I picked this up from Hotair, and in my opinion this is why Romney has no chance in 2012, and why I’m glad he didn’t get the nomination in 2008. Don’t claim to be a free market conservative when you implemented one of the country’s only state run health insurance programs that is now blowing up in their face. Now he’s claiming it wasn’t meant to bring down cost. Well, if you were a free market guy, you would have realized providing insurance to all only drives up costs, and the costs are what make complain about health care.

This election I will have a litmus test. Do you believe in the free market, as in no government intervention at all, or do you believe government should intervene and so called protect “the people”. If you answer the latter, you don’t know what the free market is, and you lost my vote. Hopefully other free market folks will do the same.

Hot Air » Blog Archive » Video: RomneyCare was never about lowering costs, says Mitt.

In a her column today, Ann Coutler explains why the parts of health care that aren’t covered by many insurance plans are the ones providing faster service, declining prices and more innovation.

She also explains how health insurance and the mess that has ensued from it was created by guess who? The Government. Great read. Check it out.

http://www.pittsburghlive.com/x/pittsburghtrib/opinion/s_650562.html

Apparently, one of the tweeps I was debating on Twitter was so hot and bothered by my blog, he thought he would set me straight. The problem for him is when debating, feelings don’t count and distortions are against the rules. Here is the criticism with my response and corrections interspersed.

The other day I had an interesting back and forth on Twitter about healthcare. The debate was whether to let the free market have its way or whether the Federal government should have a stronger hand in a “Medicare Part E” plan for everyone. At the end of the discussion I was pointed to an article on Jason’s The Proud Profiteer website entitled Health Care Reform – The red herring of the pre-existing condition. I read every word of the article and have some thoughts about the free market as it exists today and where I think the author is wrong about where we should go.

Wow, the author couldn’t even get out of the first paragraph without showing the weakness of his argument. Saying “some thoughts about the free market as it exists today” shows the the author doesn’t understand the free market. I was not arguing for the status quo. I was arguing the problem with the current health care isn’t a lack of government meddling but too much government. The government currently accounts for 50% of all health care spending. If government was the solutions, we would have already seen improvements. The fact that health care costs have risen above inflation since the government inserted itself into the market shows the government actually makes the problem worse. It also proves that the problem isn’t the free market. The problem is you don’t have a free market. As soon as you introduce government coercion, you no longer have a free market. It is no different than if the government took away you freedom of speech. You technically are still free, but you are less free than you were.

I’m all for freedom and principles in this country. The author is correct in pointing out that the country was founded on the freedom and the need to get away from tyranny, taxes and religious persecution. Now the drumbeat throughout certain people in this country is that free markets and freedom will be the pill that will cure the country’s ills. Just get government out of the way of everything but defense and we will be a better place for it. Make it “small enough to drown in a bathtub,” to coin a phrase used by one of our most memorable politicians.

One of the ways we applied these principles was to allow mortgage companies, insurance giants and auto makers to, as the author says it, be free to succeed or fail. They’re good at what they do, so why not turn them loose to thrive and then we can all benefit at their success. So how do you explain the story of Goldman Sachs, AIG and the Freddie/Fannie debacles? Weren’t these companies free to pursue their own fortunes? And what would’ve happened if they were allowed to just fail? I guess those that would’ve allowed the complete meltdown wouldn’t mind what is happening in their free market 401(k).

Surely, this part had to be a joke. The author, if he has any understanding of the free market, would not have used the examples above to discredit the free market. The entire mortgage crisis was created and encouraged by the very government that the author claims is the solution. The artificially low interest rates by the Fed spurred on by affordable housing legislation and pressures caused the bubble, and it was only a matter of time before it burst. While the author may think he had me nailed here, people that know me, know that I predicted this bubble was going to go down very soon at the height of the housing bubble. The thing is if you understand economics, you can recognize business growth from bullshit.  This disaster was the culprit for the so called failed examples above. Freddie and Fannie are government sponsored agencies for pete’s sake. They are told what to do by the government and they are the ones who invented the securitization of mortgages that the evil banks were selling.

“But we should still get out of the health insurance company’ way,” you say. “Once they have complete freedom they’ll offer a virtual cornucopia of health insurance options that every thirst will be slaked. You’ll see that there will be lots of companies and options.” If you Google health insurance company monopoly, you will quickly discover that for several years large companies have had a lock on providing health care for people. If we get out of the way, what do the Blues, Aetna and the rest do? Do they allow rigorous competition and thousands of new companies to spring up? I think they either buy up those companies to stifle competition or squash them. I was told in the Twitter conversation that we should force these companies to compete with each other. So which is it – get out of their way with no regulation or force them to compete?

