Tag Archives: Libertarianism

If American Healthcare Kills, European Healthcare Kills More

The justification for moving to a socialized healthcare system like those in Europe is preventable deaths, but the numbers don’t bear that out.

The moral argument for universal healthcare is simple: more people receiving medical care means fewer preventable deaths. If universal healthcare, such as single-payer, leads to less death, then it is obviously the superior moral choice. Politicians like Bernie Sanders will go a step further and claim that Republican legislation, in fact, kills people by reducing government-sponsored coverage.

Yet, what if there were evidence to suggest that more people would die under a universal healthcare scheme than under the current US system? What if, by the left’s standards, the American healthcare system is less of a killer than the average European one?

Consider the best estimates of how many people die in the US due to a lack of healthcare. The question is hotly contested, and approximations range from 0 to 45,000 people per year. The latter figure is obviously what most progressives prefer to cite, and although there’s much to doubt about this number, let’s for the sake of argument accept that approximately 45,000 fewer people would die in the US every year if all Americans had decent health insurance.

Now flip the question: How many people die in other countries due to deficiencies in their healthcare systems? And how many people would die in the US if we had treatment outcomes similar to those in other countries?

Socialized Healthcare Has Clear Life-Costs

study by the Fraser Institute titled The Effect of Wait Times on Mortality in Canada estimated that “increases in wait times for medically necessary care in Canada between 1993 and 2009 may have resulted in between 25,456 and 63,090 (with a middle value of 44,273) additional deaths among females.” Adjusting for the difference in populations (the US has about 9 times as many people), that middle value inflates to an estimated 400,000 additional deaths among females over a 16 year period. This translates to an estimated 25,000 additional female deaths each year if the American system were to suffer from increased mortality similar to that experienced in Canada due to increases in wait times. A system that disproportionately harms women? How progressive.

By the “US healthcare kills” logic, any tax increase that stalls productivity is tantamount to killing.

Let’s look at interventional outcomes. According to the CDC, stroke is the cause of more than 130,000 deaths annually in the United States. However, the US has significantly lower rates of 30-day stroke-induced mortality than every other OECD country, aside from Japan and Korea. OECD data suggest that the age- and sex-adjusted mortality rates within Europe would translate to tens of thousands of additional deaths in the US.If America had the 30-day stroke-mortality rate of the UK, for example, we could expect about an additional 38,000 deaths a year. For Canada, that number would be around 43,500. And this only accounts for mortality within a month of having a stroke, which in turn accounts for only 10% of stroke-related deaths.

This is further reflected in overall stroke-mortality statistics: for every 1,000 strokes that occur annually in the US, approximately 170 stroke-related deaths occur. The latter number is 250 and 280 for the UK and Canada respectively. Considering that approximately 795,000 strokes occur each year in the US, the discrepancy in stroke-related mortality is humongous. But don’t expect NPR to run a sob story about a Canadian stroke victim who would’ve survived in an American hospital.

Similarly, cancer-survival rates are considerably higher in the US than in other countries. Check out this data cited by the CDC, which comes from the authoritative CONCORD study on international cancer-survival rates. The US dominates every other country in survival rates for the most deadly forms of cancer.

If we weight the CDC-quoted survival rates for different forms of cancer in accordance with their contribution to overall cancer mortality, we find that, with the UK’s survival rates, there would be about 72,000 additional deaths annually in the United States. There would similarly be about 21,000, 23,000, and 31,000 additional deaths per year with Canadian, French, and German survival rates.

Lives are indeed saved by the many types of superior medical outcomes that are often unique to the US. This is not to mention the innumerable lives saved each year around the world due to medical innovations that are made possible through vibrant US markets. By the “US healthcare kills” logic, any tax increase that stalls productivity, and thus stalls the rate of innovation, is tantamount to killing – which is obviously an absurd conclusion.

