Considering that last night he said we have seen scare tactics instead of honest debate, President Obama was quick to engage in scare tactics of his own. The current panic — the ranks of the uninsured rose close to 6 million these past 12 months. *gasp!* Quick, get the smelling salts! I’m about to faint.

Or not. But I do have to question his numbers. He mentioned 30 million uninsured in his speech last night before the joint session of Congress. But the Census Department puts the number of uninsured at 46.3 million. This discrepancy isn’t that hard to explain since there is a difference between the people in the two uninsured groups mentioned here. President Obama specifically refers to “30 million American citizens” while the census numbers are not limited just to Americans. This tells me that there are about 16 million illegals in the U.S. who are uninsured.

When Obama stated that illegals would not be covered under his health care plan, Republican Congressman Joe Wilson of South Carolina shouted out “You lie!” If we do a little Clinton-era word parsing, then Obama is correct — his plan doesn’t cover illegals, or Americans for that matter, because he hasn’t actually released a plan. He’s been relying on Congress to do the work for him, but that’s where he runs into problems. A Senate HELP Committee version of the health care bill excludes illegals on page 111. But House Bill HR3200 doesn’t contain any similar language excluding illegals, as confirmed by the Congressional Research Service.

So who exactly are these uninsured people in America? Editorial cartoonist Michael Ramirez breaks it down in this cartoon:

The 47 Million Uninsured

I can’t get all excited about insuring those people who certainly could afford it but choose not to spend their money that way. Likewise, I’m not concerned about those who could get government funding but haven’t signed up for it. And I am certainly not interested in insuring people who are here illegally. That leaves only those people who are in-between jobs and so are uninsured. The cure for them is less government involvement, not more. After all, health care insurance as a job benefit is the result of government meddling in the free market. The solution is to have less government meddling, not more. After all, if you find you are over your head in a hole, the solution is to stop digging, not investing in more shovels.

And finally I have to point to a great video by Stuart Browning about the uninsured in America. If you can watch Faye Chao at 3:10 – 3:30 in the video without wanting to slap her free-loading face, you’re a better person than I am.

Did you catch this little tidbit in the news?

Americans would be fined up to $3,800 for failing to buy health insurance under a plan that circulated in Congress on Tuesday as President Barack Obama met Democratic leaders to search for ways to salvage his health care overhaul.

The fine isn’t surprising. The government levels all sorts of fines on people for not complying with the law. But here’s something you should consider: if this health care plan is so great, why does the government need to fine people for not buying health insurance? If this health care bill were the best thing since sliced bread, then there would be no need to beat people over the head with fines, now would there?

In the same article, Democrat Senator Max Baucus”promoted a plan that would guarantee coverage for nearly all Americans at a cost to taxpayers of under $900 billion over 10 years.” Let’s play with the numbers. $900 billion for ten years is $90 billion a year. In President Obama’s speech of last night before the houses of Congress, he said there are “30 million American citizens who cannot get coverage.” Lemme break out my calculator and divide the yearly money by the number of American’s who can’t get cover based on Obama’s own words…. carry the 2… and it comes out to $3,000 per person per year that Senator Baucus guesses health care reform will cost.

How about the government just cuts a check for $3,000 for each of the 30 million without insurance and calls it done? Such a plan wouldn’t require over 1,000 pages to outline, and wouldn’t nationalize about 15% of the nation’s economy, and so, of course, it will never happen.

And speaking of never happening, how about the government just getting the hell out of health care and letting the free market and the free will of people solve the problem? Freedom is a much better solution for this ginned-up crisis, so of course the government won’t go that route. The cry of “Give me liberty or give me death” has been replaced with “Gimme free stuff and tax the bejebers out of everyone to pay for it.” Doesn’t quite have the same stirring ring to it, but that’s the rallying call of today’s liberal. But once government controls the health care industry, it can legislate that you feel good about it’s job.

If you don’t like it, you will be fined.

Recently, while talking at the Portsmouth High School in New Hampshire, President Obama dismissed some concerns about the health care reform the Democrats have been pushing.