Hmm, not sure who said you have to force competition. It sure wasn’t me. My whole point in my post was that force is the evil. The role of the government is to prevent force from being used by one person against another. If you are tying in another conversation you had, don’t credit it to me. As far as your argument, again you are talking about a market that is not free. Companies cannot acquire a monopoly and stifle competition unless they have government backing, or they are the absolute best at what they do. If they are a monopoly because they are the best at what they do, then we all benefit.

The fact that health care and insurance are so heavily regulated now is what prevents many competitors. What you don’t seem to realize is regulation equals costs. When you have extensive regulation the costs get so high that they are a barrier to entry and only the big boys can afford to play the game. Don’t blame the free market for lack of competition. Your argument is easily disproved by looking at less regulated industries, such as the IT industry. The less regulation you have the more innovation, the more competition, and the quicker you see costs driven down.

If government is our own worst enemy as the author’s comments point out, why not just get rid of everything? Courts – who needs them? You’ve gotta beef with someone, handle it yourself and if you don’t get anywhere, kick the person’s ass or kill them. If one of those purely good companies make a product that turns out to seriously injure or kill people and you’re one of the poor schmucks that gets hurt or killed, tough luck bud. Like I just said, take a truck of Anthro and fuel and have at it.

Police and fire – we don’t need them, right? I’m sure there’s a security company that would be glad to give you your own security detail cause it’ll “fill a need.” Don’t have enough money to hire a security agency? Deal with it. There’s lots of crime victims out there. Go find the turkey yourself and dispense justice.  The 911 system is a socialist, government run system – get rid of that too. You’re having a heart attack, stroke? Get someone to put you in their car and drive you to the doctor. We don’t need no stinkin’ government run ambulances and medical staff. Hire some doctors and paramedics to stand by if you think you’ll need them.

Like you all say, for every need there’s someone to fit the bill at competitive rates, and since we’ll all be SO much more profitable when everyone gets out of free market’s way, we’ll be able to afford all these new things, right?

“But these are all ESSENTIAL government services,” you say. “You can’t take that away!” You know what, here’s where I want you to draw the line. Black & white. Think of all the things that you might need in life. Tell me why you would keep or privatize them. Then tell me why health care is not as important as 911, police, fire & paramedics. Why would you want to keep 911 as a government service but leave health care – the ability to live or die – as a FOR PROFIT endeavor.

Here is where you take my arguments and just completely distort everything. My argument is governments role is to prevent coercion. Now where does that say get rid of the courts? Where do you think government would enforce laws against coercion? Where do you think contract breaches would be adjudicated? Again, you take my argument and add a bunch of your own ridiculous arguments to it. Where did I say handle it yourself, kill people, etc? I’m pretty sure that would be included in the coercion I said the government should prevent, which is the whole point of founding a government. Your argument is very childish.

This police argument is not new. You haven’t had a brilliant brain fart. This is the typical response from socialists. The problem is police are a part of the government role to prevent coercion. What the hell do you think police do? As far as fire, in most communities the fire department is funded by charity. They hold fund raisers, and the fireman are volunteers. Apparently, you think that is socialism? In cities, this could be privatized, and it would probably be cheaper than paying your taxes. It would be no different than paying for security monitoring on your house. I’m not sure if you’ve read a newspaper lately, but there are many “government” services, such as trash collection being privatized. Do you think it’s being privatized because it’s worse?

Lastly, even if you leave these as government roles, which I personally don’t have a problem with, they are not federal programs. Apparently, you don’t seem to recognize the difference between local services provided and agreed upon by local citizens, paid for by their local taxes with Federal entitlement programs.

If you can’t afford heath insurance, Jason says that you’ll have to turn to charity. Leukemia and unemployed – charity. Stroke leaving you the inability to walk, speak or do your job – charity. Born with cerebral palsy or autism and your parents or unemployed/underemployed – charity. Jason, do me a favor, a little experiment. Take you & your son down to a doctor’s office you’ve never been to before. Tell the receptionist that you’re out of work and need your child seen for whatever – you name the illness. After they get done telling you to pay cash or you don’t get seen, take the amount of money the doctors wants you to shell out and start calling some churches. Give them the same story and tell them that you’ll probably need that same amount of money each month since your child might need special ongoing treatment. When you find the charity that’ll dole out that money month after month, let me know. The difference in your opening paragraphs – each of these families you mention probably has at least ONE working member in the household providing pay for health insurance. If I’m wrong, tell me how they’re handling things on charity.

