The current debate about health-care funding can be understood as concerned with meeting the challenge of doing three things at once:
- Ensuring that everyone can afford to buy ample medical services; and
- Lowering the price of care; while
- Not interfering with our choices.
An unnecessary tension among health care goals — created by the state
If you assume that most or all of the features of our current health care system should be treated as given, the trilemma really does seem irresolvable. Suppose everyone can afford ample medical care. We know what doctors charge. We know what hospitals charge. We know what drug manufacturers charge. We know what medical device manufacturers charge. And we know what insurers charge to, we’re told, make it all possible. And we know the charges are anything but insubstantial. So, given they way things work right now, if everyone can afford ample medical care, then everyone must be able to spend a lot of money.
If the current pricing of medical care really reflects conditions in the current market, and there’s no reason to think it doesn’t, then there’s no way to lower the cost of care without, realistically, making fewer services, fewer drugs, fewer devices available, as long as current market conditions persist. And that means, of course, interfering with our choices, since it’s hard to choose an option that’s not on the table. With fewer services available, options have been reduced, and, assuming the real value to patients of some available procedures that would be less prevalent as a result of cost-control measures, the quality of services would be reduced. So Goal 1 doesn’t look too achievable.
Of course, we could insist that Goal 1 be achieved no matter what, perhaps along with Goal 3. But then it’s hard to see how Goal 2 could be achieved. Or we could dramatically reduce choice, and perhaps, just perhaps, that might enable us to offer an ample supply of, well, some kind of care judged by someone to be of high quality, while controlling costs. Would the quality be adequate? Without choice, it would be hard to tell, and it would be hard to require quality, since that’s what unrestrained markets do, and since we wouldn’t have anything like an unrestrained market.
So it might seem, at first glance, as if there were a real problem achieving all three goals. But there’s not, if you vary one assumption that isn’t being made explicit in most of the discussions being conducted on-line, on TV, and in the print media by Beltway insiders. That’s the assumption that we need to keep a whole range of monopolistic cartels intact, cartels established by the state at least in part precisely to keep costs up.
A natural approach for anarchists to take is to challenge this assumption, while suggesting that, if it’s not endorsed, the three explicitly stated goals can all be achieved at the same time. One way to think about this is as an ongoing contribution to the debate about “socialism.” The Tuckerite claim (I’m not precisely a Tuckerite, but I like to think of myself as a fellow traveler) is, I take it, that “socialism” is best understood as naming a series of goals which can be achieved using the political means or the economic means. For the Tuckerite, the economic means turns out to achieve the desired set of goals more efficiently than the political means—and so without the aggression that’s definitionally part of the use of the political means. But what is achieved is still socialism. The Tuckerite socialist can achieve what the state socialist purports to want, but without many of the human and financial costs created by a state-based approach.
What the state does to keep health care costs high
Consider the impact of the monopoly power drug companies and medical device exercise by retaining and enforcing patent rights arbitrarily conferred by the government. Or consider the effect on prices when licensing requirements limit who can be a doctor, how many doctors there can be, what kinds of procedures non-doctors can perform? Or the effect exerted by similar licensing requirements that dramatically reduce competition in other health-care professions. Or the effect of limiting the accreditation of hospitals—too frequently in light of the market conditions of the communities in which they wish to operate (so that there’s as little head-to-head competition as possible).
And there’s more: what about the rules that provide tax incentives for employers to purchase health insurance for employees, thus taking responsibility out of the hands of employees with incentives to seek good individual deals? And what about state rules that make it harder, or impossible, for people to seek insurance from out-of-state carriers? Or ones that limit who can be an insurer (hint: not a physician who wants to offer her patients care on a flat-fee-per-year basis). These constraints create or promote monopolistic or quasi-monopolistic positions for many players in the health-insurance industry.
The FDA approval process is also, of course, a state monopoly that drives up costs and lengthens the time-to-market of many products. It’s also one of the factors that helps to make health care unaffordable for many people.
State subsidies to agriculture also contribute to health-care costs by encouraging the purchase of lots of low-nutrition foods. Purchasing these items simultaneously redirects resources that could be used to buy foods that made positive contributions to people’s health away from the purchase of such foods and encourages the purchase of items that may actually decrease health and thus boost health care costs.
Finally: it’s not a monopoly, precisely, but it is a dubious legal privilege that also drives up costs. A punitive damage award can turn an individual person into scapegoats, someone to be “taught a lesson” on behalf of the entire class of victims of conduct like his or her own. Punitive damage awards drive up costs unnecessarily while forcing health-care professionals and hospitals to focus on defensive medicine.
How the state can help to make health care accessible by stopping its war on poor people
Remember, the driving force behind so much of the debate about health care is accessibility. That’s a function of cost. But it’s also a function of the incomes of people who might want access to care but can’t afford it.
The first step would be to lower taxes. The long-term goal must be to eliminate all the tribute people pay to the state at all levels, but legislators might start by dramatically increasing the standard deduction while , at the federal level, increasing the Earned Income Tax Credit.
