The GOP Purity Test: An Intellectual Failure

Realizing their party is in disarray and searching desperately for a way to offer value to voters, some members of the GOP are attempting to institute what pundits are calling a “purity test”. Hopeful Republican candidates will have to pass this purity test in order to receive support from the GOP. Were I a Republican, I would support this type of measure. The DNC certainly has its principles defined and is fighting hard for them. Granted, those principles are abhorrent as they stem from a collectivist ideology, but they are defined principles nonetheless (though, like all collectivists, Democrats rarely expound on the specifics of those principles). Unfortunately for Republicans, the GOP has not defined any principles whatsoever. The purity test is barely more than a cheap PR stunt. In addition to falling short of an improvement in the GOP’s strength, the purity test actually represents a step backwards. Let’s examine it further.

THEREFORE BE IT RESOLVED, that the Republican National Committee identifies ten (10) key public policy positions for the 2010 election cycle, which the Republican National Committee expects its public officials and candidates to support:

(1) We support smaller government, smaller national debt, lower deficits and lower taxes by opposing bills like Obama’s “stimulus” bill;

Supporting “smaller government” and “lower taxes” makes no principled statement. “Smaller” and “lower” are merely relative measurements. “Smaller government” compared to the Soviet Union? We already have that (though, quite possibly, not for long). “Lower taxes” compared to Europe? Hardly an accomplishment. A statement of principles would have been “We support the smallest government and lowest taxes possible to provide for the protection of individual rights.” To make matters worse, the GOP mentions a specific politician (President Obama) and specific legislation (the stimulus bill). If someone asked me my name, I would not answer with “I am not Fred”. What does it matter what I am not? A person or idea is never defined as a negative, as a negative cannot be proved. To base one’s identity on a negative is intellectual suicide.

(2) We support market-based health care reform and oppose Obama-style government run healthcare;

This statement faces the same problems as the statement above. The GOP is defining itself through a negative and failing to define any core principles. “Market-based” is not enough. The market must be held completely sacrosanct and freedom must be the rule, not the exception.

(3) We support market-based energy reforms by opposing cap and trade legislation;

Again, legislation is attacked rather than principles defended. This test will be outdated in a matter of months.

(4) We support workers’ right to secret ballot by opposing card check;

Much of the same, attacking specific issues rather than defining principles. This, however, falls far shorter of what is right than the second and third resolutions. The GOP should take a firm stance against unions and any other deadly obstacles to business. Why must corporations fear subjective anti-trust law while workers enjoy government-protected collusion in order to artificially raise labor prices, thereby destroying entire firms (GM and Chrysler being the primary examples)?

(5) We support legal immigration and assimilation into American society by opposing amnesty for illegal immigrants;

While I certainly support a liberal immigration policy and oppose amnesty for those who have broken our laws, Republicans frequently portray a high degree of ignorance in regards to this issue. Immigration policy should be liberalized, coupled with the dismantling of our welfare state. Furthermore, it should be recognized that immigration policy and border security are distinct issues.

(6) We support victory in Iraq and Afghanistan by supporting military-recommended troop surges;

(7) We support containment of Iran and North Korea, particularly effective action to eliminate their nuclear weapons threat;

As noted above, it is a mistake to focus on specific issues. A coherent policy on national defense should be defined. Preferably, this policy would be non-interventionist in nature, while obligating the U.S. government to counter any threat to American citizens with extreme prejudice. It should also be made clear that U.S. soldiers are also U.S. citizens and are to be valued over civilians of other countries.

(8) We support retention of the Defense of Marriage Act;

Not only is this wildly inconsistent with the first resolution, it is so out of line with the our founding principles that I consider it criminal. There is absolutely nothing within the bounds of reason that provide for government authority to decide who a person can marry. That this is even an issue in the United States is something to be ashamed of.

(9) We support protecting the lives of vulnerable persons by opposing health care rationing and denial of health care and government funding of abortion; and

Health care rationing would not be a problem in a completely private health care system. I would assume that “denial of health care” is referring to a host of “right to die” issues which are far too nuanced for this post. A private health care system would make the issue of government-funded abortions irrelevant.