To start, I said in my blogs that you should pay out of pocket for day to day care, and you should buy a low cost catastrophic insurance plan for things, such as the ones mentioned above. The purpose for insurance is to be there for catastrophe. Again, you distort my argument.

Second, I can guarantee you I have way more experience dealing with health care than you do. My son does have cerebral palsy, and while you and Obama discredit doctors as profit seeking devils, I’ve seen first hand the charity of doctors. Doctors don’t go through 8 years of schooling followed by years of residency because of the money. It’s a calling, and they do it to help people. Most of them already do charity. Also, charities already help people every day. You many want to check them out. Most liberals claim to love charity, but it’s usually only the charity from someone else’s pocket via goverment coercion. Who do you think fled down to New Orleans after Katrina? It was the charities on the front lines getting the hard work done, while the government, as usual, stumbled and caused more harm than good.

In addition, my argument talked about charitable donations exploding because of more money remaining in the pockets of citizens. Do you think a rich guy who’s kid died from leukemia, wouldn’t setup a foundation to research and help other parents with children who have leukemia? Where do you think charitable foundations come from? Have you ever heard of Shriners? I’m pretty sure they offer health care and are a charity. How about this report, that charitable donations reached a record in 2007 under the Bush tax cuts. Oh, and that doesn’t even take into account time and labor. You may want to give your fellow man a little more credit.

When I’m buying a car or a toaster, I want free market competition. I want the government to stay out of the way UNLESS what those kind folks are selling is hurting people. When I’m having a heart attack or stroke, I want an ambulance and crew to show up as quickly as possible and save me life! I don’t want to have to think if I paid my premiums that month or that some FOR PROFIT company “with my best interest in mind” will deny me life saving treatment.

How does a publicly traded company, beholden to its stockholders and profits, have my best interest in mind? If I’m a stockholder that’s easy. If you’re a CEO with complete free market freedoms, how do you take care of people with serious medical problems and still make your bottom line? How would Ford survive as a company if most of the vehicle they sold were Pintos or some other high maintenance vehicle? What incentives and marketing schemes would they contrive to make it profitable?

via RIAsults may vary: Health Care Reform – The AIG, Freddie & GM pill. Take two of these and don’t call me in the morning.

You final argument just demonizes businesses. It’s silly to act like business people are evil, and that some how government people are angels. You may want to challenge your assumptions. Government employees and especially politicians have their self interest in mind as well, and it is more often than not detrimental to the public good. Private capital is rewarded by efficiency, which means it addresses the most needs at the least cost. That is why you can buy your toaster so cheap. This does not take place in government. In government, politics and inefficiency are rewarded, resulting in less needs being met.

While I appreciate the time you took to respond and I enjoy the debate, I really wish you would keep your arguments away from your feelings and would not distort my arguments. We are talking about a gigantic issue, and we cannot make this decision on feelings. We have to make it on reason. Just because you get a warm feeling in your belly when you talking about everyone having health care doesn’t make it so. You may want to read my other blogs on health care, where I talk about what the real problems with health care are and why government intervention will only make things worse. Then again, I’m sure that doesn’t feel good.

During this health care debate, I’ve argued many times that any government program comes at the price of your freedom. While the government supposedly can’t take away your rights as they are re-established in our Constitution, they can suppress those rights through coercing you to voluntarily give them up. They already do this with large portions of the population that rely on the government dole for their daily sustenance. How do you get the rest of society? Slowly you work toward one large government program that can be used as a carrot against the citizenry. What is that carrot? It would obviously be health care, the one program that can decide life and death matters.

“So what are you getting at here Mr. Profiteer?” By holding the carrot, the government can make you voluntarily give up your rights. If you tried saying that taking away your freedom of speech or your right to bare arms is unconstitutional, the government’s retort would be that it’s optional. You do not have to take government health care. You can forgo it. How do you forgo it when the private insurance has been decimated by trying to compete with the government’s ability to print its own money? On top of that, how do you pay for your own health care out of pocket when eventually physicians will be highly regulated and costs will be driven up so dramatically because of regulation and rationing?

Think this is a crazy scenario? How about you Mr. Frank with The Wall Street Journal? One simply need to read about what the CDC is looking into to see how quickly we may be chasing after carrots.