Another legitimate concern, he said, was whether a public insurance plan he favors would overwhelm the private insurance system. Obama said it should not.

“If you think about it, UPS and FedEx are doing just fine,” he said. “It’s the post office that’s always having problems.”

Hmm… of the three large services that deal with moving mail–UPS, FedEx, and USPS–it is the United States Postal Service that is “always having problems.” Is it a coincidence that the USPS is also the only service managed by the government with a government monopoly on first-class mail? I don’t think so. I think the comment is a prime example of why Obama shouldn’t talk about things unless he has his teleprompter present.

The obvious follow-up question to his comment is to ask why Americans should be anxious to move from private-run health care to government-run health care when Obama’s example shows that private-run mail offers a much better service than the government-run option.

So let’s take a look at the government’s track record, based on some information sent to me recently in an email.

  • The U.S. Postal Service was established under Benjamin Franklin in 1775 by the second Continental Congress. It has been managed by the government for 234 years, and it is broke. It ran a $2.8 billion deficit in 2008.
  • Social Security was established under FDR in 1935. It has been managed by the government for 74 years, and it is broke. Worse, it is a Ponzi scheme that is inherently unstable.
  • Fannie Mae was established under FDR in 1938 under FDR. It has been managed and legislated by the government for 71 years, and it is broke.
  • The War on Poverty started under LBJ in 1964. It has been managed by the government for 45 years, and it doesn’t work. Trillions of dollars have been taken from taxpayers to go to the poor. The poverty rate in the U.S. had been falling in the decade before government stepped in, but since then, the rate has remained pretty static.
  • Medicare and Medicaid were established under LBJ in 1964. They have been managed by the government for 44 years, and they are broke.
  • Freddie Mac was established under Nixon in 1970. While a government-sponsored enterprise, it has been legislated by the government for 39 years, and it is broke.
  • The Troubled Asset Relief Program (TARP) was passed under Bush in 2008. $700 billion has been squandered buying up assets worth far less than that.
  • And most recently, the “Cash for Clunkers” program was established under Obama in 2009. The initial grant of $1 billion ran out in one month, even though the financial geniuses in the government thought it would last four times as long. So Congress approved spending an additional $2 billion in the program. To boil it down, the government paid out either $3,500 or $4,500 for cars with a trade-in worth of $1,475. This is not a wise use of our money. Oh, and it’s gone.

Government has no ability to spend money wisely or efficiently, as demonstrated by the track record it has amassed in the past century. So why should we even conceive of giving government control over America’s health care system? Many times on commercials I have heard some rapidly-spoken variation of the following phrase: “past performance is not indicative of future results.” But with the government, past performance is practically a promise of future results.

Government-run health care? History tells me that the best answer is “Thank you, but no.”

Now hear this!Senator Edward Kennedy is dead. No, I didn’t watch the days of breast-beating and garment-rending that some political shows put on, and neither did I watch the actual funeral. I didn’t feel any need to listen to people talking about how wonderful a man Teddy was. De mortuis nil nisi bonum means “of the dead, speak no evil,” so does that mean he gets a pass for the terrible things he has done? No, I don’t believe it is a good idea to ignore the failures, bad ideas, and/or evil acts of people just because they are dead. But I am nice enough to not do it during his funeral, and I’m not going to do it here. But I will link to a Top Ten list.

And now I have finally reached this megaphone moment. Repeat my words anytime you hear someone say America should pass ObamaCare because Kennedy is dead.

Even after someone has died, a bad idea is still a bad idea.

Pass the bloated bill for the bloated dead guy!
Photo by Sharp Elbows

The team at work went out to eat the other day as part of a going-away celebration for the summer intern. After we were seated, we all ordered the drink and dish that we wanted. Well, mostly what we wanted. The two guys who wanted Long Island iced teas just got plain iced teas instead. Being drunk at work, while very funny, isn’t actually all that productive. After it was all done, I started thinking about how going out to eat works in many ways as a metaphor for health care.

