My Freedom Based Vision for Health Care Reform

My Freedom Based Vision of Health Care
I would like to offer my vision for American health care for the 21st century. This vision statement is not a specific policy recommendation. It is a vision of what the world could be like after a series of incremental changes. I present my vision first because it is essential, in the current health care debate, that we have a common vision before we argue about specifics. I occasionally make mention of specific policy changes in order to persuade you that the vision is realistic. But keep your eyes on the big picture and see if you don't agree that this is a world that you'd want to live in.

My vision of health care is guided by some core principles: I believe in charity and sacrifice by those blessed with more, but I also think people should lie in the bed they make for themselves. I believe in free choice. I believe that the United States has been the beacon of freedom to the world, and that it needs to remain so.


My Vision
I envision a health care system where people choose their doctor and pay their doctor much in the same way that we choose our barber or our mechanic. People would save for health care the same way they save for home or car repairs. They would budget for it and it would be their choice where to go and how much to spend. Prices would be just as transparent as they are at the local department store. And the less fortunate would have no need of insurance because society would provide free care the same way we provide Section 8 or food stamps (no mansion, and no fillet mignon but you do get what you need)

Health care would be often be delivered at home. I'd have phone and email access to my doctor. Nurses would be allowed to do more. The licensing system for medical professionals would allow for much greater latitude in the use of physicians assistants (PA). These PA's would roam the cities to deliver in-home care at hours that are convenient for their customers. People would rarely visit the hospital. Broken leg? A PA would drop by (much like a plumber drops by for emergencies). They would be licensed to perform all manner of outpatient care. Self-blood draws and self-measurement would be the commonplace. Nobody would trudge into the doctor's office just to have their throat cultured. Everyone would have health appliances that can send vitals electronically to their doctor. An additional tier of prescription drugs would be created that would allow some drugs to be prescribed by a pharmacist (Electronic medical records would be an enabler for this.) More drugs would be available over-the-counter.

My medical records would be available instantly from a medical record provider of my choice. Standards bodies (much like the ones that govern the Internet) would ensure portability of records to any service provider. Privacy laws would be enforced to ensure my data remains private.

An aside on a new personal health paradigm: The CEO of Intel, Paul Otellini recently wrote of an entirely new paradigm in health care. Please read his views on a paradigm of personal health at Politico. You see, instead of copying France or Canada, the United States should lead.

Employers
Just as people are free to choose their doctors, they would be free to choose the funding model. No longer would employers be selecting insurance providers. In fact, the tax incentives that force employers to provide insurance would have been abolished. In lieu of health insurance, employers would have increased the salaries of the employees and gotten out of the health business. If the health of employees was important, they could require yearly physicals much like they do in the Armed Services. But they wouldn't be choosing how health care is delivered to their employees. No more worrying about losing health care because you lost or changed your job! (To get there, we need to tax employer health benefits and move the tax relief directly to individuals).

My Vision on Insurance
People would carry only catastrophic health insurance. This is much like how we use home insurance to cover unforeseen events. Home insurance premiums would sky rocket if we expected insurance companies to clean our bathrooms and replace our worn carpets.

The health of society would be measured by whether people receive care or not (the number of insured wouldn't matter). Most people would buy insurance. Some people would choose not to have insurance. In my vision of health care, these people would still receive the health care they desire and can afford. Most health care will be so affordable, it will be paid for out-of-pocket (and with tax credits) If they really can't afford it, they can receive charitable care, which I talk about below.

A word about genetics. In my vision, genetic information would be strictly guarded as a private information. Insurance companies would be prohibited from requiring genetic tests. But, as now, they would be able to ask about lifestyles, habits, and past health history.

A word about pre-existing conditions. If someone waits until their house burns down to get home insurance, it is too late. It would be down right nonsense to require an insurance company to take on a customer that will be a guaranteed liability from day one. Insurance wasn't invented to take care of people. It was invented to enable people to have peace of mind while they buy homes and have children during their prime working years. If you didn't buy this peace of mind, you will need to rely on charity, as I describe below.

