Tag Archives: Health Care Debate

A Classical Liberal’s Response to Collectivism

Two accomplices get arrested for a number of crimes. The police have enough information to assure they both get a two year sentence. But they think they could connect them to another, much bigger crime, so they make both criminals an offer. If one informs on the other, he’ll go free, while the other will certainly get a ten year sentence. However, if both inform on each other, the police will have enough to ensure they both get five years.

The above scenario is commonly given to explain one principle of what has come to be called Game Theory: that when everyone works in his own best interest, it is possible to end up in a far worse position than if everyone had worked in the best interest of the collective. In the above situation it is always in one’s best interest to inform. If the other prisoner informs, you only get five years instead of ten, and if he doesn’t inform, you go free instead of getting two. Nonetheless, when both prisoners follow their best interest by informing, both get five, whereas paradoxically both could have gotten only two if they’d kept their mouths shut.

Conservatives, Libertarians, and Classical Liberals* tend to hate the above conclusion. And perhaps hate is too soft a word. It is an anathema to liberty, and one is a despised Communist merely for thinking it. As we all know, unbridled liberty is the source of all prosperity. America won the Cold War, after all, by each of us concerning ourselves only with our individual prosperity, whereas those collectivists sank into economic malaise, which ruined the Soviets, and would have ruined China if they hadn’t reformed their economic system to be more free-market. At least, this is the prevailing wisdom among modern Conservatives.

The above argument does a serious disservice to the principle of individual liberty and small government. It reduces what is essentially a moral argument into utilitarianism. Classical Liberal thought is based on the idea that people have foundational rights, that these rights allow one to choose to do anything which is not directly belligerent to another person’s rights, and that no one’s rights may be morally infringed for the benefit of any number of others. The utilitarian expresses the last principle differently: that when no one’s rights are infringed, any number of others will benefit. Now, if we were to apply that to, say, our first amendment rights, we would arrive at the conclusion that we are permitted freedom of speech because it benefits society. But from here it is no great leap to conclude that where freedom of speech does not benefit society, it need not be granted. No such conclusion could be drawn from the moral argument, that no amount of benefit to society can ever justify the suppression of speech. For this reason, the moral argument is superior to the utilitarian: it isn’t weakened when the collectivists put forward arguments along the lines of the prisoner paradox.

What then should the response to collectivism? Friedrich von Hayek, perhaps destined to be considered the greatest of the 20th century’s Classical Liberals, wrote extensively on this topic. In his work, the Road to Serfdom, the argument was put forward that the level of regulation necessary to achieve any benefits from collectivism would effectively end human liberty. Our choices would all need to be made for us by central planners, because we wouldn’t comply with the best interests of the collective on our own.

Put another way, let’s return to the first scenario. The reason this situation is regarded as paradoxical is because it is always in one’s best interest to choose the option that leads to prison for five years, whereas it is never in one’s best interest to choose the option that only leads to two years. Even if both prisoners are allowed to get together and talk out their options, and they both see that a better outcome is assured if both of them keep their mouths shut, and they agree to this course of action, it still remains an even better option for each one to double cross the other. If the first double crosses the second, he gets even fewer years than the two he’d agreed to earlier, and if both double cross, he gets five instead of ten. The paradox of this situation is that if each individual is allowed to have any individual choice whatsoever, his best choice leads to the worse result, and his worst choice leads to the better result. In order to obtain the better result, these criminals can’t be allowed any say in the matter, and a central planner must step in and choose to make both of them keep silent whether they want to or not. So long as they have any kind of individual choice, this problem cannot be resolved.

The Classical Liberal’s only recourse then is to try to eliminate any personal involvement in situations where these kinds of paradoxes occur, and they do occur often enough in our economy. When given a choice between an economic disaster or the loss of personal liberty, abstain altogether! I’ve harped on health insurance before, and have said most of what I think needs saying, but I think it provides a good example of how we ought to approach these problems. When health insurance is used as a payment mechanism for general medical care, the quantity of medicine you individually purchase has very little correlation to the premiums you pay, so frugality is not rewarded: you may as well use it to cover as much as you can; your costs will be divided among so many people that it’s hardly noticeable. But when everyone adopts this mindset, the costs of hundreds of millions of people splurging adds up, and premiums are forced to skyrocket just so insurance providers can break even. There’s still no point in being frugal, because that won’t lower your premium by more than a minuscule fraction of a cent, and even if everyone else in the country acted in the best interest of the collective and lowered their consumption, that only returns us to the position we were in at the beginning, where everyone is encouraged to buy lots of medicine for cheap, once again leading everyone to splurge. Just abstain: get catastrophic coverage, a cheap policy with a very high deductible, but pay for day to day expenses out of pocket and you’ll probably be able to save money. (That is, provided Washington gets its act together and allows tax-free personal health savings accounts.)