Take the Obama administration’s justification for its new gun research. “Gun-related violence is a public health problem – it diverts considerable health care resources away from other problems and, therefore, is of interest to NIH,” wrote the agency spokesman in an e-mail responding to questions from Republican members of Congress about new grants the CDC is giving out. The statement assumes the conclusion of the research before the first study is done.

The research on right-to-carry laws illustrates the problem with the CDC. Dozens of refereed academic studies by economists and criminologists using national data have been published in journals. While the vast majority of those studies find that right-to-carry laws save lives and reduce harm to victims, some studies claim that the laws have no statistically significant effect. But most tellingly, there is not a single published refereed academic study by a criminologist or economist showing a bad effect from these laws.

via EDITORIAL: The feds take a shot at guns – Washington Times.

Scary stuff? Public health can be played against any issue. Your speech could be a public health problem if the government claimed you were inciting violence. Hmm, how would they do that?

Mr. Frank can call me paranoid all he wants. Paranoia has kept us free for as long as we have been.

How do you get health care reform, which will harm doctors, patients, health related companies and all tax payers? Simple. You lie, cheat, steal, and if need be, you bang some heads. That is exactly what the Obama administration and congressional democrats are doing. Today’s Wall Street Journal highlights just one such scam being employed to get the support of the American Medical Association.

President Obama has made serial promises that he will not sign a health-care bill that “adds one dime to our deficits, either now or in the future, period.” This was never plausible, but now we can begin to understand what he meant: Democrats plan to make ObamaCare “deficit-neutral” by moving nearly a quarter-trillion dollars off the books, in the fiscal deception of the century.

Later this week, or maybe next, Senate Democrats plan to vote on a stand-alone bill that strips a formula that automatically cuts Medicare physician payments out of “comprehensive” health reform. Rather than include the pricey $247 billion plan known on Capitol Hill as the “doc fix” as part of ObamaCare, they’ll instead make this a separate contribution to the deficit, without compensating tax increases or spending cuts. Majority Leader Harry Reid explained at a press conference last week that “All we’re doing is wiping the slate clean by adjusting the baseline to what is current policy. This is not new policy.”

Wiping the slate is right.

It’s true that Congress likes to pretend that the “sustainable growth rate,” or SGR, is real. Created in 1997, the SGR slashes Medicare reimbursements if costs rise too steeply, as they always do. In January, doctors fees are scheduled to fall by 21.5%, and 40% over the next five years. That would force many doctors to stop seeing Medicare patients, so Congress intervenes every year and temporarily overrides the cuts.

The American Medical Association’s asking price for supporting ObamaCare is scrapping the SGR. House Democrats did just that, but it pushed the total cost of their bill above $1 trillion, a political red line. The Senate Finance Committee chose the subterfuge of fixing the problem for only one year, which is how Chairman Max Baucus could claim he had done the miracle-work of designing an entitlement that reduces the deficit over 10 years. The AMA wasn’t pacified.

So now Democrats are simply going to “untether” this spending on doctors from ObamaCare, hiding even more of its true costs. At a meeting on the Hill last week, Mr. Reid and White House Chief of Staff Rahm Emanuel made the quid pro quo explicit, telling the AMA and about a dozen specialty societies that in return for this dispensation they expect them to back ObamaCare, no questions asked.

via Democrats Plan to Strip Sustainable Growth Rate Formula from Health-Care Reform – WSJ.com.

Already the Democrats are gathering support from horrible Big Pharma, Big Insurance, and now they are twisting arms to get Big Docs. We all know how evil these groups are, while the government is so virtuous and compassionate. Why would these groups that are going to be harmed by health care reform decide to back it? Is it because it’s what’s best for America? We are told that Big Pharma and Insurance are so evil and too many doctors would cut off  your left leg just to make a buck, but then when they back Obama all the sudden we are supposed to say, “Oh, well if they are backing it, it must be a fabulous idea.” Either they are evil, or they are not, Obama.

So to see who is evil, let’s just see who is pulling the fast one. In the article above, the government currently has a policy of slashing medicare payments to doctors if medicare costs rise too quickly. As we’ve discussed in previous posts, costs always rise “too quickly”, because government money floods the market driving up demand and third party payer hides price signals from the consumer. Also, “too quickly” is an arbitrary measure based on medicare budgeting. It has nothing to do with a what is really happening economically.