My Vision of Charity:
Local and state governments would provide free access to student hospitals and clinics. The care in these hospitals would be rationed the same way it is in Canada. The difference being that, had they chosen to insure themselves, they would not be receiving rationed care. (In Canada you have no choice but to receive rationed care). And unlike Canada, the indigent care would be funded to a high degree by philanthropists, organizations like the United Way, and by state and local taxes. It is a fallacy that only the federal government is rich enough to help the poor. Several states refused New Deal handouts during the Great Depression and took care of their poor quite well. The funding of these clinics, in principle, would not come from the federal government. However, because the Supreme Court has already broadened the General Welfare clause, I would be swimming against the current to deny any role for the federal government. We would continue to provide Medicare-like services for the elderly. The federal government would be allowed to fund student and research hospitals which provide free care as long as it can be shown that the expenditures fell evenly across the states in proportion to their populations. Such federal expenditures would be modest in comparison to the size of the health care economy. In my ideal world, a constitutional amendment would have restricted all "General Welfare" expenditures of the federal government to be 10% of GDP or less.

Under my vision, every American would receive basic health care. Those who choose to provide for themselves will receive the best and most timely health care. We cannot turn our backs on the principle of the harvest. People must reap what they sow. If you didn't plan ahead, you will be cared for, but it will be Canadian style, and prompt delivery cannot be guaranteed. And your doctor will probably be less experienced. But look at it this way, those who receive free care are providing a service to society by helping doctors gain experience.

Cheap Health Care
In my vision of health care, we would honor contract law. Contracts that cap liability would be enforced. People would be free to undergo experimental treatments. The FDA would provide an experimental tier of drug availability. Doctors would guarantee their work, much like a roof contractor guarantees a new roof. Now, obviously, they can't insure every procedure will be successful. But they can guarantee specific treatments by providing free follow-ups and/or money-back if the customer is not satisfied. And because everyone is paying for their care in much the same way they pay their mechanic, costs will be driven way down for any treatments that enjoy economy of scale. (Think Brakes Plus, Midas Muffler, or Pep Boys.) And don't under estimate how cheap care would be if we allowed more in-home care as I mentioned above.

My Vision of Honoring the Constitution
In my ideal world, all law would have to be accompanied by a statement of constitutionality. People would honor the spirit, not just the letter of the the Constitution. The distribution of government from federal, to state, to county, to city would look more like a uniform rectangle rather than an inverted triangle.

The Constitution does not enumerate the power to manage health care. (Please read the 10th amendment in the Bill or Rights.) It does allow taxation and court precedent does allow spending on the "General Welfare". But the spirit of the law is that the federal government does not micromanage the affairs of the people.

Health care services arise from the fruits of someone's labor. Health care is no more a right than dental care, automotive service, or housing. That the government might decide to bestow services to the needy does not make it a fundamental right. Constitution guarantees equal rights, not equal things. Rights have to do with free agency, not with the receipt of goods and services.

A word about Social Security:
In my opinion, Social Security violates the spirit of the Constitution. However, it was found to be constitutional by the 1937 Supreme Court. The old-age portion of SS won assent by 7/2 vote and the unemployment portion squeaked through on a 5/4 vote. Some historians speculate that Justice Owens, the swing voter, was influenced by FDR's court packing scheme. So we now have a legacy in which the "General Welfare" clause of the Constitution can allow the federal government to justify almost any spending. But this does not nullify the spirit of the law.

And what if it can be shown that spending detracts from the General Welfare? If so, it is unconstitutional by any standard. Today, we have unfunded liabilities that if not fixed will eventually bankrupt social security. The 1937 supreme court approved a system that was self-funded. Today it is pay-as-you-go and is producing a huge generational transfer of wealth. The program has led to an unquenchable appetite for pork barrel spending. With 70 years of hindsight, we can definitely see that the program has exceeded James Madison's worst nightmares. What they needed in 1937 was a stimulus program with a sunset. That would have promoted the general welfare in a time of need and then returned the country back to the normal balance of power.

In my vision, two amendments to the Constitution would be enacted. The first, (as mentioned above) would keep "general welfare" spending to less than 10% of GDP unless temporarily overridden by a 3/4 vote. The second would be a balanced budget amendment (again with a 3/4 vote override provision).

Summary
In short, in my vision, freedom of choice is preserved while still guaranteeing help to those in need. I have no illusions about my vision being a panacea. It is just a vision. If only 80% of it were realized, we'd be the envy of the world. It would take a lot of work. As affluent as we are, we'd probably still pay 16% of GDP on health care but it would be by choice. And the rewards would be spread evenly across all people in a way that balances choice, accountability, and charity. Above all, this vision honors the spirit of the Constitution and preserves the principles of freedom which have blessed all of humanity.

