This is by far the best analysis I’ve heard of the Obamacare decision, from my colleague Onkar Ghate. Not to be missed.
Archive for June, 2012
“The Constitution is too good for us.” On this morning’s Mike Slater Show, Yaron explains how Obamacare is part of a long and ugly trend of government intervention, and talks about what a free market in health care would look like. One of Yaron’s best interviews—don’t miss it.
Our private, market-based health care system has led to spiraling prices, and so we need government to step up to the plate and bring health care within our reach. That, anyway, was the claim we heard during the debates over Obamacare.
But prior to the government’s entrance into the medical field, health care was regarded as a product to be traded voluntarily on a free market—no different from food, clothing, or any other important good or service. Medical providers competed to provide the best quality services at the lowest possible prices. Virtually all Americans could afford basic health care, while those few who could not were able to rely on abundant private charity.
Had this freedom been allowed to endure, Americans’ rising productivity would have allowed them to buy better and better health care, just as, today, we buy better and more varied food and clothing than people did a century ago. There would be no crisis of affordability, as there isn’t for food or clothing.
But by the time Medicare and Medicaid were enacted in 1965, this view of health care as an economic product—for which each individual must assume responsibility—had given way to a view of health care as a “right,” an unearned “entitlement,” to be provided at others’ expense.
This entitlement mentality fueled the rise of our current third-party-payer system, a blend of government programs, such as Medicare and Medicaid, together with government-controlled employer-based health insurance (itself spawned by perverse tax incentives during the wage and price controls of World War II).
Today, what we have is not a system grounded in American individualism, but a collectivist system that aims to relieve the individual of the “burden” of paying for his own health care by coercively imposing its costs on his neighbors. For every dollar’s worth of hospital care a patient consumes, that patient pays only about 3 cents out-of-pocket; the rest is paid by third-party coverage. And for the health care system as a whole, patients pay only about 14%.
The result of shifting the responsibility for health care costs away from the individuals who accrue them was an explosion in spending.
In a system in which someone else is footing the bill, consumers, encouraged to regard health care as a “right,” demand medical services without having to consider their real price. When, through the 1970s and 1980s, this artificially inflated consumer demand sent expenditures soaring out of control, the government cracked down by enacting further coercive measures: price controls on medical services, cuts to medical benefits, and a crushing burden of regulations on every aspect of the health care system.
As each new intervention further distorted the health care market, driving up costs and lowering quality, belligerent voices demanded still further interventions to preserve the “right” to health care.
The solution to this ongoing crisis is to recognize that the very idea of a “right” to health care is a perversion. There can be no such thing as a “right” to products or services created by the effort of others, and this most definitely includes medical products and services. Rights, as our founding fathers conceived them, are not claims to economic goods, but freedoms of action.
You are free to see a doctor and pay him for his services—no one may forcibly prevent you from doing so. But you do not have a “right” to force the doctor to treat you without charge or to force others to pay for your treatment. The rights of some cannot require the coercion and sacrifice of others.
American health care has needed reform, but what it has needed is not more government intervention but less.
I talk about these issues at length here.
Courtesy of Richard Epstein writing in the, would you believe it, New York Times:
[H]is decision is wrong. As a matter of constitutional text, legal history and logic, the power to regulate commerce and the power to tax should not be separated. It is not good for the court or the country that the chief justice’s position in such an important case is confused at its core.
Consider first the constitutional text. Chief Justice Roberts refers to Congress’s power to “lay and collect Taxes.” But it’s worth recalling the surrounding language, which notes that Congress has the power to “lay and collect Taxes” only in order “to pay the Debts and provide for the common Defence and general Welfare of the United States.”
Historically speaking, this clause corrected one of the great weaknesses of the Articles of Confederation (the precursor to the Constitution), which had forced Congress to essentially beg the states for the revenues needed to run its business. By giving Congress independent powers over taxation and other revenue sources, the Constitution ended that dependency. But as a quid pro quo, the Constitution also restricted the use of these revenues to classical public goods — benefits that must be given to all citizens, if given to any — like paying off national debts and paying for the nation’s defense. General welfare, mentioned in parallel with these two phrases, is best read as covering only matters that advance the welfare of the United States as a whole. The redistribution of income, or “transfer payments” among citizens, like those mandated under the Affordable Care Act, doesn’t qualify for taxation in this originalist reading of the Constitution.
- Regulatory State Watch: So you think you can be a hair braider?
- I’m beginning to suspect that Paul Krugman is not infallible.
- “It’s Time for a Frontal Assault on the FDA.” Yes, please.
- Hey, I have an idea. Let’s spend hundreds of billions—nay, trillions—on fighting poverty and fail completely.
- Thomas Sowell: “In the political language of today, people who want to keep what they have earned are said to be ‘greedy,’ while those who wish to take their earnings from them and give it to others (who will vote for them in return) show ‘compassion.’”
- A climate alarmist admits he was being alarmist. Your turn, Mr. Gore.
- The left’s economic position today is that we have to spend our way to riches. The theoretical justification for this position is Keynesianism. But history has not been kind to Keynes’s theory. Nor has logic.
- “Big carrots are designed to encourage big, if disciplined, risk-taking. The money itself is negligible on a shareholders’ bottom line. That’s why boards haggle more with CEOs over shaping the incentive than trimming nickels and dimes from the dollar amount. And, lo, the dynamism of the U.S. economy is not unrelated.”
- “The Fiscal Consequences of the Supreme Court’s Healthcare Ruling”
- Not enough Americans are on food stamps. The government thinks so, anyway. “The U.S. Department of Agriculture has been running radio ads for the past four months encouraging those eligible to enroll. . . . The department is spending between $2.5 million and $3 million on paid spots, and free public service announcements are also airing.”