Anyways, in the end doctors are going to have their reimbursements cut yearly as costs exceed bureaucratic expectations. If you are a doctor, how many times are you going to let the government put the screws to you before you stop treating medicare patients? Then what happens when doctors begin dropping medicare patients? Well, we’ve already discussed that cost or price is effected by supply and demand. Even if demand stayed the same, which it won’t because this is a new expansion of medicare, supply is going to be cut. Doctors will be dropping out, leaving less doctors and choices for patients on the government’s dole. Oh, and guess what. With the decrease in supply, guess what happens. You guessed it, costs increase. Hmm, what did the government say they would do if costs increase above expectations? Oh yeah, they would cut reimbursement rates, leading to a circular decline of medical care.

“Hold up buddy. The article above says they are scrapping that.” Oh, that’s right. In a bargain with the devil, the AMA is going to support this if congress drops the SGR. Does dropping it fix the budgetary problems? No it doesn’t, and as soon as the budget ceiling explodes, you will hear how evil the doctors are again. Congress, like the decievers they are, will undoubtedly renege on their agreement with the AMA and re-instate the SGR.

There is nothing good about the government involvement in health care. It’s making a deal with the devil expecting him to uphold his end of the bargain. The problem is once the devil has gained control of your life, it takes an act of God to get him out.

Over the past week, I’ve been writing about how the free market is the best solution to health care reform. I also argued that the best way to fix health care is to get rid of third party payer, typically employers, from the health insurance purchase. The second fix was to get rid of third party payer for day to day medical expenses. For some reason, despite the fact that the market delivers food to you to survive, Americans think the market without the government involvement would not provide the insurance and medical solutions needed.

Now I’ve already argued that they would. Examples like walk-in health clinics, $4 prescriptions, and HSAs abound. The biggest fear for most people though is the pre-existing conditions and finding health insurance. I’ve exclaimed and still do that the market will address this need, because that is what the market does. It addresses needs.

The change that would help propel the creation of new insurance products is the consumer of the insurance actually purchasing the insurance. When we purchase goods and services for ourselves, we seek out the goods and services that address our needs effectively at the best possible price. This shopping will create a educated consumers and will generate competition among the providers of insurance and medical services.

Today while doing my bills, my mortgage company sent me this offer: “You can now get $100,000 of accident hospitalization insurance coverage for one full year for free.” Wow, free. Let’s take a look at the fine print. First, let’s make it clear this coverage is for accidental hospitalization. It is not for going to get your flu shot, which as we said before should be paid our of pocket. If our real concern is making sure we do not go bankrupt in the event of an unplanned disaster, surely a plan that covers accidents would be on the top of our list. So, this plan covers hospital stays and emergeny treatments. It even has an option to add your family and include doctors visits. Doctors visits are limited to one per month with a lifetime limit of 60 visits. Wow, I can probably count on one hand how many times I’ve been to the doctors in the past 20 years.

This plan is not total coverage, but it does address a need, accidental coverage. There are exclusions to this plan. The accident cannot be the result of drinking, drugs, committing a felony, flying a plane, war, accidents outside the US, etc. By limiting their exposure, they are able to offer a reasonable amount of coverage for a very low price. How much is this plan? After the free period, it goes up to $9.95/month. To add doctors visits, its $13.95/month, and for a family it’s $19.95/month.

So what does it say about pre-existing conditions? “All eligible customers who complete and return the Activation Form will be accepted. There are no medical questions or physical examinations required for enrollment.” Sounds pretty good for pre-existing conditions to me.

Now, I am not saying this plan here is the answer. It does not cover all scenarios. It’s for accidents. It does not cover cancer, heart attacks, or diseases. I think we could all agree, how could it at $9.95/month? What this highlights though is companies including your home mortgage company will offer solutions. When you are shopping for your own insurance, you will make good decisions to address your own personal needs. You will not be pigeon holed into a plan that doesn’t apply to you because a co-worker has different needs. You also will not go without options. The market is where options are created, and the government is where options are few and usually all bad.

Earlier this week, I posted a two part series on how to fix the health care crisis. The solution was to get rid of third party payer in respect to the purchase of health care and insurance. Immediately, I got and was glad to have received the red herring question of the pre-existing condition.

Let me start off by saying, that I have a child with special needs. My 9 year old son has cerebral palsy and has gone through years of physical therapy and occupational therapy to be able to walk on his own. He still wears braces on his legs. In additions, my niece has a severe case of autism, so bad that she is fed through a feeding tube. I say this because I know personally what parents have to deal with when it comes to pre-existing conditions.