Our Best Hope
The best legislation that I have seen to-date is The Patient's Choice Act. I don't understand why this Act isn't being discussed more actively. I know the President would be reluctant to give credit to two Republicans, but this bill addresses the insurance problem while providing a universal solution! He could claim victory at getting everyone covered and receive the bipartisan support which he claimed he would strive for.

Liberals, Conservatives, and the Political Spectrum

I remember being taught about stereotypes in middle school. A stereotype is an overly simplified description of a class of people. When used as a verb, it means to force people into little boxes into which they really don't fit. It creates a tendency to prejudice and false assumptions.

Such is the case with labeling people as conservative or liberal. Not only are these terms stereotypical, but they are not really that accurate. Today's conservatives can be described as classical liberals. Today's liberals can be described as neo-conservatives.

Furthermore, we have created a one-dimensional notion of Left versus Right. If you take the world's smallest political quiz you'll immediately realize how silly the Left/Right spectrum really is. The Quiz presents an improvement by adding another dimension.

But I think the Quiz authors (Libertarians I believe) miss the mark too. The opposite end of Statism should be Anarchy, not Liberty. This concept was well known to the founders of our republic. The political spectrum as they knew it was one in which being a moderate was a virtue (on the Left/Right spectrum, being a moderate has about as much clarity as the muddled conservative/liberal labels).

And so now I present you with the most concise description of political spectrum which informed the creation of the American standard of liberty:

July 4th, A time to recommit to the principles of freedom

Celebrating Freedom

This year we celebrate 233 years of freedom. We also celebrate 222 years of union. Late in 1787, in a flash of inspired genius, 55 men put aside their petty differences and forged the great balancing act we know as the United States Constitution. Get out your barbecue, head to the fireworks, but don't let July 4th pass without having pondered our founding documents.

Have you read the Declaration or the Constitution lately? Just as importantly, have you read any biographies of the founding fathers? The founding of the the longest lived constitutional republic is no small matter. I have always felt that balance is the key to most human endeavors. The Constitution of United States has it! Everywhere you turn, there is a check against those with authority. Not only are the three branches of federal government played off one another, but the entire federal government is checked by both the States and the people. (And the people are checked by the Constitution and by their chosen statesmen.)

If I were to sum up the U.S. constitution in one sentence, I'd say this:
It's all about providing freedom from abuse by those in authority.

Context for the Constitution is also important. It matters what the framers intended and it matters to understand the milieu in which their discourse took place. Thus, a study of history and of important works such as Common Sense and the Federalist Papers is also in order.

Here is an example of how context helps us understand the founding principles. While the Constitution pays homage to "We the People" it also puts a check against them. In fact, it is a great fallacy to believe our country to be a democracy. James Madison says in Federalist 10 "Democracies have ever been spectacles of turbulence and contention; have ever been found
incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths...A republic, by which I mean a government in which the scheme of representation takes place, opens a different prospect, and promises the cure for which we are seeking."

Another phrase in the Preamble that has lead to much abuse in federal government is the "promote the general welfare" clause. Of this Madison had this to say: "Nothing is more natural nor common than first to use a general phrase ( like common welfare) and then to explain it and qualify it by a recital of particulars." (Federalist #41) Thus, that clause means nothing on it's own! It's meaning is elaborated by the details of enumerated powers later on. Jefferson also concurred: "Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated."(1817 letter to Albert Gallatin).

Let not another Independence Day pass without recommitting ourselves to the civic duty of understanding good government. I have assembled here some essential resources.

1. The Constitution of the United States
2. The Declaration of Independence
3. The National Center for Constitutional Studies
4. The 5000 Year Leap
5. My own MP3 collection of the Federalist Papers

Happy July 4th!

Cherry Picking Your Scapegoat

This post is just a reprint of the second half of this older post:

How Two Sides can both be right about Objective Truths
Now I will show by example how opposing viewpoints about objective truth can both be right. I will take the recent financial crisis as an example. That there is a meltdown of sorts is pretty much an objective truth agreed upon by most everyone. Over the past months I've heard two claims that were made with utmost certainty:
1. Republicans, especially President Bush (And more recently President Reagan), are 100% to blame for the crisis.
2. Democrats are 100% to blame for the crisis.