The Healthcare Debate Has Been Misframed by Demagogues

I’ll be the first to admit: our medical system is far from optimal. Among other things, soaring healthcare costs certainly need to be controlled, and insuring against medical calamity ought to be much more affordable. But the policy demands advanced by Sanders and his ilk are completely ignorant of the massive deficiencies that are characteristic of universal healthcare systems. They’ll sing songs all day about the 45,000 lives taken every year by greedy insurance executives and their cronies on Capitol Hill, yet remain completely ignorant of the fact that the European systems they fetishize are less humane by their own standards.

If we’re going to call Paul Ryan a killer for curtailing Medicaid spending, then we logically have to apply that epithet to all politicians who advocate for European systems – you know, the systems with outcomes that would result in tens of thousands of additional deaths in the US every year. Paul Ryan may indeed qualify for the Manslaughter Olympics, but Bernie Sanders is poised to smash the world record.

What We’ve Learned About Economics in the Last 100, 150, and 200 Years

2017 marks important anniversaries in the world of economic theory.

The year 2017 is a milestone in both economic history and the history of economics. The Marx-inspired Red October coupe d’état took place in Russia one century ago. The 1st volume of Marx’s Capital, a Critique of Political Economy was published 150 years ago. David Ricardo’s Principles of Political Economy and Taxation was published 200 years ago.

Ricardo’s Law of Comparative Advantage is an application of what economists now term Opportunity Cost.

Death Blow to MercantilismThe bicentennial of Ricardo’s book is worth commemorating because this book finished a crucial debate over the merits of international trade. 18th Century Mercantilists believed that a nation could become wealthier through trade surpluses- by having exports greater than imports. Taxes on foreign goods create a surplus of exports over imports. 18th Century Economists David Hume and Adam Smith each demonstrated flaws in the economic nationalism advocated by Mercantilists. Hume demonstrated that trade surpluses just cause an inflow of money, gold back then, which makes exports more expensive. Smith proved that free trade can make all nations wealthier by allowing each nation to specialize in areas of absolute productivity advantage.

Smith and Hume dealt severe blows to Mercantilism, but Ricardo ended the debate between Mercantilists and Economists. Ricardo proved that free trade will make everyone wealthier by allowing each nation to specialize in areas of comparative productivity advantage. Ricardo pointed the way to both modern economic theory and prosperity. Ricardo’s Law of Comparative Advantage is an application of what economists now term Opportunity Cost. People who choose between goods according to the cost of not having some other real good maximize expected real wealth. The emergence of global trade in the modern world has raised productivity by allowing people to choose the most advantageous options, not just domestically.

The progress achieved from Ricardo’s insight has been limited by two factors. First, Mercantilism remains popular. Second, a third set of ideas emerged to challenge Ricardo. Smith and Ricardo both erred by thinking that the price of a good ultimately depends on labor content. Ricardo pointed the way out of this intellectual error (Opportunity Cost), but Karl Marx took a different path. Marx argued that since all value comes from labor, all profits come from exploiting labor. Marx’s initial critique of Smith-Ricardo political economy was published in 1867, with two additional volumes published posthumously. Marx argued that workers would overthrow capitalists to end misery brought on by capitalists paying them mere subsistence wages.

Problems with Marxism

Problems with Marxism were ascertained during a half-century of debate.  In 1917 the leader of the Bolshevik faction of Marxists, Vladimir Lenin, admitted that the notion of capitalists exploiting workers in each in their own nations was wrong. Why did Lenin concede this point? Because it was obvious that wages and living conditions for workers in the most advanced industrial nations were rising.

Yet somehow Marxism is resurgent and popular in academia.