(10) We support the right to keep and bear arms by opposing government restrictions on gun ownership;

This is fairly simple and I can’t find much fault with it. But I would note that no reason is given as to why the 2nd Amendment  is to be so fiercely protected. True, it’s part of the U.S. Constitution – but so was the 3/5ths Compromise, and I don’t see anyone fighting to bring that back. The right to keep and bear arms is a natural consequence of an individual’s right to his/her life. The right to your life naturally includes the right to defend your life. As governments have historically been the most serious threat to human life, and governments keep and bear arms, it follows that individuals should keep and bear arms as well

The absence of principles in this purity test is a symptom of the intellectual void in the GOP. Until Republican candidates can offer voters a value, instead of simply being non-Democrat or anti-Obama, they will continue their slow descent into nothingness. I only hope that a third party will gain enough support to challenge the rampant collectivist ideology in today’s politics.

Politicization of Health Care Reform

Donald Boudreaux‘s letter to the Baltimore Sun on the politicization of health-care reform:

You are right to decry the increasing politicization of health-care (”Medicine trumps politics,” Nov. 24).

But you are also unreasonable to do so.  Yours is among the most strident voices in support of Obamacare.  To demand more government-enforced and financed health-care arrangements and to decry the inevitable politics that arises in response to this government intervention is like demanding government-enforced and financed free love and decrying the inevitable resulting increase in unwanted pregnancies and STDs.

Sincerely,
Donald J. Boudreaux

An Interview with Dr. Walter E. Williams

Post has changed location. Click here to read this post.

Bill Clinton gets it wrong on health care

Former President Bill Clinton recently weighed in on the current proposal for health care reform. I’d like to break down his statement and point out some of the more glaring fundamental flaws in his thought process.

I basically said that I think it’s an economic imperative. We’re in an economic crisis, we’re trying to bring America back, and I have always been concerned that, you know, 16 percent of our people don’t have health insurance and 30 percent are without it at any given time during the year.

Our current economic predicament was caused by the thinking that “economic imperatives” exist for government. In order to bring America back, government needs to stand aside and do absolutely nothing. As for the figures regarding percentage of citizens without health insurance, I would like to point out two things. One: health insurance is not the same as health care. Two: even if some citizens lack health care, that does not create a moral imperative on the part of others to provide that care for them.

But the main thing, since we’re focused on the economy, is that we are spending 16.5 percent of our income on health care. The next most expensive country is Switzerland at 11.5. The next most expensive is Canada at 10.5. All of our competitors are between 9 and 10 percent. That means every year, it’s like we write a check to all of our economic competitors for $800 or $900 million. And they cover everybody — we only cover 84 percent, and we don’t get better outcomes. We get worse outcomes.

This would make sense, if a government-run health care system would decrease costs and increase quality of care. Unfortunately, there is no evidence that socialist health care systems maximize utility. It is also worth noting that this talk of writing checks to trading partners is evidence of a zero-sum economic mentality of the type that fosters protectionist policies.

So the point I tried to make is that this is an economic imperative. To just give you one example, before the economic collapse of Sept. 15, 2008, with the Lehman Brothers failure, median income after inflation in our country was $2,000 lower than it was the day I left office in 2001 — that’s back in the dark ages. I mean, we went through all those years, and one big reason is, after inflation, health care costs doubled.

Inflation: another problem caused primarily by government intervention in the economy.

So my argument was, this is an economic imperative as well as a health care imperative. Second thing is that on the policy, there is no perfect bill, because there are always unintended consequences. So there will be amendments to this effort, whatever they pass, next year and the year after and the year after. And there should be. It’s a big, complex, organic thing.

If a bill is not perfect in that it violates individual rights and involves government stepping outside its proper bounds, then it should never be passed. No societal progress is worth the cost of even one violation of individual freedom. It is “big, complex, organic” legislation (such as the programs of the New Deal) that shackle our economy and stunt our growth.

But the worst thing to do is nothing. That was my argument on the economics and on health care.

This single statement sums up the liberal/Keynesian economic philosophy. But no political rhetoric can change the fact that the very best thing a government can do for an economy is nothing.

