Tuesday, January 05, 2010

Is health care a right? Should it be? 

Many say it is -- or should be. For instance, during his presidential campaign, Barack Obama: "I think it should be a right for every American."

Economist Steven Landsburg and historian Ted Brown of the University of Rochester recently had a debate on the subject, the video of which Landsburg has posted on his blog. However the substance of that discussion quickly veered from whether health care is a "right" to how to best provide it.

A few thoughts on the "is it a right" question:

"Rights", as in legal rights, are effectively applied to behavior: a right to free speech, free assembly, not testify against oneself, yell “fire” in a crowded theater (or not), consult with an attorney if charged with a crime, restrict the behavior of police and prosecutors, etc. If you pass a law to create such right, you have it. It is created!

However, proclaiming a general human "right" to a good, service, or physical condition that must be provided using economic and organizational resources accomplishes nothing.

Imagine everyone being given a "right" to a three-room apartment, 50-mpg car, pony, or unicorn. Passing legislation creating the "right" does nothing at all, zip, to provide it. If the thing can’t be provided generally at a plausible economic cost, then after creating the "right" to it, it remains unprovided. The whole exercise is just wishful thinking and, frankly, posing.

Monty Python put it well...

On the other hand, if an item really is so important as to be in general demand, and it can be provided economically, then it will be by the free market, and there is no need to create a "right" to it.

This is why there is no legal "right" to food and clothing, even though they are far more important than medical care to 98% of people 98% of the time. (How long could you live without food, compared to without a visit to the doctor?) They are already provided amply at low cost so there is no need to go through the whole political exercise of creating a "right" to them.

Those on the left who seek to create a "right" to something generally conflate messy thinking along the lines of: "rights are provided by the government ... rights are good (such as ‘civil rights’) ... so if we just create a right to this good thing it will be provided by the government ... then things will be better than now ... More rights are better!”.

Senator Bernie Sanders, independent/socialist of Vermont, provides a typical example:
Health care is a right ... the fight for a national health care program will prevail. Like the civil rights movement, the struggle for women's rights and other grass-roots efforts, justice in this country is often delayed - but it will not be denied. We shall overcome!
This can be very hard to argue with in principle because it is a belief system, and quite amorphous. But one can point to real-world examples showing how it falls apart.

For instance, the closest real-world parallel to the proposed right to health care is the actual right in many state constitutions to "high quality public education". And what has been the result? Fortunes spent on litigation costs, plus here in New York school conditions like these, at a cost now of $20,000 per year, per student.

Why? Because, among other reasons, the "right" to a quality education doesn’t trump collective bargaining agreements with government unions that, among many other things, keep even the most incompetent on the payroll. (The rights of government unions under their contracts are defended by the left a good deal more stridently than rights to education and health.)

Today the left has a dream of creating a "right" to health care that will result in top-quality government-provided health care for all. But the same reality that exists in public education exists for public health care. Decreeing a right to it does nothing to provide it -- certainly not in any satisfactory quality.

Let's discuss the obstacles facing quality health care for a moment.

What are the big structural defects in the US private market health care system today?

(1) The employment tie for health care -- plus tax deduction that employers receive for its cost, combined with tax-free receipt of it by employees.

This makes no sense in any direction. Why should the quality of one's health care depend on whether or not an employer's pockets are deep? Why should the size of a tax subsidy for personal health benefits vary with whether a business is in a high or low tax bracket? Or on one's own personal tax bracket? How can requiring individuals to get different health insurance every time they change jobs possibly be good? No other country has a system like this.

(2) The McCarran-Ferguson Act of 1945, which (a) allows state regulators to bar interstate purchases of insurance, thus enabling state politicians to create local monopolies of favored insurers, and (b) prohibits federal anti-trust actions against those local monopolies. Effectively, this act repeals the Commerce Clause for health insurance by eliminating the competitive national market for it, and also places state-regulated local markets beyond federal anti-trust rules.

Note well that both these distortions were created by the government -- not by the free market -- during the exigencies of World War II. (The employer tie was created to enable big businesses that needed to attract more workers to get around federal wage controls by providing a new benefit not counted in "wages".)

Since then, both distortions have been preserved and expanded by interest group politics. The employer tie provides a competitive advantage to big firms that can afford to provide attractive health packages, at the cost of smaller and newer competitors who can't. The employers' tax-deduction for, and employees' tax-free receipt of, benefits provides a valuable tax subsidy for those firms and the people at them. They all insist on keeping all that, no matter how unequal and "unfair" it is compared to others. As to the forces keeping McCarran-Ferguson in place...

Well, what entirely predictably results do you get when you let local politicians block all outside competition to their politically favored local businesses, while also blocking anti-trust regulation of the local businesses?

First, monopolies and cartels, thusly: In New York, just two insurers, GHI and Empire Blue Cross, have 47% of the market. In New Jersey, just one, Horizon Blue Cross and Blue Shield, has 43%. In Connecticut, Wellpoint by itself has 55%.

Worse, being exempt from anti-trust enforcement and free to engage in anti-competitive practices, the politicians, their favored insurers and the unions set up local monopolistic "iron triangles" that mandate all kinds of excess coverage (via "better" insurance policies, whether consumers want them or not) which create extra premium revenue for the insurers, extra jobs for unionized health care workers, and payof^h^h, er, brib^h^h, er, generous campaign contributions to the politicians. With cost-reducing innovations that threaten this establishment being squashed by regulators.

The effects are starkly seen at state borders. For instance, in Pennsylvania a 55-year old man can go online and have the choice of 99 health plans with cost as low as $141 a month. Go across the border into New York State and he is limited to only 12, and their cost is, er, somewhat larger.

The unions are big supporters of corporatism and oligarchy —- the employer tie and iron triangles —- because they use regulation of the big, government-favored corporations to their own ends. (See: GM & UAW.)

Now let’s imagine the left succeeds in declaring health care to be a legal "right", indeed a "human right". Are its Democratic party politicians then going to dismantle these health care "iron triangles" that are among their most powerful constituent groups?

Not a chance. Not any more than their current health reform plan does, which is "not at all" -- and not any more that the "right" to a quality public education has improved inner city school systems.

So much for the dream.

(The bipartisan Wyden-Bennett health care reform would have addressed the real fundamental problems of the health insurance market by breaking the employer tie ... opening interstate sales of insurance to create competition, breaking the local cartels and driving down costs ... and eliminating the tax subsidy for health insurance while using the tax revenue saved to insure the uninsured -- but Senator Baucus killed that first thing to protect his iron triangle constituents. And White House records show the single most frequent visitor to the White House during 2009 was Andy Stern, president of the big SEIU health care workers union, guiding the "reform" along so as to not displace the incumbents and protect his members from cost-containment measures.)

OK ... now the subject of this post too has changed from "health care as a right" to "what’s the best method to provide health care?" -- which is just what most of the "rightsers" really have in mind (imagining government provision must be the answer, because obviously free markets have failed).

Though sticking to the issue of health care as a "right", we’d have stopped two-thirds of the way back up this post -- noting that creating a legal "right" to enjoy a product, service or physical condition does exactly zippo nada to provide it.

While, in contrast, if that item both is in genuine demand and can be provided at reasonable economic cost, then the free competitive market will provide it, and no discussion of the need to create a legal "right" to it will ever arise.

Unless the politicians intervene to stop the free market from functioning, of course.