Imagine a group of people going out to eat, and each person is paying for himself. Each person is free to juggle personal preferences in food with price and available funds. If the diner has both funds and the desire, he can order the Lobster Thermidor a Crevette with a mornay sauce garnished with truffle pate, brandy, and a fried egg on top and spam. But most of us aren’t rich, so we bypass the really expensive steak and lobster dish for a less expensive dish that would still be tasty. Or we could choose to spend the money because we do love the lobster so. Doing that would mean not being able to spend the money on something else, of course, but sometimes it’s nice to splurge.

In a truly free-market health care situation, there would be mixture of options available to people. Do you want a quick tetanus booster-shot or a confirmation that your bronchitis is bacterial in origin and get some antibiotics? Or do you want to splurge on a full-body MRI scan to make sure that there aren’t any strange lumps lurking about? Yes, in a situation like this, the poor would have far fewer options due to their lack of cash, but isn’t that also the case with food? As a society, we have determined not to let people starve to death just because they don’t have money. There are private food banks, soup kitchens and religious organizations that will feed people, often for free. But does the fact that some people are poor and can’t afford Lobster Thermidor mean we should prevent the rich from eating it if they so choose?

OK, now imagine a different dining experience, patterned after the single-payer health care plan that exists in the U.K. and Canada. Every time you buy something in town, an extra fee is charged on top of the cost. Every time you walk by the restaurant, a fee is deducted from your bank account, whether you go in and eat or not. Heck, just living in the town causes a fee to be levied against your account. Yes, it means you have less to spend on other things, and what you do buy is more expensive, but there is a positive side — when you go to the restaurant, you don’t have to pay the check. It’s free! Isn’t that great?!? We’ll ignore the fact that you have been charged again and again and again to pay for this “free” food. It’s free! So go order yourself a lovely Lobster Thermidor and enjoy.

Well, not so quick. See, this is a one-size-fits-all program, and that means there aren’t a mixture of high-end, la-di-da restaurants mixed in with the cheap burger joints. If you want to go out to eat, it’s at the government diner, and you can only order what’s on the menu. Today’s special is beef stew, so enjoy.

You’re vegetarian? That’s not a problem. Just don’t eat the beef chunks. There are still plenty of vegetables in there. Well, there are three varieties of beans in the stew, but beans are vegetables, right? OK, so there’s just one type of bean in the stew, but the chef has two magic markers that she uses to make it look like three. Then again, you don’t have to worry about the beef. It was too expensive, so she only tells people there’s beef in it. Best eat up because there’s no seconds. She only has the one pot of stew on the stove, and there are people waiting in the rain to be seated on your stool. Besides, it’s almost 5 pm, and time for her to close up.

Do you really want a one-size-fits-all single-payer dining experience? I won’t call it “free dining” since everyone pays for it with every value-added tax, income tax, and payroll tax government levies. And you are paying for it every time the dinner choice isn’t what you wanted, or the quality you wanted, or you have to wait for a while before you can be seated and order.

I wouldn’t accept a government diner, so why are people calling for single-payer, one-size-fits-all government health care? But are the people really calling for it? Most people don’t want it, as reported by Rasmussen:

Forty-three percent (43%) now Strongly Oppose the legislation while 23% Strongly Favor it. Those figures, too, are similar to results from earlier in August.

While supporters of the reform effort say it is needed to help reduce the cost of health care, 52% of voters believe it will have the opposite effect and lead to higher costs. Just 17% believe the plans now in Congress will reduce costs. This is a critical point at a time when voters see deficit reduction as more important than health care reform.

Additionally, by a 50% to 23% margin, voters believe the proposed reforms would make the quality of care worse rather than better.

But liberals in and out of government are anxious to get this implemented. Why? Every attempt to socialize health care has resulted in higher taxes with worse service, and this plan would be no different. So it can’t be about improving health care. Every attempt to socialize heath care has resulted in huge bureaucracies with all the loving care that comes with them, which is why people thrill at the idea of waiting for hours at the DMV.

Socialized health care is all about control — control over people’s lives, people’s money, and people’s businesses. Do you really want the stern governmental lunch lady looming over you with a heavy ladle in her hand, telling you to hurry up and eat the cold and mushy canned peas? Is that the dining experience you long for?

