The Right Vision Of Health Care
- Yaron Brook

FORBES MAGAZINE

With the primary season in full swing, the presidential candidates
are fighting over what to do about the spiraling cost of health care--
especially the cost of health insurance, which is becoming
prohibitively expensive for millions of Americans.

The Democrats, not surprisingly, are proposing a massive increase in
government control, with some even calling for the outright socialism
of a single-payer system. Republicans are attacking this "solution."
But although they claim to oppose the expansion of government
interference in medicine, Republicans don't, in fact, have a good
track record of fighting it.

Indeed, Republicans have been responsible for major expansions of
government health care programs: As governor of Massachusetts, Mitt
Romney oversaw the enactment of the nation's first "universal
coverage" plan, initially estimated at $1.5 billion per year but
already overrunning cost projections. Arnold Schwarzenegger, who
pledged not to raise any new taxes, has just pushed through his
own "universal coverage" measure, projected to cost Californians more
than $14 billion. And President Bush's colossal prescription drug
entitlement--expected to cost taxpayers more than $1.2 trillion over
the next decade--was the largest expansion of government control over
health care in 40 years.

Today, nearly half of all spending on health care in America is
government spending. Why, despite their lip service to free markets,
have Republicans actually helped fuel the growth of socialized
medicine and erode what remains of free-market medicine in this
country?

Consider the basic factor that has driven the expansion of government
medicine in America.

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.
And Republican politicians--not daring to challenge the notion of
such a "right"--have, like Romney, Schwarzenegger and Bush, outdone
even the Democrats in expanding government 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.

So long as Republicans fail to challenge the concept of a "right" to
health care, their appeals to "market-based" solutions are worse than
empty words. They will continue to abet the Democrats' expansion of
government interference in medicine, right up to the dead end of a
completely socialized system.

By contrast, the rejection of the entitlement mentality in favor of a
proper conception of rights would provide the moral basis for real
and lasting solutions to our health care problems--for breaking the
regulatory chains stifling the medical industry; for lifting the
government incentives that created our dysfunctional, employer-based
insurance system; for inaugurating a gradual phase-out of all
government health care programs, especially Medicare and Medicaid;
and for restoring a true free market in medical care.

Such sweeping reforms would unleash the power of capitalism in the
medical industry. They would provide the freedom for entrepreneurs
motivated by profit to compete with each other to offer the best
quality medical services at the lowest prices, driving innovation and
bringing affordable medical care, once again, into the reach of all
Americans.

Yaron Brook is managing director of BH Equity Research and executive
director of the Ayn Rand Institute.

http://www.forbes.com/opinions/2008/01/08/health-republican-plans-
oped-cx_ybr_0108health.html