With that said, free markets and freedom in general are principles on which this country was founded. Principles are meant to be applied in all circumstances, because they prevent us for choosing the wrong path. Our founders knew this. It is by veering off these principles that we are in the mess we are in now. Just because there is a hard issue to be addressed, doesn’t mean we throw away our principles. We don’t teach our children principles to guide them through life, just to have them toss them aside at the first circumstance that challenges their principles. Principles are meant for the hard issues. The are not meant for the easy issues.

“OK buddy. Enough preaching already.”

Agreed! We must start off this topic discussing the morality of government health insurance. Then we will move on to the economics of the issue.

In Thomas Paine’s great work “Common Sense”, he lays out how and why governments come into existence. He describes a civilization with two people, and how with two people you do not need government. Those two people can discuss their problems and come to a solution directly. As more and more people come into this society, they can no longer work out their disagreements directly. There are just too many of them, and they have other duties that require their attention and time. This is when government comes into existence. They decide to appoint select members of the society that they believe will represent their best interests. Those representatives will then setup laws and rules that protect all members of the society. What are they protecting each member of society from? They are protecting them from each other. They are making sure that one member doesn’t use coercion on another member. This coercion can be in the form of theft, fraud or even murder. This is how government is supposed to function in a free society. I think we would all agree that the government that functions in this manner is a just and moral government.

If we all agree to that, then we must acknowledge that coercing someone against their will directly or through the government is an immoral act. This is why the free market is always moral, and all other systems are immoral. The free market allows people, in pursuit of their own interest, to peacefully without coercion come to an agreement on trading a product or service between themselves. Both parties in the transaction walk away from the transaction better than before.

As soon as the government becomes involved, with the exception of preventing coercion (contract law, prosecuting fraud and extortion, etc), they then become the coercive power. Just because they may be acting on something that the majority agrees with doesn’t mean that coercion is now moral. I’m sure the best case of this was slavery. The majority approval for the government coercion did not make slavery moral. Immoral acts are always immoral.

What I am leading up to here is having the government force any individual to pay for another individual’s health insurance is immoral. Also, forcing an individual to buy his own insurance is immoral. In a free society, people are free to pursue their self interest. They are free to be miserly, charitable or neither. They are free to be successful, and they are free to fail. This is a just and moral society. As discussed earlier, this is a principled society. As soon as you veer away from this principle, no matter what your intentions, you then cannot say that another act of coercion, say Wall Street millionaires taking our tax dollars, is immoral.

I know this may sound like great theory, but the truth is life would be much better if we stuck to the principles of our founding fathers. I think we all know and agree to that, but then for some reason we immediately find that this special circumstance is different. It isn’t different. Our founding fathers had many reasons and opportunities to take the path we are now taking. They decided to take the principled stand. They decided to take it for us. George Washington could have easily been a king. He could have setup a monarchy that would have passed from generation to generation. Read history, and you will find how easily he could have done this. People were begging him to be king. Instead, he stood on the principles they professed during the revolution, and he stepped down after two terms.

Now, enough of my moral argument. Morals are great, and we’d all be better off if we lived by them, but how will the free market address the question that prompted this blog?

The free market operates in this manner. Individuals need many things for survival and pleasure. Because they cannot meet all their needs by their own action and invention, they offer what they are best and most efficient at creating and delivering for something they need that someone else is best and most efficient at creating and delivering. This is what is known as the division of labor. For society to benefit the most from everyone’s production, this must be voluntary and with out compulsion. When voluntary, people will seek to offer what they can create better and in more supply than everyone else. They do this based on their self interest. The more value they can create the more they will be able to get from others through trade. When government bureaucrats decide who should do what, you end up with people producing things that they are less efficient at producing. This results in a lower quality of life for us all.

This is apparent even in the most obscure products and services that are offered today. Do you think in government controlled economies, people with a fetish for purple, prince garbed, frog figurines could ever find the product they seek? In the free market, even products and services that seem so obscure that they wouldn’t be worth producing are produced. They are produced because there is a need, there is someone who can produce it, and there is a price at which both agree the product is worth producing and purchasing.

In the market of pre-existing medical conditions, this type of innovation would undoubtedly take place as well. There would be entrepreneurs that see a need that needs met. Typically, these entrepreneurs have experience themselves with being on the needing side of the tracks. They found that they couldn’t meet their own need through the market, so they say “Hey, I see an opportunty here. Why don’t I offer this to society. There has got to be many more people out there with the same need.” As we know, this happens every day, and this is why we as Americans progress so quickly. This is why the internet in a very short time went from bulletin boards to what we have today, where you can make video conference calls across the globe for FREE!