There is much debate over the health care reforms proposed by President Obama. But I’m actually using the word wrong. Debate happens when both sides discuss the reasons for and against some object or objective, but there is no debate if there is no dialog. If one side makes it impossible for the other to talk, then there is no debate. When former Representative Tom Tancredo tried to address some students and faculty of the University of North Carolina, he was prevented from doing so by the boisterous and destructive actions of some protestors.

“No dialog with hate!” some people chanted at Tancredo, but I don’t understand why. If someone is going to say something hateful, stupid, or incredibly offensive, I want that person to say it. I’m not going to shout him down or stop him from saying it, partially because I believe that others have a right to free speech as I do, and partially because I love to hear people clearly state their hateful, stupid, or incredibly offensive ideas. It makes it easier to reject them. And mock them.

But not everyone believes that people should be free to speak. The people who protested Tancredo obviously didn’t believe he had any right to speak at the university. And as Andrew Klavan explains, some of the debate tactics used by people is nothing more than a way of telling the other person to shut up.

When someone tells you to shut up, they are telling you that the debate is over. Their minds are made up, and no amount of talk or facts will change their minds. Does that sound like someone who is looking for truth, or someone with his eyes tightly closed, his fingers in his ears, and going “la, la, la! I can’t hear you!”? Pretty childish, no? They can’t handle the debate, so it’s much easier if you’d just shut up and go away. So what does that say about our Dear Leader when he says something like this:

“But I don’t want the folks who created the mess to do a lot of talking. I want them to get out of the way so we can clean up the mess. I don’t mind cleaning up after them, but don’t do a lot of talking.”

This is not the voice of someone who wants to discuss and debate. This is the voice of someone who wants you to shut up, sit down, and take whatever he shovels out to you. And you had better be grateful for it, too.

The Washington Post has a video of Republican Presidencial candidate Mitt Romney visiting a diner and talking to the people there. The video focuses one of the people who works there at the diner, Michele Griffin, and what she would ask Mitt Romney when he arrives.

I ask all the candidates: What are you going to do for me? My family? You know. My husband works two jobs. I just came back to work. I was disabled for two years. My hands were really bad. We had a rough time making it.

Later when Romney was talking about reaching out to other nations with our medical technology, Griffin shouted out, “Excuse me, how about our nation? How about the USA? Come on!” Romney answered her by explaining the private health care insurance plan put in place in Massachusetts while he was governor of that state. You can watch the six minute video if you like, but you should be able to understand Griffin’s point of view from what I’ve already quoted.

The thing I found very telling about Griffin’s attitude is how self-centered it is. “What are you going to do for me?” She wants to know what the federal government is going to do to take care of her and her family. But how is it the responsibility of the federal government to do so? I’ve heard people quote the Preamble of the Constitution that says, “promote the general welfare” and extract from that the concept that the federal government should take care of everyone. But notice that is says “promote” not “provide.”

It’s sad that Griffin has such high medical bills and a family that has so many medical problems. But when she says, “What are you going to do for me?” she’s not just asking that of the candidates. She is asking that of you, John and Jane Public. What are you going to do for her? More specifically, how much are you going to pull out of your wallet to take care of her problems? Because if the government pays for her medical bills, the money is coming from your wallet.

When I hear people ask the government, “what are you going to do for me?” I hear the voice of self-centered greed. And that’s not pretty. In all fairness, Griffin may not be demanding a hand-out from John and Jane Public, but I am pretty confident that she doesn’t understand that government has no money that it hasn’t first taken from someone else.

Socialism sucks. And while I’m on the subject of things that suck, Marxism also sucks, but I repeat myself. There is a simple reason why both socialism and Marxism suck, and it can be described in terms of homeostasis — the automatic processes your body uses to regulate your body temperature, blood sugar, hormones, etc. Here’s what I wrote before about homeostasis and command economies:

The wonder of the body is that necessary processes like the insulin/glucagon battle take place automatically, whether you think about them or not. And it’s a good thing that we don’t have to think about these functions. The chemistry necessary to turn those two all-beef patties, special sauce, lettuce, cheese, pickles, and onions on a sesame seed bun into the glucose your body needs (minus the icky bits your body doesn’t need) is a chemist’s nightmare. How long would it take you to break normal table sugar (and water) into glucose if you had to do the following chemical reaction manually?