Since wages in capitalist nations were obviously moving away from, not towards, subsistence levels, Marxists sought some new basis for justifying their belief in capitalist exploitation. Perhaps imperialist powers, like Belgium, France, and England, exploited workers in colonies. Is this theory plausible? No decent person could excuse abuses by the English, French, and especially Belgians, in their colonies.Can Lenin’s revised Marxism explain capitalist development in the United States, Germany, or Sweden? Germany and the US accumulated capital for decades without colonies.  How could the initial phases of German and American industrialization be the result of “surplus value” extracted from future colonies?  Furthermore, Germany and the US acquired relatively small colonies, very small compared to ongoing industrialization in these nations. The U.S. acquired its’ colonies from the 1898 Spanish-American war. Why didn’t Spain develop more substantially while it had colonies?

Do the examples of France and the U.K. actually fit with Lenin’s imperialism theory? No. Industrial development in France and the U.K. began while these nations were just beginning to acquire colonies, and continued even after these colonies were lost around a half-century ago.

Experience over the past 200 years has also shown that Ricardo was right about Mercantilism, yet this repudiated theory remains popular today. Experience over the past 150 years has shown fatal flaws in both Marx’s original and Lenin’s revised version of Marxism, and the theoretical defects of Labor Value theory were completely exposed by Carl Menger in 1871.

The defects of Mercantilism and Marxism are hardly trivial. Red October created a wave of Marxist states, which perpetrated atrocities that dwarfed the abuses of French and Belgian colonials. Yet somehow Marxism is resurgent and popular in academia. Mercantilists stood in the way of the unprecedented economic progress achieved through globalization, yet Mercantilism is resurgent and popular in the White House. One century ago this year the rise of Bolshevism rose to threaten modern progress. Bolshevism drove many others into the extreme nationalist movements of Mussolini and Hitler. Now, a century later, the twin threats of Fascism and Marxism appear resurgent. What can we learn from the resurgence of Nationalism and Marxism? Those who have failed to learn the correct economic lessons of modern history may doom all of us to repeat its worst aspects.

Republished with Permission – Original article may be found at FEE.org

In One Image, Everything You Need to Know about Health Insurance, Community Rating, and Pre-Existing Conditions

When discussing government involvement in the health sector, I usually focus on the budgetary implications. Which makes sense since I’m a fiscal wonk and programs such as Medicare, Medicaid, and Obamacare are diverting ever-larger amounts of money from the economy’s productive sector.

I also look at the tax side of the fiscal equation and complain about how the healthcare exclusion mucks up the tax code.

Though it’s important to understand that government involvement doesn’t just cause fiscal damage. All these programs and policies contribute to the “third-party payer” problem, which exists when people make purchases with other people’s money. Such a system is a recipe for inefficiency and rising prices since consumers generally don’t care about cost and providers have no incentive to be efficient. And since government figures show that nearly 90 percent of health care expenditures are financed by someone other than the consumer, this is a major problem. One that I’ve written about many, many times.

But there’s another economic problem caused by government – price controls on insurance – that is very important. Indeed, the fights over “community rating” and “pre-existing conditions are actually fights about whether politicians or competition should determine prices.

Simply stated, politicians want insurance companies to ignore risk when selling insurance. They want artificially low premiums for old people, so they restrict differences in premiums based on age (i.e., a community rating mandate), even though older people are statistically far more likely to incur health-related expenses. They also want artificially low premiums for sick people, so the crowd in Washington requires that they pay the same or similar premiums as healthy people (i.e., a pre-existing conditions mandate), even though they are statistically far more likely to incur health-related expenses.

Set aside that the entire purpose of insurance is to guard against risk. Instead, let’s focus on what happens when these types of price controls are imposed. For all intents and purposes, insurance companies are in a position where they have to over-charge young and healthy people in order to subsidize the premiums of old and sick people. That’s sounds great if you’re old and sick, but young and healthy people respond by choosing not to purchase insurance. And as fewer and fewer young and healthy people are in the system, that forces premiums ever higher. This is what is meant by a “death spiral.”