Abortion Funding and ObamaCare

Michael F. Cannon of the Cato Institute puts the abortion/ObamaCare debate into context:

President Obama’s approach to health care reform — forcing taxpayers to subsidize health insurance for tens of millions of Americans — cannot not change the status quo on abortion.

Either those taxpayer dollars will fund abortions, or the restrictions necessary to prevent taxpayer funding will curtail access to private abortion coverage. There is no middle ground.

Thus both sides’ fears are justified. Both sides of the abortion debate are learning why government should not subsidize health care. Tip of the hat to President Obama for creating this teachable moment.

This is precisely why market mechanisms are nearly always more effective and more in line with individual rights than the government alternative. The political process requires unanimity – all for one and one for all. Whereas the market allows each individual to allocate his resources as he thinks best, leading to the greatest freedom and the greatest utility.

Author’s note: I am opposed to abortion for the same reason I so ardently favor capitalism – the sanctity of individual rights. But the purpose of this post is not to debate abortion, it is only to provide an example of the problems associated with any centrally planned scheme for the allocation of resources.

Lessons from RomneyCare

The failed Massachusetts health plan holds three key similarities with the current national health reform proposal: mandatory coverage, government controls over what coverage must include, and a “public option.” Paul Hsieh describes these similarities between ObamaCare and RomneyCare.

1) Massachusetts’ system of mandatory insurance both inflates costs and violates personal rights.

Under any system of mandatory insurance, the government must necessarily specify what constitutes an “acceptable” insurance plan. Hence, this creates a giant magnet for special interest groups seeking to have their pet benefits included in the required package.

Massachusetts residents are thus required to purchase benefits they may neither need nor want, such as in vitro fertilization, chiropractor services, and autism treatment — raising insurance costs for everyone to reward a few with sufficient political “pull.” In aggregate, such mandated benefits have increased the costs of health insurance in Massachusetts by up to 50%.

Mandatory insurance thus violates the individual’s right to spend his own money according to his judgment for his benefit. Instead, he much choose from a limited set of insurance plans on terms set by lobbyists and bureaucrats, rather than based on a rational assessment of his needs.

2) “Coverage” and “medical care” are not synonymous.

Supporters of the Massachusetts plan frequently claim that it is a success because 98% of the state’s residents are now “covered.” But this is misleading, because it conflates theoretical “coverage” with actual medical care. In fact, access to medical care has worsened for many Massachusetts residents.

Some patients in western Massachusetts must wait more than a year for a routine physical exam. Some desperate patients have even resorted to “group appointments,” where the doctor sees several patients at once (without the privacy necessary to allow the physician to remove the patient’s clothing and perform a proper physical exam).

Similarly, the average waiting time in Boston to see a specialist has increased to seven weeks. In contrast, waiting times in comparable cities in other states have been decreasing and now average three weeks.

Because the state-mandated health insurance is so expensive, the government must subsidize the costs for lower-income residents. In response, the state government has cut payments to doctors and hospitals. With such poor reimbursements, physicians have become increasingly reluctant to see new patients.

3) The Massachusetts plan will ultimately result in rationing.

Although supporters of the Massachusetts plan had hoped it would save money, the opposite has occurred. The state expects to spend $595 million more in 2009 on its health insurance program than it did in 2006 — a 42% increase.

In response, a special state commission has proposed controlling costs by radically restructuring how doctors and hospitals will be paid. Instead of paying providers based on the services they render, the state would pay a fixed annual fee to cover all of a patient’s medical needs. In theory, this would give providers an incentive to improve efficiency and eliminate unnecessary tests and treatments.

But in practice, this would also create a dangerous incentive for physicians and hospitals to render as little care as possible. Under the Massachusetts proposal, if your care costs less than your annual allotment, then the providers would keep the unused portion. If your care costs more, then the difference would come out of their pockets. Such a system thus pits your doctor’s interests against your own.

Those who don’t learn from the past are doomed to repeat it. The ash heap of history is piled high with the failures of men and government who sought to bring about prosperity through control rather than freedom.