And, incidentally, this is another reason why the people in Washington trying to pass their insurance regulation “reform” bill (which I still doubt is going to make it into law, although the Dems are apparently more suicidal than I gave them credit for when I wrote after Scott Brown’s election and are trying to go Kamikaze to get it passed) are writing a simple disaster. The use of insurance as a funding mechanism for ordinary, expected health-care expenses puts everyone in the above paradox, which is causing the higher premiums we want to prevent. Abstention from non-catastrophic insurance is the only solution, yet the bill in question makes it illegal to abstain. This leaves us with one of two choices: premiums can go up forever, or a (death) panel of central planners will make our decisions for us, based on our value to the collective. The Democrats swear the latter will never happen, so in other words they plan on reducing premiums by forcing the market to raise premiums. Brilliant.


*Try as I may, I cannot find an appropriate word for the philosophy upon which the idea of a limited government is founded other than Liberal. The word Liberal, from the Latin root meaning “free,” was applied first to the same people as invented the idea of defined and limited government powers as a vehicle for protecting freedom. This Classic Liberalism finds its expression most clearly in modern fiscal conservatives, whereas fiscal liberals, being statist and all too often authoritarian, do not deserve the term. Doubtless calling conservatives liberals and liberals illiberal is confusing, but it needs to be done, as the alternative is becoming more problematic. Fiscal conservatives, being unable to call liberals illiberal, have taken to calling them by names of other historically illiberal groups: socialists and fascists. This is not precisely accurate, and illiberals are all too ready to point out minor distinctions between their views which are supposed to deflect the accusation. A wider, blanket term for statists is required, and that term is illiberal. But to use that term, the fiscal conservative must also become comfortable with calling himself a Liberal.

Massachusetts & Making Laws

To make a law, a bill must be passed by both the House and Senate and signed by the President. This is what we all learned from the School House Rock song, right? Well, it’s a little more complicated than that. Both chambers want their say in a bill. If the House writes and passes a bill, the senate usually isn’t willing to just rubber stamp it into law. The senators want their own concerns addressed. So after the house passes a bill, the senate will usually write an entirely separate bill. Now we have a problem: no single bill has been passed by both chambers, so despite the fact both have passed a bill, nothing can yet be presented to the president. Here comes the fun part. Both bills are sent to a conference committee which creates a third bill. Now both houses vote on this, and then the president can sign it into law.

The Democratic “health care” “reform” bill is at the proper stage for conference committee. One bill has passed the House, and a second has passed the Senate. But Democrats can’t do this, because a committee bill would have to pass the Senate again. As of tonight, that’s not going to happen. The Republicans have picked up seat number 41 with the election of Scott Brown. This allows them to filibuster, or to essentially prolong debate on the bill indefinitely. Not only that, the fact that Brown was elected by Massachusetts is quite probably going to shake either Nelson or Bayh or Webb into the no camp. Remember: Obama’s been telling the Dems for months that the only way they can save their careers is to vote yes on Obamacare. Clinton has prolcaimed that the major Democratic defeat in 94 was caused, not by the same manner of voter disgust over Hillarycare as we see over Obamacare, but rather, by Congress’s inability to pass a bill. If that were true, we’d have a Senator Elect Coakley tonight instead.

If the Senate can’t be counted on to pass another bill, the only option Democrats have is to have the House pass the Senate bill which had already been passed verbatim. Through a process called reconciliation, which is immune to the filibuster but can only address strictly budgetary issues, the senate can pass modifications to the taxes planned to pay for this, but otherwise, the House has to accept everything the Senate gave them, or the bill is dead.

Is this going to happen? House leadership says yes. The average house Democrat, by all accounts, is much less optimistic. When the bill passed the house, it passed by 5 votes. One of those was the lone Republican, Joseph Cao, whom no one expects to vote for it again. Now if even two more Democrats flip, that means the bill will fail by one vote (because every vote which flips from yes to no subtracts one from the yes column and adds one to the no column, bringing the columns nearer by two).

Now, about twenty or so Democrats voted against the first bill, for various reasons. The House contains a coalition of “Blue Dogs,” or conservative Democrats. But these have been derided over the past three years as being all bark and no bite. It’s been argued that Pelosi is allowing these two dozen or so to vote no such that their largely conservative constituencies won’t vote them out, but if she needs the votes, she can get them. Nonetheless, if these representatives were allowed to vote no to save their jobs earlier, and now seeing Massachusetts have even more reason to fear for their jobs, one would have to be a pretty serious ideological liberal to flip one’s vote now.

So, for what it’s worth, I think this bill is dead. And I’m hoping to see one of the market-driven reform bills that have been written by the Republicans replace it after the Republicans either retake the house this November, or at least make the gains necessary to prevent the Dems from suppressing it like they have suppressed a half dozen palatable alternatives already.


About two hours after the election was called, I read that Barney Frank, who is no Blue Dog, has stated that the Democrats are not going to be able to continue as if the Massachusetts election hadn’t happened, and will have to try to pass a revised version of the current bill through the Senate. If the House leadership can’t get Frank on board with the pass-the-Senate-bill-verbatim strategy, it’s not going to happen. The day after the election was called, we have Obama himself making similar, if cryptic statements. Democratic leadership has awoken to the fact they overstepped with Obamacare, and do not intend to destroy their party with what everyone would now see as cheap antics. There is still talk of a compromise which would be diluted so that it can get the approval of Senate moderates, but such, if even possible, would require foundational and revolutionary changes such that it wouldn’t even be the same bill, I think I’m justified in reiterating, this bill is dead.