C12H22O11 + H2O —> C6H12O6 + C6H12O6

Now aren’t you glad that your body does this automatically for you? I know I am….

Just as your body is best served to have the blood sugar levels controlled automatically by the pancreas working invisibly inside you (further down and a bit more to the right. Yep, right there), the invisible hand of market forces works best when the force of government is kept out of it. Government intervention is similar to the injections of insulin. While it can be of short-term benefit to the person involved, it is neither as fast nor as efficient as the automatic actions of the pancreas.

People and economies work best when regulated by automatic processes, and socialism is not automatic. It is the heavy hand of government trying to brute-force the kinds of decisions that are best handled by the “invisible hand” of the free market.

“But American health care is broken! We need the government to fix where the market has failed.” I’ve heard several people make that claim whenever the subject of rising health care costs comes up. But why are health care costs rising? Here is a very telling graph that I’ve mentioned before:

Growth of medical costs

Notice that the more the cost of health care is paid by some third party like health insurance, the faster the overall cost goes up. But in cases like Lasik eye surgery, costs have gone from $10,000 per eye to under $500 in a few short years. Since people have to pay for laser eye surgery themselves, they have shopped around and sought out the best service for their money. But the chart shows that when people are not involved in the costs, as happens with insurance payments, costs go spiraling up like, well, health care costs.

Since third-party payments appear to be linked to rising costs, the proffered solution is to create more third-party payments by socializing medicine? Sounds like trying to put out an apartment fire by throwing logs and cans of gas in through the window. Oh, hey! The fire’s getting worse. Toss on more wood and gas!

But feeding the flames of the problem is exactly what socialist champion Michael Moore wants. His newest piece of crap documentary, titled Sicko, is hitting theaters, so expect to hear more people call for single-payer socialized medicine. To prove his point about the problem of American health care, Moore took some people down to Cuba for treatment. I find it ironic that when Fidel Castro needed emergency surgery, even though Cuba is supposedly a nation of doctors, they flew in a Spanish surgeon to work on him. So much for the vaunted socialized medicine of Cuba.

It’s illuminating to read the IMDb comments attached to Sicko. Many commenters claim that America’s love of money is bad, and socialized medicine in Europe and Canada is good. As one commenter put it, “Michael goes to 4 countries with Universal healthcare coverage, including a longtime alleged nemesis Cuba. In all instances he finds that there is great medical coverage, FOR FREE. Ontop [sic] of that, medications are either free, or almost free compared to U.S.A.” But this Canadian commenter is wrong. Medical coverage in such countries is not free. It is paid for by taxation, and governments have to reach into your pocketbook to get the taxes. So in no way do nations with socialized medicine get their health care for free.

Interestingly enough, the plot outline as listed on the IMDb just changed. It was once described as a comedy about 45 million uninsured Americans, but now it says the film is a documentary comparing health care systems. The original outline trotted out the common claim that there are 45 million Americans without health care in the U.S. That’s 15%, or almost one in six people. But Stuart Browning does a great job of showing how that number is inflated in his video. Removing from that equation the people who voluntarily choose not to have insurance, like the young and healthy, and those people who could receive health insurance through programs like Medicaid but who don’t bother to apply, the number of truly uninsured in the U.S. is about 8 million people, or about 2.7% of Americans. Browning sums it up this way in his video:

A small minority of people slip through the cracks through no fault of their own – however in any nation there is a group of people who refuse to participate in society or take responsibility for their own well-being. Even if our government attempted to force them to receive regular health care, many wouldn’t comply.

So, why do we keep hearing about a crisis of 45 million uninsured?

Maybe, it’s because the problem of Americans without health insurance is exaggerated and used as a smokescreen by many reformers who advocate socialized health care financing.

