Bailey Squishes on Health Mandates

Recently I had the opportunity to meet the charming and well-read Ron Bailey of Reason magazine. We briefly discussed his 2004 article that advocates an individual mandate for health insurance. While Bailey does some great work for Reason, he is completely wrong on the matter of health mandates. While his article is dated by magazine standards, the issue is very much alive; for example, the somewhat market-friendly Rocky Mountain News just endorsed mandates this past weekend. So, in refuting Bailey’s case for mandates, I mean to discredit mandates generally (though of course my comments here are limited in scope).

Bailey makes three broad mistakes.

First, Bailey commits what I’ll call the “Wonk’s Fallacy.” That is, he concocts the best possible policy to implement a mandate, but he ignores or peers past the real-world political process, which is dominated by ideological politicians (usually with redistributionist sentiments), high-priced lobbyists, special-interest groups, and accidents common to sausage-grinding.

The Rocky does the same thing. It editorializes:

Two aspects of SB 217 give us pause. First, it includes an individual mandate, requiring every uninsured Coloradan who is not enrolled in a government program to purchase coverage. But we can live with this so long as value benefit plans are indeed viable and available at modest costs.

That’s a bit like saying one can live with socialism, so long as it is a “viable” sort of socialism.

In the real world, policies are subject to political manipulation and unintended consequences. For example, Paul Hsieh, a Colorado doctor, has compiled various stories about the problems with the Massachusetts plan, which, as a combination of mandates and expanded welfare, is in some ways similar to the plan proposed for Colorado. Moreover, as Michael Tanner pointed out during his recent trip to Colorado, mandates are in fact continually subject to special-interest group pressure to expand the scope of what’s mandated.

Bailey’s second major error is more fundamental. His case for mandates explicitly rests on the forcible redistribution of wealth as an allegedly unalterable political “fact.” And his case implicitly grants that it is the state’s responsibility to ensure that people obtain health care. Once that case is granted, the free-market position is lost. Completely socialized medicine is inevitable, until and unless somebody effectively makes a principled case for liberty in medicine. (Thankfully, Hsieh, writing with Lin Zinser, has made just such a case, but it remains to be seen whether their efforts can overcome the widespread capitulation by the sunshine friends of liberty.)

In order to keep us off the fast road to socialized medicine, Bailey has placed us on the slow road to socialized medicine.

Bailey’s third main problem is that, by pushing mandates, he de-emphasizes the true cause of existing problems in modern medicine: decades of political interventions. The reason that health care is a problem today is that it has already been largely socialized. For details, see the article by Zinser and Hsieh. To make insurance more available, what politicians can and should do is remove the political controls that have made health insurance too expensive for many people to afford.

Now that I’ve summarized the major issues, I’ll go through some of Bailey’s specific points.

Bailey begins his article by quoting a poll showing that “62 percent of the respondents favored a universal, government-run medical insurance program.” I don’t know what the polling would show today. But such polls are irrelevant for deciding which policies are, in fact, based on individual rights and which would therefore achieve good medicine in practice. It is the job of friends of the market to move public opinion, not sell out their principles to it. Moreover, very often people’s opinions are “soft,” in that people can be swayed by solid arguments. Unfortunately, Bailey’s approach is more likely to move public opinion even further in the direction of socialized medicine.

Bailey writes, “[T]he increasingly successful campaigns to privatize Social Security and expand school vouchers suggest a way out: mandatory private health insurance.”

I have no wish to reiterate my case against so-called “privatized” Social Security here. But I will point out that, when the government forces you to buy something and therefore tightly controls what it is you can buy, the product is in a fundamental sense not “private.” Similarly, if the government forced parents to pay for schools of the government’s choice, those schools would not be “private.” When the government forces you to buy investments, insurance, education, or whatever, those items are not “private” in the sense of existing in a free market. They are merely socialized by another means. In common libertarian parlance, such government controls are counted as fascistic rather than as communistic, with socialism remaining the broader category.

Bailey then conducts a very interesting discussion of the problems in medicine and part of the history of political controls. Bailey also notes that one reason that health care has become more expensive is that doctors can do so much more to help people:

As William B. Schwartz, a professor of medicine at the University of Southern California, notes in his 1998 book Life Without Disease: The Pursuit of Medical Utopia, “In 1950 costs of health care were remarkably low, because, for a large percentage of patients, doctors really couldn’t do much. People spent relatively little on health care (only 4.4 percent of gross domestic product) and got what they paid for — very few useful diagnostic tests or effective treatments.” In 1950 there were no polio, measles, or hepatitis vaccines; no open heart surgeries or pacemakers; no organ transplants; few cancer chemotherapy agents; no MRI or CAT scans; and no drugs for ulcers, high blood pressure, or arthritis.

Bailey also explains the fundamental problem with employer-paid insurance, which is the direct result of tax distortions: “‘Everybody thinks they’re spending somebody’s else’s money,’ explains Robert Helms, a health care scholar at the American Enterprise Institute.”

Bailey laments, “Unfortunately, there is no prominent political or intellectual figure on the national scene offering a comprehensive free-market alternative to socialized medicine.”

Well, no, political figures tend not to advocate free-market alternatives when the self-proclaimed advocates of free markets themselves endorse socialism. Yet, in Colorado, a very small coalition has been successful at making real free-market reforms a noticeable part of the public debate. Had Bailey fought for liberty rather than for socialism in 2004, today free markets would have had a better chance. Instead, today we have to waste our time fighting our “allies.”

Bailey offers his main case for mandates:

Why not just tell Americans they are responsible for buying their own health insurance from now on? If people couldn’t pay for medical care, either through insurance or out of pocket, they wouldn’t get it. “After people begin to notice the growing pile of bodies by emergency room entrances,” Tom Miller wryly suggests, “they will quickly get the message and go get medical coverage.”

But that’s not going to happen, says Mark Pauly, a health care economist at the University of Pennsylvania’s Wharton business school. “Americans don’t want to see their neighbor dying bleeding in the street,” he says. …

Since it’s unlikely that Americans will allow their improvident neighbors to expire without medical care in the streets, is there a politically palatable alternative that can preserve and expand private medicine in the United States? Yes: mandatory private health insurance.

There are two main problems with Bailey’s analysis. First, the options are not binary: either pay or don’t pay at the time of service. A third option is to require people who get care to pay for it over time. Second, Bailey here completely ignores the legitimate role of voluntary charity, which can come from health-care providers as well as from individual donors and organizations. Notably, voluntary charity is much more likely to discriminate between the moochers and the truly needy and thus to encourage independence rather than dependence.

Bailey discusses health-savings accounts, shifting away from the employer-pay system, and “privatizing” Medicaid and Medicare, but those reforms are not and should not be tied to mandates.

Bailey closes, “The proposal for mandatory health insurance offers a way to maintain our private system, expand consumer choice, lower costs, and allow medical progress to continue.” Bailey’s claim is exactly wrong: the proposal for mandatory health insurance undermines liberty in medicine and paves the road to socialized medicine.

If we value our health and our freedom, what we need is liberty in medicine — and allies wiling to advocate liberty rather than statism masquerading as privatization.