HELP, healthcare reform research report

Miscellaneous General
1

i did a research report on healthcare reform incorporating views by hazlitt, mises and bastiat. my teacher, who is apparently very liberal, feels that it is illogical and does not offer a opposing solution to government reform.

i started with the broken window, which she believes is an idiotic analogy as the owner could simply sue the party that broke the window or file an insurance claim. also, she feels that since hazlitt and mises died 20 and 30 years ago respectively that their views are out of date.

she then proceeded to tell me that i can’t base my paper on the views of two economists who are not even from the united states. i rebutted and reminded her that keynes was a british economist and the majority of modern economist today base their views on his (correct me if i’m wrong as i’m relatively new to austrian economics and economics in general). personally i don’t think the nationality of the economist matters.

she then went on a tirade of how she met ayn rand and spouted off some stuff about existentialism which i know nothing about. which i thought was strange as i never even mentioned rand, even though i’ve read atlas and fountainhead, in my paper or during the course of the conversation.

anyway, i did summarize the healthcare bill and hoppe’s freemarket solution. she basically tore me to shreds saying if there was no regulation or licensings requirements that the average person would get scammed by crock doctors which would increase in quantity due to lack of regulation.

i made it a point to her that i wasn’t advocating that people would stop attending medical school, just that eliminating regulation would allow the division of labor and the laws of supply and demand to take place in the medical field as it would be easier for an optometrist to specialize in his chosen field as oppossed to having to spend time and money learning about the rest of the human body due to regulations (again, correct me if i’m wrong)

she also argued that, if left to charity and goodwill, the poor, homeless and children born with pre-existing conditions would be left to die in the street. that the market would not remove the bodies as there is no profit or incentive to do so and that the only way to protect these classes is via the government.

she then spent the next ten minutes explaining to me how insurance companies would drop everyone as they approached death should we deregulate them. my argument was that insurance companies could not do that as long as the conditions that arrose were not due to things directly under the individuals control. i pointed out to her that as i’m a smoker i wouldn’t be covered by my insurance policy should i develop lung cancer. her point was that since death is inevitable, it would give grounds for the insurance company to drop you since death is something you can conceivably control. she also pointed out that it is impossible to differential natural causes from ones sicknesses that arise from drinking, smoking, eating too much fast food etc.

can someone point me in the right direction in terms of reading material as to what would happen to these classes should the market be left to its own devices? i couldn’t think of a better response other than charity and goodwill so she stumped me somewhat no that note.

also, i provided sources to back up my argument but how do i overcome her objection that the philosophy of mises and other austrian and libertarian philosophers still apply today even though they hundreds of years ago. how can i incorporate the philosophy of liberal thinkers so i can balance the views in my paper so it isn’t so onesided which i admit it was.

TIA for all your help.

2

I think the first thing you should show her are companies that specialize in insuring people with pre-existing conditions. My two cents.

3

ok, i will def do that, but let me play devils advocate because i know what she’ll say. how would this help people who can’t afford to pay the costs of insurance from companies that will charge a higher premium for a high risk pool of insureds?

4

to add to this, how do i rebutt her claim that the constitution has a clause which provides for the general welfare of its citizens.

5

Put your iPhone (or other Cell phone) in her face!

Explain to her that the physics behind it are to the combined contributions of scientists, all of which, have long passed away, some of them contributed their work as early as the 18th and 19th century and even before.

I love it when it is Economists who try to discredit Austrians by using the “out of date” complaint. It just further shows how mainstream economics is totally ignorant to what they are pretending to be. They are a joke!

6

great argument, i should have tought of that! after all, einstein didn’t discover relativity by himself in a vacuum! he borrowed greatly from the great minds that preceeded him.

i’m just not quite sure how to overcome her slippery slope, straw man, appeal to emotion, etc. objections.

7

  1. You don’t really have to quote any economists to explode Obamacare. Just think about it in terms of supply and demand. What happens when you restrict the growth of supply by adding regulations and expand the growth of demand by subsidizing the medical expenditures of an additional 30 million people? Of course health care will become less affordable, the government deficit will expand, and we might soon face rationing as the government tries to control health care costs.