That is not to say you would not have some progress under a government controlled economy. The problem is you would only have progress in the areas that some bureaucrat, special interest or the majority believe should be pursued. If your child suffers from a less common ailment, you are out of luck.

With the free market, you will see innovation so much faster, and you will see prices of those innovations quickly drop. How much did a little 20″ LCD screen cost just 10 years ago? Politicians love to blast the rich, but guess who will fund that new medical treatment your child or you need? When it is first developed in the free market, it will be expensive. That is because of all the research and development costs that went into innovating the product or service. The rich will be the only ones who can afford it. There are only so many rich people, and eventually the manufacturer will have to figure out how to make it cheaper to gain access to a larger market. In this process, all the other companies that participate in the creation of the product will also be pursuing reductions in production costs. This will create a butterfly effect, which will result in rapidly declining prices. I know people think it isn’t fair for the rich to be the only ones who can afford it at first, but under the government controlled market or a market with out the rich, the innovation wouldn’t have taken place.

As I said previously, when you remove the third party payer from the insurance purchase, you will quickly see incentives to live healthier. According to the CDC, chronic illnesses that are caused by life style choices account for 75% of all health care expenditures. It would be a far stretch of the imagination to believe that this number would not be drastically effected if those life style choices were punished via higher premiums. A large decrease in chronic diseases would undoubtedly reduce insurance rates, and it would reduce the cost of health care in general.

Also removing the third party payer from the day to day health care purchases would drastically increase competition and lower prices for normal health issues. This would help those who have pre-existing conditions by allowing them to get the regular medical care at a fair price. Personally, this was my major issue when searching for insurance. My son’s pre-existing condition prevented him from getting even catastrophic care. The reason being is they assumed there would be a large amount of day to day care. I wasn’t concerned with day to day care. My concern was catastrophe. I needed coverage for the care that you can’t plan for. With the decrease in the cost of day to day care that would result from paying out of pocket and increased competition, you would see insurers more inclined to cover those who have pre-existing conditions. One can easily imagine an insurance company running a new marketing campaign stating that is is the “Only insurance company to offer coverage for children with autism”. That is a market that needs served, and they would be the first to tap into that market. Quickly competitors would step up to the plate, and prices would be driven down. Doctors who specialize in a particular affliction would compete for the dollars of potential clients by offering the newest and best treatments. These are the circumstances in which the market shines best.

The last wonder of the free market that would help those who really struggle financially is charity. Historically, charity has always been the way the poor was able to receive the services that they need but could not afford. Americans are the most generous people on the planet, and it would be almost a guarantee that with the government out of the market you would see increased prosperity. With that increased prosperity, you would see more charitable donations. Insurance companies and doctors would donate time and dollars to take care of the less fortunate. One must ask what would happen with charity under a government run health care plan. If the government turns you down, it would almost certainly be illegal or at minimum be detrimental to the doctors relationship with the government if he performed a procedure out of charity.

As I write this, I get super excited as a parent of a special needs child thinking of the innovation that would be unleashed in a completely free market. Unfortunately, we have already let the barbarians in the gates, and they are not going to leave of their own accord. The likely hood that we will drive them out and take back our economy and country is slim. It involves the unknown. It’s easier to accept the mediocrity of the known than it is to trust in what we know is truth but seems so far from where we currently are. I beg you not to fear. Can you imagine what fear our founding fathers, who never knew what life was like without the protection of the Royal Crown, must have felt? The amount of courage that it must have taken just amazes me, even as I write this. I’m sure we can all agree, thank God that they did. Let’s remember life isn’t only about the here and now. It isn’t just about take care of me, and the future be damned. Now is our turn to take the principled stand. It’s our turn to make the tough decisions for posterity. If we do the right thing, one day, our children and grandchildren will say, “Thank God that they did.”

After reading the following editorial in the Wall Street Journal this morning, I had to send in a letter to the editor. While I doubt it will get published, it will here. That’s another lovely thing about the free market! Here’s the editorial followed by my response.

By VERNON L. SMITH

There is widespread agreement with the principle that our health-care system needs to be reformed. But our representatives and our neighbors have much trouble in reaching agreement on the particulars. There have been many legislative bills offered and hundreds of amendments with no clear path to a resolution.

Health-care systems everywhere encounter cost overruns and rationing devices, like queues, in their diverse attempts to deliver products for which demand has long grown faster than other economic sectors. Why is it so difficult to find the private and public means, the combination of markets and government assistance, that enables a preferred outcome to emerge?

