Clinton Health Plan: The Wrong Prescription

The Clinton administration’s health care proposal is based on two faulty premises. First, and most fundamentally, it errs in assuming that guaranteeing health care is a responsibility of the government. It is not; no one has a “right” to health care. Second, assuming that health care were a legitimate responsibility of the government and the federal government ought to “do something” about the so-called health care “crisis,” the Clinton plan does exactly the wrong thing by trying to guarantee that everyone has health insurance. The problem—if there is one—with the American health care system is that it is overinsured; we need less insurance, not more.

I. Health care is not a “right.” There is only one fundamental right; an individual’s right to his or her own life. All other rights are consequences or corollaries of this basic right. For example, freedom of conscience, freedom of speech, and freedom to travel are natural rights that derive from the fact that human beings are rational creatures capable of speech and locomotion. Other rights–such as trial by jury, protection against unreasonable searches and seizures, and the prohibition of cruel and unusual punishments—are civil rights recognized by law as additional safeguards for individual sovereignty and dignity. These are true rights and, as such, can be enjoyed by all persons equally; no one’s exercise of a right is contingent on another’s waiver of the right.

Rights, properly speaking, do not require sacrifice. Rights prescribe the government from interfering with individuals; they do not require government to benefit by stealing from others. But to make health care a “right”—that is to guarantee medical services to all regardless of their ability to pay—requires some to make sacrifices for the sake of others. Medical services are, after all, not provided cost-free by a bountiful nature; they are available in finite quantities by individuals who must expend effort to produce them. State-guaranteed health care is thus founded on widespread rights violations.

Anyone who talks about a “right” to health care should be asked one question: At whose expense? The notion that one has a “right” to health care really means use of the coercive power of government to force some individuals—those with the foresight to plan for their own health care needs and with the ability to implement those plans—to sacrifice what they have earned to other individuals who lack such foresight and ability. It is an application of the principle, “from each according to his ability, to each according to his need.” Anyone who doubts the evil and destructiveness of this principle should read the parable of the Twentieth Century Motor Company in Ayn Rand’s Atlas Shrugged.

Medical care may be an important human interest or need, but it is not a “right.” Considering it as one will create a multitude of problems and injustices. No matter how wealthy a society is, its resources are never equal to the totality of the demands placed in them. The experience of other countries with national health insurance shows that far from guaranteeing the “right,” care is routinely denied to those who need it. Citizens not only do not have an enforceable right to any particular medical service; they don’t even have a right to a place in line when health care is rationed. The 100th person waiting in line for heart surgery is not “entitled” to the 100th surgery, for example; and given the average wait in countries like Britain, New Zealand, and Canada, those at the bottom of the priority list are literally at the risk of their lives.

II. The popular media has described America’s health care as being in a state of “crisis” for so long and with such vigor, that is has become a commonly accepted myth. In truth, though there are problems with the American health care system, it is by no means clear that there is a “crisis.” The United States may have the costliest health care system in the world, but it is also the best in the world; in no other country do individuals have such ready access to so many medical services. And Americans on the whole are not being bankrupted by health care costs. In 1990 only 5.2 percent of the average American household’s total expenditures went to health care, including health insurance costs, medical services, and prescription and non-prescription drugs. To put that in perspective, Americans spend more on restaurant food (6.4 percent of expenditures), yet no one speaks of a “dining-out crisis.”

Government in the United States today at all levels is an abject failure in guaranteeing one of the most basic rights, freedom from violent crime. Before it assumes additional responsibilities of questionable legitimacy, government should be held accountable for its pathetic inability to perform even its necessary functions. This is especially true of the federal government, which is itself responsible for many of the problems that beset health care today. Soaring expenditures through Social Security, Medicare and Medicaid not only contribute to the federal budget deficit; they also drive up the private sector’s cost because the low reimbursement rates on government-funded health care help make private insurance more expensive than it otherwise would be. Congress should limit its reform efforts to the abolition (through a gradual privatization) of these existing federal programs.