Here’s another dirty little secret, although it’s not so secret any more — hospitals are not allowed to turn away any injured person who goes to the emergency room, whether or not that person can pay for medical services. In the movie, Faye Chao demonstrates this. She makes more than enough money to pay for health insurance, but she chooses to save the money rather than spend it. In one exchange in the movie, she talks about her experience with hospital care:

Faye Chao: I bike everywhere in the city, so I have gotten hit by drivers twice – and one time I ended up in the hospital. No, I didn’t have health insurance, but I was treated – and billed for it later.

Stuart Browning: Umm hmm. How much was the bill for? Do you remember?

Faye Chao: Honestly I don’t because I didn’t bother to pay for it.

Free health care! Just stiff the hospital like Chao did if you want free health care. Or you can do what socialist nations do and pass the bill on to the taxpayers. Do you really want your health care handled by the government? Before you answer, I suggest you first get your driver’s license renewed at the DMV. The cheerful, attentive service you receive at the hands of the DMV should be a fair example of the service you can expect from government-run health care.

Don’t worry about having to wait months for government-run health care services — just keep repeating to yourself, “It’s free.”

And like so many other free things, you’ll get exactly what you pay for.

Humorist and author P. J. O’Rourke, in his book Eat the Rich, summed up the four ways of spending money thus:

  1. Spend your money on yourself.
  2. Spend your money on other people.
  3. Spend other people’s money on yourself.
  4. Spend other people’s money on other people.

If you spend your money on yourself, you look for the best value at the best price — knockoff Pings on sale at Golf-Fore-Less. If you spend your money on other people, you still worry about price, but you may not know — or care — what the other people want. So your brother-in-law gets a Deepak Chopra book for Christmas. If you spend other people’s money on yourself, it’s hard to resist coming home with real Pings, a new leather bag, orange pants with little niblicks on them, and a pair of Foot-Joy spikes. And if you spend other people’s money on other people, any damn thing will do and the hell with what it costs.

Government spending falls into the last two types. This is why the Transportation Security Agency is in hot water for spending so much of other people’s money on themselves, stuff like art and silk flowers. But most of government’s spending is solidly in the last type, and this is why no government branch ever spends less than its yearly budget. It’s not like it’s their money, so they finish spending every bit of the yearly budget before the new fiscal year begins.

As bad as that is, government is guilty of exporting this most wasteful of spending practices to other areas of our lives. At the end of World War II, there were fewer able-bodied men between the ages of twenty and forty than before. In a normal situation, a shortage of a good will cause the price to rise, but the government had placed a cap on wages, so how could the manpower-starved businesses attract workers? As an added perk, companies started to offer medical benefits to their workers. The wages were fixed by law, but the medical benefits were a way around the law. Well, the smaller companies couldn’t compete with the big boys, so they yelled to the government.

The government realized that the wage controls were a problem, so they quickly dropped them. Hah! In your dreams! Instead, the government “fixed” the problem by giving tax breaks to companies who provided these medical benefits to their employees. You will get more of that which you subsidize, so very shortly most companies were offering medical benefits to their employees to compete in the marketplace and because of the tax breaks it provided.

But what is the nature of spending with these health care plans? This is a case of people spending other people’s money on other people. Who cares about the cost? Not the employees. By 1960 70% of the American people had health care coverage, up from about 20% in 1945. With the corresponding rise in people insured, so also rose the cost of health care. Stan Liebowitz wrote an interesting article for the Cato Institute in 1994. The most telling part of the article is represented in the following graph.

Cost rises in Health Care

Medical costs have gone up in direct relationship to how little people pay out of pocket for them. This is the 4th method of spending money in action. By the mid-’60s, the rising cost of health care was an issue for retired people and the poor who didn’t have a company paying for health insurance. They petitioned the government to fix this problem. Rather than backing out of the mess they had created, the Federal Government decided that Medicaid and Medicare would do the trick. This effectively pulled more people away from paying their medical bills directly, and shifting nearly all medical spending into the 4th method. Looking at the graph above, can you predict what happened next? Let’s not see the same hands this time. Yes, you in the back, you’re exactly right — prices did go up.