  2. Her rebuttal of the broken window fallacy is downright idiotic. The fallacy doesn’t have to do with insurance or suing people. The fallacy has to do with the seen vs. the unseen. If you break the window, everyone sees how the business owner has to pay someone to fix his window, etc. The unseen is what would’ve happened if the window was never broken in the first place - the cobbler (or whatever) would’ve used his money for other purposes. Therefore, we learn that breaking the window does not actually add to overall economic activity. If you add insurance and/or law suits to the mix, you get the same result. That insurance company had to get money from somewhere. So the unseen in this case is that because of the broken window, the insurance company made less money, so it’s owners now have less to spend. Similarly, in the case of law suits, there still wasn’t a net gain in economic activity, because there still was a loss when the window was broken.

  3. If we removed all medical licensing and regulation, would there be a few more medical quacks scamming people of their hard earned dollars? Sure there would. But at the same time, there would be many more real doctors providing much more real health care. So the trade-off in this case is a little more medical quackery for a lot more real health care for much lower prices. One useful thing to point out is that in the real world, a medical quack would get a bad reputation and lose customers to real doctors. In addition to that, a medical quack could be sued for fraud. That’s how the market self-regulates.

  4. A bigger problem today isn’t licensing in itself, but how insurance works. First of all, the government already pays for 50% of all medical expenditures in the United States via Medicare, Medicaid, S-CHIP, the IHS, the VA, etc. That alone does much to inflate demand for health services and thereby increase health care prices. Various regulations, such as state mandates, also artificially inflate the demand for medical services AND they increase the cost of buying health insurance. After all, if health insurance companies have to insure alcoholics against alcoholism and women for abortions and men for Viagra (no, I’m not joking, these are all actual examples of state mandates), then everyone who buys health insurance will have to pay more in order to insure for things they may not want. Also, the state mandates increase demand for medical services, which means an increase in prices of course.

  5. Most people with pre-existing conditions aren’t children who are born with leukemia or whatever. Most of them are people who have developed a pre-existing condition. e.g. alcoholics develop liver problems because of their alcoholism, smokers develop respiratory problems due to their smoking, etc. Insurance companies then see this and they rightly say that your insurance will have to cost more if you want some because you are at greater risk of developing liver problems, lung cancer, etc.

  6. To say the poor would fall by the wayside is kind of silly. For simplification, let’s say that the average doctor earns $100,000 per year. Now, let’s say that a working class group offers to hire “the average Joe doctor” for $100 grand. Let’s also say that this working class group has 200 members. Each member would have to pay $41.67 a month for practically unlimited medical care from this doctor. That’s pretty affordable if you ask me, and I earn minimum wage. But that’s just for preventive care. For insurance against things such as workplace accidents, most people would be able to afford a high-deductible insurance plan or most people could make use of some kind of health savings account provided by their employers. But because these two things are regulated to death in the United States, they are rarely used.

  7. Your teacher is a moron for that “dropping your insurance close to dying” argument. The entire point of insurance is that your risk is measured and then you receive a contractual guarantee that for x price you will be covered if y happens. If the insurance company breaks that contract, you will be able to sue for a lot of money due to time and money lost. This makes it unprofitable for insurance companies to violate contracts by dropping people without a good reason (a good reason being that people break their contracts first by doing things like not declaring pre-existing conditions).

8

might i add that she invalidated my argument because i borrowed heavily from the ideas of mises et al.

in any event, i incorporated mises’s ideas of competition from human action. but overall understading of the work is elementary at best. who has views that are contradictory to mises’s views on competition? marx? the socialists? the communists? i just need to present an opposing argument and expose the flaws in them so my paper is more balanced.

9

I think I can help with the general welfare clause. The general welfare clause appears under Article 1, Section 8 of the Constitution in the Enumerated Powers section of the Legislative Branch after the power to tax and spend. It’s directly followed by “but all Duties, Imports and Excises shall be uniform throughout the United States.”

