War (On Your Health) Is The Health Of The State

Speaking in Wisconsin yesterday, President Barack Obama proclaimed that “We have reached a point where doing nothing about the cost of health care is no longer an option.”

If by “we,” Obama means “government,” then he needs to crack a history book. The correlation between government intervention in health care and the increasing cost of health care is close enough that graphs for the two phenomena are virtually interchangeable.

From the introduction of Medicare and Medicaid to Nixon’s HMO Act to the Emergency Medical Treatment and Active Labor Act, every government intervention in health care has increased costs … and none of the plans currently on the table will reverse that trend.

One of the most pernicious side effects of the state’s involvement in health care has been the re-definition of the term “insurance.”

Before government involvement, insurance was a specific kind of bet (or, if you insist, investment): A hedge. A healthy individual would purchase a policy and make minimal periodic payments. As long as that individual remained nominally healthy, the bet or investment amounted to a small periodic loss, and the individual paid his own bills for regular visits to the doctor and for treatment of minor illnesses and injuries.

The bet only “paid off” if the patient suffered a catastrophic illness or injury — something that the average person simply couldn’t afford to have treated.

It was a bet worth making — the costs of placing it were minimal and distributed over time. So long as the individual remained healthy, he was a “loser” in the sense that he was making those payments, and the insurance company was a “winner” in that it was making a profit from the individual’s premiums.

If the individual received a diagnosis of cancer, or experienced a tragic automobile accident, he became a “winner” in that his treatment expenses were covered, and the insurance company “lost” the bet. Of course, the insurance company was playing the actuarial odds and “won” overall … as did its customers, who were protected from the worst economic effects of ill health or accident.

Once government got involved in “insurance” — through Medicare and Medicaid — health care prices began to rise (due to increased demand) … and a sense of entitlement began to form in the private sector. Over time, the perception of insurance as a “hedge” began to wane, and policyholders began to see insurance as a different proposition: “I make a monthly payment, the insurance company pays my medical bills.”

This change of perception, coupled with government intervention to promote Health Maintenance Organizations and Preferred Provider Organizations, drove the demand for — and the costs of — “health care” up even further.

Of course, it didn’t help that entry into the health care industry had been under the de facto control of a professional guild (the American Medical Association) with a vested interest in limiting supply for the better part of a century by then … do I hear a cry of “pre-existing condition” from the audience?

If you’re looking for someone to blame for the rising costs of health care, you’re in luck. I can give you 536 names to choose from. 435 of those names change every two years, 100 of them change every six years, and one of them changes every four years (you can tell it’s changing when you see moving vans pulling up in front of 1600 Pennsylvania Avenue, Washington, DC).

The latest proposals out of Washington include wonderful ideas like an “individual mandate” and a “public option.”

In English, “individual mandate” means requiring those of us who don’t need or want “health insurance” to buy it, so that those who do want or need it don’t have to pay as much for it. Aside from the obvious injustice of this approach, it should be obvious that it won’t work … because the people who are forced to buy it will almost certainly make use of it, wiping out the subsidy effect. I don’t want a new car, but if you make me buy one I’ll probably drive the damn thing.

“Public option” means that those who honestly can’t afford the new tax (which is exactly what the “individual mandate” comes down to) will be covered by Uncle Sugar and his close personal friends, the taxpayers. Which, of course, will artificially drive demand, and therefore prices, even higher.

There’s one, and only one, way to reduce health care costs, and that’s to build a wall of complete separation between health care and state. While we’re at it, might as well build that wall between everything else and state, too.

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