Fast forward to today. We see the same problems in action. The elderly, who don’t have a company to pay their health care costs, are complaining about the rising cost of medicines. In a politically shrewd but truly dumb financial move, President Bush pushed for a prescription drug benefit for the heavily-registered and commonly-voting AARP crowd. With more spending on prescriptions shifting into the 4th method of spending money, expect the cost of medicines to rise, rise, rise.

Milton Friedman explained one reason why costs have risen in an article entitled How to Cure Health Care from 2001:

Employer financing of medical care has caused the term “insurance” to acquire a rather different meaning in medicine than in most other contexts. We generally rely on insurance to protect us against events that are highly unlikely to occur but involve large losses if they do occur – major catastrophes, not minor regularly recurring expenses. We insure our houses against loss from fire, not against the cost of having to cut the lawn. We insure our cars against liability to others or major damage, not against having to pay for gasoline. Yet in medicine, it has become common to rely on insurance to pay for regular medical examinations and often for prescriptions.

You will get more of that which you subsidize. By removing the majority of the out-of-pocket cost of a doctor visit or of a bottle of pills, there is little downward pressure on using that service. Friedman also covers this problem in his article:

Enactment of Medicare and Medicaid provided a direct subsidy for medical care. The cost grew much more rapidly than originally estimated – as the cost of all handouts invariably do. Legislation cannot repeal the non-legislated law of demand and supply. The lower the price, the greater the quantity demanded; at a zero price, the quantity demanded becomes infinite. Some method of rationing must be substituted for price and that invariably means administrative rationing.

Every time you hear someone badmouth an HMO for the way they deny coverage, you can thank the government’s involvement in the health care industry. Had then-First Lady Hillary Clinton been successful in nationalizing the health care industry, everyone would have health care insurance. Good thing, right? Wrong! Haven’t you been paying attention about how that would shift all health care spending into the 4th method? Did you realize that had Hillarycare been enacted, paying cash for your own medical bills would have been a crime?

Time to hammer home the point. There is one medical cost I can think of that has steadily decreased over time, while at the same time the technology has increased, and that is laser eye surgery. This procedure is not covered by medical insurance, so the money comes from the patient’s own pockets. This is the 1st method of spending, and this means people hunt for a bargan, driving prices down. And doctors compete with each other for the money by improving the technology while also driving down their costs and increasing overall care. If laser eye surgery were to be covered by health care, you could expect to see the cost of the procedure soar to new heights.

So how can we get out of our current situation? Well, it won’t be easy. The ultimate solution is to move from spending other people’s money on other people to spending your own money on yourself. There is a method in place for doing just that — Medical Savings Accounts. Again from Milton Friedman:

The high cost and inequitable character of our medical-care system is the direct result of our steady movement toward reliance on third-party payment. A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes. The ideal way to do that would be to reverse past actions: repeal the tax exemption of employer-provided medical care; terminate Medicare and Medicaid; deregulate most insurance; and restrict the role of the government, preferably state and local rather than federal, to financing care for the hard cases.

If large companies were to change to catastrophic health insurance, the cost of that insurance would be much less than it is now. They could take some of the savings and place that into their employees’ medical savings accounts, some to go into the employees’ paycheck, and pocket a bit of the leftover savings themselves. It would truly be a win-win situation all the way around: the company spends less money, the employee gets a medical savings account and more money in the paycheck, and there would be a strong incentive to shop around and lower medical costs.

You would benefit. The company would benefit. People on low or fixed incomes would benefit from the dropping medical costs. Heck, even doctors would benefit from reduced paperwork from giant HMOs. So just who would suffer?

Political satirist and author P.J. O’Rourke once wrote of the four ways you can spend money:

  1. You spend your money on yourself.
  2. You spend your money on other people.
  3. You spend other people’s money on yourself.
  4. You spend other people’s money on other people.