The healthcare reform bill is clearly in violation of this because it disproportionately helps some people (the sick) at the expense of others (the healthy) therefore this bill is not in the interest of the general welfare but instead in the interest of the welfare of particular people. The tax (the mandate is essentially a tax that you get charged with if you don’t buy health insurance) is not uniform.

10

I think that it’s utterly ridiculous that an educator would suggest that Hayek’s and Mises’ views are out of date. In her defense, although Keynes was British and the founder of the Keynesian school, the modern face of Keynesian thought is not like that of Keynes. Nevertheless, the Austrian school has gone through a lot of change, as well, since the 1920s and 1930s, and a lot of this change was spearheaded by Mises and Hayek themselves, who refined their theories up until their deaths. Irregardless, would see have considered Austrian theories outdated had you used more recent authors?

Some more “up-to-date” Austrian pieces on healthcare:

  1. Reisman, George, “The Real Right to Medical Care versus Socialized Medicine”, Mises Daily, 6 August 2009. This is probably the definite article on healthcare on the Mises website.
  2. Finegold, Jonathan M. Catalán, “Why Not Universal Car Insurance?”, Mises Daily, 11 March 2010. Although the analogy was not as clever as I thought it was when I first wrote it, this is basically an application of the economics George Reisman expounds above applied to a hypothetical universal car insurance. The laws of economics apply to all social insurance programs.
  3. Finegold, Jonathan M. Catalán, “Economic Law & Universal Healthcare”, California Review, April 2010. This is the same thing as above, except applied directly to universal healthcare. It’s also relatively short (~800 words).
  4. Healthcare Reader. This is a listing of most articles ever published on universal healthcare on Mises Daily.
  5. Lehman, Charles Fain, “Who Is to Blame For the High Cost of Healthcare?”, Economic Thought, 21 January 2010. This useful as a quick overview, and for the links he provides.
11

let me play devils advocate again, these were the arguments she had when i pointed these things out.

  1. extending coverage to 95% of americans will increase the demand for coverage; therby, increase the supply of doctors which result in “decreased costs” for consumers. (again, this was her argument)

  2. capital goods are meant to be consumed. a broken window will not lead to the business owner laying off workers.

  3. how would the consumer know if a doctor is good or bad? who would protect the “irrational idiotic consumer” who doesn’t know enough to protect himself. (i pointed out that the market would crush the reputation of illegimate doctors which would inturn destroy their profit making potential and she replied) ok so i move to another state and take advantage of other idiotic consumers.

  4. corporations have an unlimited lifespan, it would be cheaper for them bear the costs of litigation as opposed for fulfilling your claim. the little guy does not have enough money to challege corporations though the judicial system. because of this the consumer would have no where to go or any enforcement body to turn to.

12

how do you quote on this forum?

I think I can help with the general welfare clause. The general welfare clause appears under Article 1, Section 8 of the Constitution in the Enumerated Powers section of the Legislative Branch after the power to tax and spend. It’s directly followed by “but all Duties, Imports and Excises shall be uniform throughout the United States.”

The healthcare reform bill is clearly in violation of this because it disproportionately helps some people (the sick) at the expense of others (the healthy) therefore this bill is not in the interest of the general welfare but instead in the interest of the welfare of particular people. The tax (the mandate is essentially a tax that you get charged with if you don’t buy health insurance) is not uniform

i tried to reason with her about this in regards to natural rights. then she expounded on the virtues of existentialism. am i approaching this wrong? what exactly is existentialism?