In Defense of Health Insurance Discrimination

Don Watkins of the Ayn Rand Center’s Voices for Reason blog discusses the grave mistake of barring health insurers from discriminating.

…in actual fact, it is eliminating health insurance discrimination that is unfair. Forcing insurance companies to take all comers, and to charge all customers similar fees can accomplish only one thing: to force some health insurance customers (primarily the young and healthy) to subsidize other health insurance customers (the elderly and the sick). That’s not insurance–that’s welfare.

The overall effect of eliminating health insurance discrimination is to drive up the costs of health insurance. As the Wall Street Journal points out, states that currently prevent insurance discrimination through community rating and guaranteed issue rules have the most expensive individual insurance markets in the country.

We abhor racial discrimination, not because it is discrimination, but because race has no bearing on a person’s intellect or character. But when it comes to insurance, it is obviously relevant whether someone has pre-existing conditions, or is otherwise at greater risk to need medical care. That’s not to say that on a free market people at risk for disease would not be able to buy insurance. They would simply have to pay more than people without such risks.

Insurance is inherently discriminatory. An insurance company cannot function without assessing risk, charging greater fees for greater risks, and refusing to provide “insurance” to those for whom the outcome in question is certain. It is by carefully assessing risk and discriminating accordingly that insurance companies enable us to protect ourselves against some of life’s unknowns. That is a crucial benefit, and those who provide it should not be smeared, but thanked.

Reforming health care… for the worse

On Tuesday, Speaker Nancy Pelosi unveiled the House’s 1,990 page health reform bill. IBD reports on the negative reactions from ordinary citizens and their private health care providers alike.

We already know it contains an aggressive version of the government-run public option, and the 39 Blue Cross and Blue Shield companies warned after the Thursday unveiling of “devastating consequences.”

“Millions of people would lose their current private coverage they are happy with,” the companies warned. “In addition, the government will underpay providers — even if negotiated rates are initially used — creating major access issues, including long waits for services, with some providers closing their doors.”

The Blue Cross and Blue Shield Association also pointed out how any “government-run plan will use its built-in advantages — no matter how it is initially structured — to take over the market” through “price-setting based on Medicare” or by using “existing government programs as leverage for negotiations.”

A government option would also enjoy “many financial advantages right from the start, including an exemption from federal and state taxes and other assessments that private plans must pay, immunity from state lawsuits, as well as a host of other state rules and regulations.” Plus it will get “at least $2 billion in startup capital.”

The mere fact that Americans and their representatives only have 13 days to read this legislation before it is voted on should be enough to inspire a vehement outcry against it. Add on to this secrecy the unnatural invasion into citizens’ private lives by government and the devastating economic consequences, and you have a piece of legislation that is completely antithetical to the core principles of the American political system.

Public ‘Option’ is a Misnomer

Michael Tanner of the Cato Institute explains how the “public option” is actually anti-choice.

Cognitive dissonance is defined as holding two completely contradictory ideas at the same time.

That seems to be the case with the American public, with a new poll showing rising support for a so-called public option in health care, even as the public continues to oppose greater government control over the health care system.

Most likely that is because supporters of a public option have successfully framed it as just that: an option. That seems entirely reasonable. The American people believe in “choice” and “competition.” So why not allow another choice? Most Americans would keep the insurance they have today (and are happy with), but those who wanted to join the government plan could do so.

But that’s not the way it would actually work.

A government-run plan would have an inherent advantage in the marketplace, because it ultimately would be subsidized by taxpayers. The government plan could keep its premiums artificially low or offer extra benefits, because it could turn to taxpayers to cover any shortfalls. At the very least, the program carries with it an implicit guarantee against future losses. Would a Congress that has bailed out banks and automobile companies because they are “too big to fail” resist subsidizing the government’s insurance plan if it began to lose money?

Even without direct subsidies, the government could prevent the true cost of the program from showing up in premium prices in myriad ways. For example, the government-run plan will not have to pay state or federal taxes, and unlike private insurance plans, who can be sued in state courts, the government-run plan could only be sued in federal court.