In the first case, you’re likely to do some good bargain shopping to get the best stuff for the lowest price. When spending your money on other people, you tend to go as cheaply as you can–that is why ugly polyester ties see a big upswing in sales around Father’s Day. When you spend other people’s money on yourself, you can really live high on the hog, and the sky is no limit–Dom Perignon and fine caviar for breakfast! But when you spend other people’s money on other people, you have no reason to care what is bought or how much it costs. Sadly, this is how our government spends money. Is it any wonder that we get truly stupid spending like mohair subsidies?

One of the current big issues being forwarded by President Bush is a welfare prescription drug benefit. In this case I am absolutely opposed to this new entitlement program. Interestingly, those newfound Democrat spendthrifts who balk at the $87 billion Bush requested to help fight terror and rebuild Iraq and Afghanistan are clawing each other in their rush to spend over $400 billion on this newly-proposed benefit for America’s elderly.

Why do the elderly need assistance in paying for their drugs? On average, the elderly are the richest age group in our nation, so they are most equipped to pay for their own pharmaceutical needs. So why are government people on both sides of the political aisle in such a rush to pass this benefit? For one very simple reason: elderly citizens vote, and in vast numbers. Career politicians know that if they can count on the elderly vote, they will never be voted out of office. And that, after all, is their primary concern.

So here we have the wealthiest portion of America’s population on the fast track to get a major government handout to pay for their drugs. And there are plenty of elderly folk who are eagerly anticipating this bit of government largess. After all, they are entitled to this money because they are old, right? Well, not really. But try telling that to the old folks with extended blue-veined hands. I wrote previously about the nature of rights in our country. Basically, I do not have the right to access your money, time or labor. This is why the UN’s statement that we have the “right” to food, clothing, housing and medical care really means they want the right to plunder your pocketbook to pay for other people’s food, clothing, housing, and medical care. These are not rights–these are demands!

Since we have dismissed the erroneous idea that health care is a right, what are some of the other reasons people are clamoring for this new handout? Believe it or not, I have heard several people lay claim to this benefit merely because they are elderly. Really. In their minds, they have achieved the right to vacuum money from your hip pocket because the sun has risen and set on them a magical number of times. While I applaud their longevity, I do not appreciate their willingness to take my money.

The high cost of health care is probably the most commonly-used excuse for this program. After all, the elderly would not need our money to pay for their prescriptions if health care were not so very expensive in our country. But this is backward reasoning. Health care is so high-cost precisely because it falls into the fourth spending category: spending other people’s money on other people. What incentive does the doctor have to compete with other doctors and offer the best service at the lowest cost if his fees are paid by someone he never sees?

My wife’s mother recently had an extensive surgery performed on her foot to reconstruct her bones. To understand how the foot was healing, her podiatrist ordered a series of scans. When the bill came back from the x-ray imaging center, it was almost twice what the regular hospital charges for a full-body MRI. If the doctor had not spotted this extraordinary charge, neither Mom, nor the doctor, nor the insurance company would have noticed or cared. This lack of accountability is one of the primary reasons why health care costs are increasing. In a short while after the passing of this new benefit, health care costs will continue to rise, probably even faster than before, and the cry will come up from the elderly that their doctor visits and surgeries are costing too much. The politicians will see the need to “fix” this problem by tossing even more of other people’s money down this rathole.

So what is this new welfare prescription drug benefit? All together now: it is spending other people’s money on other people. This will do nothing to reduce the cost of health care. It will just force the fewer, poorer young generations to care for the numerous, wealthy retirees. This is like saving a burning house by pitching buckets of gasoline onto the fire. Not a smart move, but since the largest voting block in the nation will benefit, you may be assured that the drug benefit will pass both the House and Senate with ease.

How can we break this spiral of rising costs? The only sure way to change it is to shift the trend from spending other people’s money on other people to spending our own money on ourselves. If we succeed, then our natural desire to spend the lowest amount of money on the best possible product will provide a much-needed brake on the cost of health care. This principle works when we buy cars, clothes, and candy, so why would it not work with health care? It certainly worked in the days when people paid for their own health care, and it would work much better than the current system.