This question has a simple answer that plagues health care everywhere.

The health-care provider, A, is in the position of recommending to the patient, B, what B should buy from A. A third party—the insurance company or the government—is paying A for it.

This structure defines an incentive nightmare. You do not have to be an economist to realize that, when phrased in this way, nobody knows how to solve this problem. Hence the many experiments, all of which have been deemed less than satisfactory.

I don’t know whether this problem has a solution. If it does, I think it requires us to find mechanisms whereby third-party payment is made to the patient, B, who in turn pays A, supplemented with any co-payment from B for services. Hence, from the moment B seeks services from A both know who is going to be paying A for what is delivered. A and B each has need for what the other brings to the table, and this structure carries the potential for nurturing the relationship between A and B. B is empowered to become better informed about the services recommended by various A’s that he might choose among, and the A’s might find it particularly important to build good reputations with B’s.

Mr. Smith, the 2002 Nobel Laureate in economics, is a professor at Chapman University.

via Vernon L. Smith: The ABC Dilemma of Health Reform – WSJ.com.

Subject:  In response to “The ABC Dilemma of Health Reform”

Leave it to the intellectual to turn the simple into the complex. Mr. Smith, a Nobel Laureate, says “I don’t know whether this problem has a solution.” Is he serious? Any economist knows the disaster that ensues when price signals are not available to the purchaser.

The entire system can be fixed by addressing third party payer in respects to the purchase of medical services and the purchases of the insurance. Instead of further incentivizing the distortion of the market via the tax code’s promotion of employer purchasing of insurance, we should incentivize the individual. When the individual purchases his own insurance, he’ll make better puchasing decisions, such as buying a catastrophic plan instead of a plan that covers everything down to teeth cleaning. The individual will also make better purchasing decisions when the doctor tries billing him $10 for a band-aid.

When the accumulative effect of millions of these first party payer transaction kick in, you will see prices come back in line with the rest of the market. You will see entrepreneurs battling it out for the consumers dollar.

Sincerely,

Jason Vanzin

Finally a politician that gets it! This is spot on. I believe someone else said this. Hmm, who was that?

By Rep. Bill Cassidy

Price is power. Given limited resources and infinite wants, price empowers us to determine the best use of limited resources.

With health care, the closest most patients come to price is the $15 or $20 co-pay. When we leave the doctor’s office, we don’t know if we received $5 worth of health care or $500.

On the surface, it’s a bargain. But the “bargain” hides and contributes to higher insurance premiums and massive medical inflation.

Our current system ignores the power of price. We can’t know or compare prices, much less be rewarded for acting on them. Because there is no incentive to control costs, we don’t. At $15, why not request any test? According to a McKinsey Quarterly report, the disconnect between price and cost is a leading driver of skyrocketing medical inflation, along with the burgeoning cost of treating chronic disease and the expense of administrative overhead.

via The power of price – Washington Times.

Today, the Wall Street Journal has an article about the battle being waged between Wal-Mart and Amazon to be the dominate book discounter on the web.

Wal-Mart Stores Inc. launched a brash price war against Amazon.com Inc. on Thursday, saying it would sell 10 hotly anticipated new books for just $10 apiece through its online site, Walmart.com.

That was just the beginning.

Hours later, Amazon matched the $10 price, squaring off in a battle for low-price and e-commerce leadership heading into the crucial holiday shopping season. Wal-Mart soon fired back with a promise to drop its prices to $9 by Friday morning — and made good on that vow by early evening Thursday.

via Wal-Mart, Taking on Amazon, Launches Price War on Books – WSJ.com.

This is how the free market works without government intrusion. Competitors work to gain market share by delivering either a better mouse trap or a cheaper mouse trap. The winners are the ones, who can deliver it cheaper and better, and the consumer who gets to benefit from the competition. There is no market in existence that must be taken out of this type of economic activity in order to better deliver it to the people. This includes health care. Are we to believe if health care was opened up to competition that you wouldn’t have the Wal-Marts of the world stepping in to deliver solutions? Just because it’s health care doesn’t mean it’s market is different.

The truth is the government is not in health care to better deliver a service. It is in the market for control. It wants to decide who gets what advantages, and who get what services. It wants to profit itself from the consumption of health care, and it wants to gain the power from that is derived from controlling access to health care. If you want to see health care flourish for all people and to deliver progressively better and cheaper mouse traps, get the government out of health care. We will all be better off for it.