13

"Thomas Jefferson explained the latter general welfare clause for the United States: “[T]he laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised. They [Congress] are not to lay taxes ad libitum for any purpose they please; but only to pay the debts or provide for the welfare of the Union. In like manner, they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose.”[7]

Chief Justice John Marshall described in obiter dictum a further limit on the the General Welfare Clause in Gibbons v. Ogden: “Congress is authorized to lay and collect taxes, &c. to pay the debts and provide for the common defence and general welfare of the United States. … Congress is not empowered to tax for those purposes which are within the exclusive province of the States.”[8](http://en.wikipedia.org/wiki/General_Welfare_clause#cite_note-7)"

http://en.wikipedia.org/wiki/General_Welfare_clause

Along the lines of the definition provided in Gibbons V. Ogden, it could be argued that Romneycare, an analog to Obamacare is perfectly constitutional under the 10th Amendment which reserves all powers not expressly delegated to the federal government to the states but that Obamacare is unconstitutional because, first of all, the tax is not uniform, and second of all, the federal goverment was never given explicit power to do something like this (even under a broad interpretation of the commerce clause) and so the spending power is not being used in line with the general welfare clause.

14

I don’t think existentialism has anything to do with this. If the law doesn’t give the Congress the power to do what she wants it to do, the Congress can’t do it (legally I mean.)

15

Jonan,

Some responses.

  1. extending coverage to 95% of americans will increase the demand for coverage; therby, increase the supply of doctors which result in “decreased costs” for consumers.

While usually businesses do expand to accept a larger pool of demand, which is why in a free-market it would make sense for healthcare providers to do the same (or, do all businesses except the healthcare industry do this?), the fact is that she ignores the factors which currently cap the supply of doctors and healthcare providers. In the case of doctors, the major barrier is the AMA which actively restricts the supply of doctors to inflate earnings. If the AMA was abolished, and nurses were able to preform their traditional role, then the costs of doctors would go down dramatically.

The problem of socialized healthcare is that this problem is not solved, and the government then limits the supply of healthcare providers (insurance companies), as those that are not included in government contracts are pushed off the market.

  1. capital goods are meant to be consumed. a broken window will not lead to the business owner laying off workers.

Capital-goods are meant to be invested, not consumed. The point of the broken window is that while the window maker has been temporarily stimulated, the owner of the shop is now one window poorer; he paid for one window, for the price of two. The fact that the shop owner is poorer makes society, as a whole, that much poorer, as well. It represents the destruction of wealth. At the level of an individual shop owner and one broken window, the effects may not be disastrous, but when you take this into consideration for an entire population then the effects are, indeed, disastrous.

Nevertheless, I think the broken window fallacy muddles your argument on universal healthcare. I don’t suggest adopting it. There are better strategies to take.

  1. how would the consumer know if a doctor is good or bad? who would protect the “irrational idiotic consumer” who doesn’t know enough to protect himself.

Your teacher wouldn’t be able to tell if she is receiving good service or bad service? She wouldn’t be able to tell if she was satisfied or not? I think your teacher is preferring to ignore logic, and instead appeal to emotion.

  1. corporations have an unlimited lifespan, it would be cheaper for them bear the costs of litigation as opposed for fulfilling your claim.

This is not true. Most corporations prefer to settle. The costs of litigation are usually higher than the cost of the claim.

16

nice! i think she was trying to confuse me. what upset her most was that i had a logical answer for every argument she brought up.

at one point, i brought up the fact that america was prospering during the inherent “lawlessness” before the constitution was passed. apparently, it was only because of the ideas that american pioneers and industrial revolutionist “stole” from europe pre and post constitution.

when i pointed out to her that carnegie came here with nothing and increased the standards of living for millions of americans she was quick to point out how many people died working for him.

17

“Nevertheless, I think the broken window fallacy muddles your argument on universal healthcare. I don’t suggest adopting it. There are better strategies to take”

i’ll take a look at the articles you referenced tonight. which strategy would be best to incorporate into my argument?

18

“Nevertheless, I think the broken window fallacy muddles your argument on universal healthcare. I don’t suggest adopting it. There are better strategies to take”

i’ll take a look at the articles you referenced tonight. which strategy should i incorporate into my argument?

19

I think what she’ll tell you is that Congress has the power to do this under the commerce clause and she may be right.

20

bloomj, “to regulate interstate commerce” meant to help facilitate interstate commerce, not to restrict it.