Government plans such as Medicare and Medicaid traditionally reimburse providers at rates considerably lower than those of private insurance. Providers recoup the lost income by shifting costs onto those with private insurance. Indeed, it is estimated that privately insured patients pay $89 billion annually in additional insurance costs because of cost-shifting from government programs. If one assumes that the new public option has similar reimbursement policies, it would both allow the public plan to keep its own premiums artificially low while simultaneously increasing costs and, therefore, premium prices for private insurance.

All of this means that the government-run plan would be significantly cheaper than private insurance, not because it would out-compete private insurance or because it was more efficient, but because it had unfair advantages. Businesses, in particular, would have every incentive to dump their workers into the government plan.

In the end, the private insurance market would be eviscerated, leaving millions of Americans with no choice but the government-run program. No choice. No competition. We would effectively be on the road to a single-payer health care system, with the government in complete control of one-sixth of the U.S. health care system and some of the most important, personal, and private decisions in our lives. Down that road lie massive new taxes, huge budget deficits, and ultimately government rationing of care.

The public option is a sure-fire method to initiate a government monopoly over health care. Government enterprises never function as efficiently as the private sector. Whenever competition is allowed to flourish, societal welfare increases. But because government cannot compete with the private sector, we see government monopolies implemented under the guise of the “common good” (an absurd concept in and of itself). These government monopolies typically have one aim: control–and ObamaCare is no exception.

Why ObamaCare May Die

It took centuries of intellectual, philosophical development to achieve political freedom. It was a long struggle, stretching from Aristotle to John Locke to the Founding Fathers. The system they established was not based on unlimited majority but on its opposite: on individual rights, which were not to be alienated by majority vote or minority plotting. The individual was not left at the mercy of his neighbors or his leaders: the Constitutional system of checks and balances was scientifically devised to protect him from both. This was the great American achievement…

- Ayn Rand

Sadly, our current executive and legislative leadership is not acting in the best interest of the individual, but in the interests of various groups. The silver lining is that their juggling act may be collapsing. Michael F. Cannon, Director of Health Policy Studies at The Cato Institute, has a blog post on how the Democrats’ various constituencies are becoming plainly at odds – and why this friction could ultimately be ObamaCare’s doom.

The Left and the health care industry both want universal health insurance coverage.  The industry, because universal coverage means massive new government subsidies. The Left, because that’s their religion.

But universal coverage is so expensive that Congress can’t get there without taxing Democrats.

• Sen. Jay Rockefeller (D-WV) is the biggest opponent of Sen. Max Baucus’ (D-MT) tax on expensive health plans because that tax would hit West Virginia coal miners.
• Unions vigorously oppose that tax because it would hit their members.
• Moderate Democrats in the House oppose Rep. Charlie Rangel’s (D-NY) supposed “millionaires surtax” because they know it would hit small businesses in their districts.

And on and on…

But if congressional leaders pare back those taxes, they lose the support of the health care industry, which wants its subsidies.

• That’s why the health insurance lobby funded this PriceWaterhouseCoopers study saying that premiums would rise under the Baucus bill: the $500 billion bailout they would receive isn’t enough.  They also want – they demand –  steep taxes on Americans who don’t buy their products.
• The drug companies, the hospitals, and the physician groups are likewise demanding big subsidies, and will run ads to kill the whole effort if those subsidies aren’t big enough.

As always, health economist Uwe Reinhardt put it colorfully:

“It’s no different from Iraq with all the different tribes…‘How does it affect the money flow to my interest group?’  They are all sitting in the woods with their machine guns, waiting to shoot.”

Once the shooting starts, industry opposition will sway even Democratic members, because there are physicians and hospitals and employers and insurance-industry employees in every state and congressional district.

Can President Obama and the congressional leadership satisfy both groups?  My guess is, probably not, and this misguided effort at “reform” will therefore die.  Again.

President Obama’s Keynesian economic policies and programs attempt to defy reality by evading the law of causality. As with all collectivist societies, however, we will be visited by reality’s judgment and learn the hard way that empty rhetoric and false promises will never replace innovation and production as tools of economic prosperity.

HT: Club for Growth