My argument is based on the fact that, whether they knew it or not, each of the above claimants is implying "according to my values and priorities" in their statement. When you take into account the implied reference point, their claims can both be verified objectively

I will do so. According to this Denver Post article and this WSJ article there are about eight causes of the financial meltdown. Some of the causes had both beneficial as well as deleterious effects. In no particular order:

1. Enactment of laws that encourage home ownership (most notably, the CRA of 1977 and the 1993 expansion of it) (D)
   
2. Political pressure on Fannie and Freddie to buy/guarantee subprime loans. Followed up by lax oversight. (D)
   
3. Deregulation of banks which allowed them to get too big and have too high a debt load (R)
   
4. Overregulation of banks which give them a false sense of security. (D)
   
5. Low interest rate policy of the Fed which fueled mortage debt (D/R)
   
6. Preditory lending practices (R)
   
7. Government created credit-rating oligopoly (providing the market with misinformation) (D)
   
8. Short Sellers (R)
   

This is a gross simplification, but each of the causes above can be loosely associated with one political party or the other. To be fair, each cause can be attributed to both parties...but I'm trying to make a larger point. I've marked each cause with the associated party.

Now a bubble can only burst when it reaches a certain level. Take away any one or two of the above factors, and you might have averted the crisis entirely. So if you order the list above according to your priority, the last few items (that the other guy caused) are the entire cause of the meltdown right? This sort of cherry picking can be justified from a subjective point of view and it is very very common. But wouldn't be better if we acknowledge the valid considerations of both sides?

Obama's Tax Increase on All Americans

10,000 for a candy bar
I'll never forget my first hand experience with 5,000 percent inflation. I was living in Argentina in 1989 as a missionary. We got our living stipend at the beginning of the month. It was denominated in Australes. The money had to be spent quickly, as prices would double by the end of the month. When I arrived in 1989 a candy bar (the tasty alfajor) was 100 australes. When I left in 1991 the same alfajor cost 10,000. I'll never forget how we used 100 Austral bills as toilet paper. I still have a wad of Australes an inch thick that I kept as a souvenir.

Inflation is a major back door tax on all citizens. Everyone with a bank account or a fixed wage suffers. Governments with debt love inflation because they can pay down debt with devalued currency. The recession is causing a temporary deflationary cycle, but with things starting to turn around, everyone knows that inflation is the true threat. I noticed that gas was already back up to almost 2.50. And it isn't because of oil demand. The dollar is losing value. The Chinese are getting nervous about holding so much U.S. debt. Even prominent central bankers are worried. Here is a random quote from fund manager Harry Lange at Magellen (one of my 401k funds) "In my view, that no-holds-barred approach to spending could mean that inflation will resurface as a serious problem once the U.S. economy enters a recovery phase. " And from the fund managers of Vanguard Primecap: "There are legitimate concerns about the increased moral hazard and unintended consequences that are likely to result from the various rescue plans and stimulus bills...We are also concerned that the dramatic increase in money supply may result in inflation."

How to fund a major increase in the size of government
It is completely naive to believe that President Obama can fund all his programs by just soaking the rich. I believe he thinks it can be done, but it goes against all experience. The reality is that Obama's initiatives will be paid for by everyone. Here is how:

1. Inflation will pay for much of the debt. China will not keep buying our treasuries forever. You monetize debt by selling it to the Federal Reserve. Sure, the FED buys debt all the time to maintain a stable money supply. But now it's being pressured into it for political ends.
2. The tax increase on the "rich" will miss the target and hit smack dab on the middle class. As the 2003 Bush tax cuts proved, the upper class doesn't try as hard to hide income when taxes are relatively lower. Thus, we saw a surge in the amount that the upper 10% pays in taxes because of the Bush tax cuts. Obama will reverse that trend, and the rich will go back to either hiding income or being less productive with it. The middle class will have to shoulder the burden.
3. Cap-and-trade. Regardless of the environmental merits, carbon taxes are a tax increase on all Americans. I'd even say they are regressive. There is no such thing as a tax on a company. Only taxes on people. You can tax companies all you want, but it all lands on consumers and on shareholders. (Most Americans are shareholders of some sort, whether through a company retirement fund or a 401k plan.)
   

No matter how it turns out, the pro-Obama forces will be able to claim victory because the processes I've outlined above are all very indirect. But modern liberals have always succeeded more when they take the back door approach. Who wants to hear tough talk? Americans seem to want others to pay for their benefits, so the political class has to fool them into believing that they're getting a free ride. We'll you're not. Factor into it the opportunity costs of lost freedom and innovation, and the picture is pretty bleak.