Tanner Defends Liberty in Medicine

Michael Tanner of the Cato Institute spoke at the Independence Institute March 6 about health policy. (He is shown with Lin Zinser of Freedom and Individual Rights in Medicine and Brian Schwartz.)

The bulk of Tanner’s speech (around 37 minutes) is available here in mp3 format.

Tanner began by noting that the U.S. has the best health care in the world, despite its problems. While life span is not an appropriate basis for comparison because many other important factors impact it, the U.S. performs well in terms of outcomes for diseases.

While some complain that the U.S. spends “too much” for health care, Tanner noted that reducing costs is not an end in itself. “It’s very cheap not to provide health care,” he said. The problem is that American health care often is not subject to market pricing.

Another problem is that “too many people… are uninsured.” However, Tanner added, often-cited measures of the problem are misleading. Because insurance is tied to employment, people often lose their insurance for a short time as they change jobs.

Tanner then reviewed harmful policies and proposals in Britain, Canada, and the U.S., such as the attempt by some to force employers to provide insurance for all employees. That proposal “flunks Econ 101,” Tanner said, because it would reduce wages elsewhere and/or result in more unemployment.

What about forcing individuals to purchase insurance? Tanner noted the real costs of forcing emergency rooms to treat people without compensation. (Tanner did not suggest any change to that policy, though I have argued against it.) However, Tanner noted, such costs account for only around 2.5 to 4 percent of health-care spending, rendering them “somewhat manageable.”

The problems of insurance mandates, on the other hand, would be severe. Such insurance would be subject to political rules; people would no longer be free to purchase the insurance they wanted. Insurance mandates are difficult to enforce, and it’s impossible to force everyone to buy insurance. Mandated insurance is subject to continual pressure by interest groups to expand coverage, which expands costs and leads to limits on care.

Tanner said that the most important reforms must take place at the federal level, particularly regarding the tax code that entrenches expensive, employer-paid insurance. At the state level, the cost of insurance can be reduced by eliminating various mandates.

The key question, Tanner said, is this: “Do you decide, or does someone else decide for you?”