It’s worth asking, too, about the impact of multiple monopolies on the circumstances of poor people. The state does lots of things that make and keep people poor.
Some kinds of jobs require business licenses, or other kinds of permissions from local actors to start up. Maybe the licenses require costly and dispensable equipment or unnecessary certification, or maybe they just involve prohibitive up-front costs. (Think about how much it costs to obtain a New York taxicab medallion.) Sometimes, they preclude people using the low-cost facilities that are their own homes for business purposes, imposing the heavy burden of working elsewhere. And sometimes—as when Tulare, California, officials recently shut down a little girl’s lemonade stand because it didn’t have a license—licensing requirements are just exercises in petty tyranny. Whatever their form or their motivation, the burdens created by licensing requirements fall hardest on poor people.
Those same requirements impact where poor people can find housing: housing that doesn’t meet someone else’s standards of middle-class acceptability is denied to poor people who could pay for it, but might be able to pay for anything else. And the burden on the poor is only increased when certain kinds of jobs are denied to people at all—like selling medications that the government wants sold only by government approved pharmacists in government-approved pharmacies.
Tariffs also hurt poor people by significantly increasing the costs they need to pay for imported goods (including, often enough, food that would be less expensive than domestic alternatives absent import duties). Often touted as propping up poor workers’ incomes, they serve primarily to boost the profits of poorly performing domestic producers at the expense of both domestic consumers (especially poor ones) and foreign producers.
In a perfect or near-perfect market, it might make little difference whether or not everyone was unionized. But in today’s un-freed market, state-guaranteed privilege, rather than competitive excellence, is responsible for some corporate profits. In this kind of market, unionization can help to improve workers’ economic positions. State limitations on union activity can tend to reduce unions’ influence, and so to reduce the incomes of workers who might make more were they free to engage in more radical bargaining tactics.
An initial anarchist agenda
Bottom line: arguably the most important thing government officials could do to reduce health care costs would be to get completely out of the way, to stop privileging favored elites and driving up prices. State functionaries could:
- Stop offering protection to patents and copyrights.
- Eliminate hospital accrediting and professional licensing rules, leaving a variety of flexible, competing market-based certification systems to do the job.
- Limit malpractice awards to actual damages plus the costs of recovery (including reasonable legal fees).
- Repeal regulations that prevent the sale of insurance across state lines and the prevent the operation of what amount to insurance schemes by health professionals.
- Alter the tax code to de-link employment and insurance. (This change would have the potential to boost net taxes, of course, if it weren’t made in tandem with the tax cuts for which I’ve argued.)
- Replace the FDA approval process with alternative, voluntary private certification systems.
- Eliminate agricultural subsidies.
And government officials could also ensure that ordinary people had the resources needed to pay for (newly much less expensive) health care. They could:
- Eliminate licensing, zoning, and related restrictions that help people from starting small, low-capital businesses.
- Eliminate rules that prevent poor people from entering business regarded as off-limits (like selling non-approved pharmaceuticals—which could be certified by voluntary, non-state certification services).
- Eliminate rules that force poor people to choose between the kind of housing middle-class planners and neighborhood busybodies prefer—and no housing at all.
- Eliminate import duties.
- Slash the tax burden at the state and federal level as much as possible—sharply increasing the standard income tax deduction and the Earned Income Tax Credit—and make corresponding reductions in spending.
- Eliminate state limitations on collective bargaining, including compulsory arbitration requirements, prohibitions on secondary boycotts, back-to-work orders, and “all state Right-to-Work Laws which prohibit employers from making voluntary contracts with unions.”
Notice how the Tuckerite socialist model would work. It would ensure that poor people had more money. By eliminating monopolies (and quasi-monopolistic market distortions like tax subsidies for particular insurance choices), it would also ensure that prices for health care services—whether purchased directly or provided via insurers—were lower. By keeping a competitive market in place, it would ensure that competitive market pressures would tend to elevate overall product and service quality. And because it wouldn’t involve the installation of yet another czar, or the equivalent, because it would leave people free to make their own health-care choices, it would preserve liberty rather than limiting it. It would achieve all three of the goals proponents of current health-care reform measures say they want.
Putting it on the able could also provide an opportunity to link a variety of other pro-freedom legal changes with (radical) health-care reform. And it would force proponents of statist options to ask more clearly whether they value the goals they say they want to achieve more than they value the opportunity to give more power to technocrats.
While a Tuckerite socialist plan would, indeed, provide a way of achieving state-socialist goals via the economic rather than the political means, such a plan would be anything but a continuation of the status quo. Indeed, it would be a dramatic attack on the status quo, one that redistributed wealth from privileged monopolists to ordinary people, and dramatically increased the likelihood of access to inexpensive, high-quality medical care for all Americans.
Make use of the following additional resources to expand knowledge and understanding of the topic covered in this unit.
The entire unit, including all additional resources, can also be downloaded as a workbook to be used offline.