaughlin
Free Health Care
There is no such thing as a free lunch. That is a truism from time immemorial and applies to all areas of our lives. If you receive something of value, there is a cost. Even if a good or service is labeled as “free”, it doesn’t just appear magically. Someone bears the cost in some way or another.
Health care is an issue where the concept of “No Free Lunch” applies in all cases, in spite of what popularizers of socialist health care systems would have you believe. Every surgical procedure you receive, every medication you take, every filling in your tooth is paid for by someone. If the dentist doesn’t get paid for the filling, he is paying for it in lost revenue. If your health care plan covers it, participants or sponsors of the plan pay for it through contributions. If a government program pays for it, then it comes from taxpayer pockets.
Much of the current health care debate comes down to the idea of universal health insurance, attempting to get around the politically sticky issue of direct socialist control of the entire health care system.
The concept of insurance is pretty simple. There are catastrophic events which can bankrupt an individual or organization. In a specific pool of participants, the approximate number of occurrences of a covered event can be determined, but the individuals that experience the event cannot be predicted. It makes sense to pool resources of members choosing to take part. Each one contributes a small, affordable portion to cover the large cost of the small number of occurrences.
Events that can be anticipated are not insurable events. If there was a football ticket insurance plan, only people who plan to attend football games would buy the insurance. If ticket prices were $100, the costs incurred by the plan would be $100 per participant plus administrative fees. In that case it would cost more to get the tickets through the plan than it would to get them yourself. It is pretty obvious that it would be immoral to force non-football fans to purchase the insurance just so the cost to participants going to the games would be lower. The same applies to health insurance.
The biggest difficulties that occur in the health insurance debate revolve around the terms used. If people were very clear about what they were discussing, many of the issues could be dealt with relatively easily.
All modern health insurance plans have only a minor insurance aspect. The bulk of the plan expenditures is merely the transfer of regular, anticipated, non-catastrophic costs from patient to employer or sponsor. It is disguised pre-tax wages, provided as an escape from income taxes. Another sizeable chunk of what is called insurance is redistribution of income from low or no risk people to 100% risk participants, due to mandated coverage. In the case of government programs, it is the redistribution from taxpayers and paying participants to non-paying participants. In each case, it is debatable whether it is good or bad. It is not debatable that it is not insurance.
The part that is not insurance is either wages or charity. Disguising them as insurance skews the market and creates a tangle of inconsistencies and misunderstanding.
It is pretty well understood and accepted that people are more careful with their own money and property than they are with that of others. A person who pays his own bill is most likely to be sure he gets his money’s worth. If someone else pays, however, they are not as careful. An insurance company has different interests than the participant but, in order to be competitive, the company must be efficient and also provide good service. Government, on the other hand, has no incentive to be efficient. It is not compelled by profits and competition to care for taxpayers. They get their money through compulsion, whether they deliver service or not.
Government mandates, regulations and billions of taxpayer dollars has distorted the market and caused massive increases in costs and restrictions on services. There is no area in health care that does not feel the heavy hand of government. You can’t blame the free market for the problems when it isn’t even close to free.
Health care is an important matter. It is critical that we understand the issues in order to deal with it. The smoke and mirrors of government health care will amplify the problems that already exist, caused by impositions on Americans by un-American politicians.
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Daniel Mclaughlin
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