For the sake of argument, let’s assume, however, that there is something seriously “wrong&
quot; with the American health care system. What’s the problem, and what should be done to correct it? Careful analysis indicates that the problem has been misdiagnosed by the Clinton administration, and that the proposed remedy may be worse than the disease.

Much of the discussion about a “crisis” focuses on the 35 million Americans without health insurance. Lack of insurance does not mean lack of access. It is a mistake to assume that all the uninsured are indigent and cannot pay for medical care. In fact, some 9 million have incomes higher than median household income. Many are self-employed business owners, doctors, lawyers, and other professions who could afford health care but choose not to buy it because they are young enough, healthy enough, and/or wealthy enough to pay for their health care directly.

Rather than focusing on the uninsured, health care reform ought to focus on those who have insurance. A good proposition can be made that the rest of us are overinsured—and in fact, that it is the abundance of insurance that has pushed costs so high by encouraging overconsumption. The original purpose of insurance is protection against ruinous expenses, not routine ones. Americans’ obsession with so-called first-dollar coverage, in which an insurance underwriter basically pays for every trip a person makes to the doctor, isn’t really insurance at all, but a prepayment plan for the consumption of one of life’s necessities. Some commentators have likened this to a hypothetical “food insurance,” with a person paying a fixed monthly premium that entitles him to a predetermined menu of delicacies, free of charge, whether he could afford them or not. With insured Americans paying so little out of their own pockets, there is no incentive to control costs. Indeed, consumer
preferences—the patients choices—are all too often regarded as irrelevant. Producers decide what their costs are going to be and then wrestle with getting consumers to pay these costs—through employers and insurance companies or through the government, as well as out-of-pocket payments.

By far the most sensible plan for reducing health care costs can be found in a book published last year by the Cato Institute: Patient Power: Solving America’s Health Care Crisis, by John C. Goodman and Gerald L. Musgrave. Goodman and Musgrave base their proposal on the realizations that solving America’s health care problems requires undoing the harmful distortions introduced into the system by the government and that only a market-based system will work. Rather than relying on ever-deeper government intrusions into the market, Goodman and Musgrave emphasize the need to empower patients: to let people make their own decisions about what kind of health-care coverage to acquire, and then provide consumers with tax incentives needed to help them acquire it.

A health system similar to the ideal that Goodman and Musgrave has been implemented in Singapore, where many of the major needs that other governments approach with welfare and entitlement programs are met by requiring people to save. In Singapore, personal savings accounts are replacing the welfare state. Instead of a government-run social security system, Singapore’s residents are required to save for their own retirement. Instead of a government-run health care system, people are required to place six percent of their annual income into medical savings accounts. Funds build up in these accounts tax-free and can be spent only on medical care. The consumers themselves are the payers, drawing upon their own tax-deferred savings to shell out the payments. Thus, the less they rush to the hospital emergency room for every ache and pain, whether real or imagined, the more they accumulate in the Medisave accounts for the day a genuine emergency arises. The philosophy is simple: e
ach person should pay his or her own way; each family should pay its own way; and government transfers should be minimal.

Health care policy in countries all over the world is moving away from government involvement, replacing socialism in medicine with privatization, competition, and market incentives. The Clinton administration seems determined not to recognize this trend; sadly, while the rest of the world adopts pro-market reforms, President Clinton offers a reactionary proposal calling for more government spending and regulation. As Arkansas newspaper editor Paul Greenberg has astutely observed, “When it comes to a choice between liberty and control, competition and regulation, simplicity and bureaucracy, it is scarcely a choice for this president. He almost instinctively shies away from any reform that would empower the individual. Instead, he gravitates toward any approach that relies on big business and big government—and big bureaucracy to mesh them… Just suggest relying on individual freedom or free market, and you can almost hear his mind swing shut.”

Perhaps humorist P.J. O’Rourke sums it up best with his observation, “If you think health care is expensive now, just wait until you see what it costs when it’s free.”

David N. Mayer is a Professor of Law at Capitol University Law School in Columbus, Ohio. He is author of the forthcoming book, The Constitutional Thought of Thomas Jefferson, University of Virginia Press, April 1994.