President Runs afoul of Actuarial Science

Insurance is a preventative measure taken against low probability, high impact risk. It operates on the principle that, while it is impossible to predict the costs of any individual person, it is very much possible for actuaries to predict the costs of a large number of people within a certain segment of the population. That number allows us to calculate everyone’s individual probable risk, and if everyone pays that amount in, the insurance company will have enough money on hand to compensate for everyone’s actual damage.

Health Insurance DebateThe premiums people pay on health insurance are equal to the value of the risk being covered, plus what is necessary for administration of the fund. The ramifications of not assessing premiums on the basis of the basis of the cost of the risk determined by actuaries cannot be understated. Insurance companies are only viable because everyone buys his own coverage on the basis of his own risk, and therefore pays a premium commensurate more or less to what he would probably have to pay out of pocket to doctors without the plan. When people pay more or less than the assessed value of their risk, insurance companies collapse, as follows:

When governments mandate that seniors should pay lower premiums than what they cost, insurance companies have to make up the balance by raising premiums on the young and healthy. Seniors sign up for the plan in droves to take advantage. Because they’re paying less than they cost, the company loses money. The young are getting much less than they pay for, and drop the plan. Because they’re paying more than they cost, the company loses money. The insurance company goes broke.

The consequence of this kind of system is that when a health insurance company says someone with a preexisting condition is “uninsurable,” that’s not a euphemism for “we’re greedy capitalists and don’t want to pay.” Someone with a preexisting condition like cancer would have an enormous probable cost, and if they were to be hypothetically covered by insurance, they’d have to pay a premium on the order of hundreds of thousands of dollars annually – the cost that someone with an expensive preexisting condition is likely to pay in a given year. They’re literally uninsurable. Now you can advocate that the state should cover their costs, but you can’t advocate that insurance companies should pay all their bills without charging them premiums equivalent to their cost. That’s not insurance, that’s a social program, and if we’re going to institute such a social program, do it with a social program, don’t hide it in “insurance reform.” It will break the system.

As a side note, this is the sole reason the current proposal for “health care reform” mandates universal-coverage-or-else. It isn’t about making young people be responsible, it’s about preventing young people from dropping a plan that funds its charity through a de facto tax on the young in the form of higher premiums.

Tim Shaw for GooseRadio

On Healthcare Reform – Less Just Might Be More

My compatriot Amanda and I were having breakfast this morning and somehow the topic of health care reform came up. I said was pretty apathetic about the whole thing, which she disapproved of and so we got the chance to discuss it. As a result, I now have a much more concrete concept of what my opinions on health care reform are.

I think we all agree more or less that our current health care system is broken or at least, far from the ideal. Thus, everyone is trying to come up with ideas of how to fix it. The goal is apparently for everyone in the country to be able to get the healthcare they need. This is a good goal. But I have a hard time getting enthusiastic about any of the solutions being proposed, mostly because I disagree with their foundational assumptions.

The first foundational assumption is just what healthcare needs to include. Our nation is obsessed with health, but this obsession often times seems to a) have much more to do with comfort than survival and b) be solving problems that are a result of unhealthy lifestyles. And so, when we expect healthcare, we expect much more than is necessary or reasonable. We want a pill and a cure for everything and we want it now, thank you. This is not to say that all healthcare is like this; there are legitimate health concerns and health needs in individual lives. I’m just saying that in a lot of cases we expect much more than what we actually need.

The second foundational assumption is that if people do not have access to healthcare, that it is the government’s job to do something about it. (sidenote: we expect the government to do everything else to keep us happy and comfortable, why not this?). For centuries, the responsibility for healthcare did not fall on the government, but was picked up by the church. Who cared for the sick and the dying? The church. Why not today? Did not Jesus tell us to love and care for the least of these?

So, my response to healthcare reform is, let the government do what it will do with the healthcare game. The game is broken; they’re trying to rewrite the rules. My solution? Get out of the game and help those who can’t afford to play.

We don’t need institutionalized healthcare was much as we think we do. Our bodies have an amazing capacity to stay healthy; they’re designed that way. Every day our body successfully defends us against millions of physical and biological threats often without us knowing it. The best healthcare reform we can have is reforming the way we care for our best medical resource: our bodies.

Your body is the best doctor you have, and common sense is the best medicine. Take care of your body (healthy food, lots of water, regular sleep and exercise) and it will take care of you. Granted, it’s not wrong to access healthcare when it’s really needed and to go to a doctor in some situations. But we don’t need it as much as we think we do.

Good healthcare reform would be this:
To reform the way we take care of our bodies
To reform our expectations about what healthcare we really need
To reform the church’s lack of responsibility towards the poor, needy and sick

Kristina BjorkmanGooseRadio