The pro-intervention crowd has a supposed solution to this problem. Just impose a mandate that requires the young and healthy people to buy insurance. Which is part of Obamacare, so there is a method to that bit of madness. But since the penalties are not sufficiently punitive (and also because the government simply isn’t very competent), the system hasn’t worked. And to make matters worse, Obamacare exacerbated the third-party payer problem, thus leading to higher costs, which ultimately leads to higher premiums, which further discourages people from buying health insurance.

So how do we solve this problem?

One of my colleagues at the Cato Institute, Michael Cannon, is a leading expert on these issues. And he’s also a leading pessimist. Here’s some of what he wrote a week ago as part of a column on the Senate bill to modify Obamacare.

ObamaCare’s “community rating” price controls are causing premiums to rise, coverage to get worse for the sick and insurance markets to collapse across the country. The Senate bill would modify those government price controls somewhat, allowing insurers to charge 64-year-olds five times what they charge 18-year-olds (as opposed to three times, under current law). But these price controls would continue to make a mess of markets and cause insurers to flee.

But he wasn’t enamored with the House proposal, either. Here are some excerpts from his analysis earlier this year of that proposal.

The House leadership bill retains the very ObamaCare regulations that are threatening to destroy health insurance markets and leave millions with no coverage at all. ObamaCare’s community-rating price controls literally penalize insurers who offer quality coverage to patients with expensive conditions, creating a race to the bottom in insurance quality. Even worse, they have sparked a death spiral that has caused insurers to flee ObamaCare’s Exchanges nationwide… The leadership bill would modify ObamaCare’s community-rating price controls by expanding the age-rating bands (from 3:1 to 5:1) and allowing insurers to charge enrollees who wait until they are sick to purchase coverage an extra 30 percent (but only for one year). It is because the House leadership would retain the community-rating price controls that they also end up retaining many other features of the law.

Though existing law also is terrible, largely because of Obamacare. Here are passages from Michael’s column in the Hill.

ObamaCare’s core provisions are the “community rating” price controls and other regulations that (supposedly) end discrimination against patients with preexisting conditions. How badly do these government price controls fail at that task? Community rating is the reason former president Bill Clinton called ObamaCare “the craziest thing in the world” where Americans “wind up with their premiums doubled and their coverage cut in half.” Community rating is why women age 55 to 64 have seen the highest premium increases under ObamaCare. It is the principal reason ObamaCare has caused overall premiums to double in just four years. …Why? Because community rating forces insurance companies to cover the sick below cost, which simply isn’t sustainable. The only solution ObamaCare supporters offer is to keep throwing more money at the problem — which also isn’t sustainable.

Anyone who wants to really understand this issue should read all of Michael’s work on health care issues.

But if you don’t have the time or energy for that, here’s an image that I found on Reddit‘s libertarian page. Using not-so-subtle sarcasm, it tells you everything you need to know about why price controls ultimately will kill health insurance.

P.S. None of this suggests we should feel sorry for health insurance companies. They got in bed with the previous administration and endorsed Obamacare, presumably because they figured a mandate (especially with all the subsidies) would create captive customers. Now that it’s clear that the mandate isn’t working very well and that increased Medicaid dependency accounts for almost all of the additional “insurance coverage,” they’re left with an increasingly dysfunctional system. As far as I’m concerned, they deserve to lose money. And I definitely don’t want them to get bailout money.

P.P.S. Republicans aren’t doing a very good job of unwinding the Obamacare price controls, but they deserve a bit of credit for being bolder about trying to undo the fiscal damage.

Addendum: A comment from Seb reminds me that I was so fixated on criticizing price controls that I never bothered to explain how to deal with people who have pre-existing conditions and therefore cannot get health insurance. I’m guessing the answer is “high-risk pools” where the focus of policy is directly subsidizing the relatively small slice of the population that has a problem (as opposed to price controls and other interventions that distort the market for everyone). But the main goal, from my perspective, is to have states handle the issue rather than Washington. A federalist approach, after all, is more likely to give us the innovation, diversity, and competition that produces the best approaches. States may discover, after all, that insurance doesn’t make sense and choose to directly subsidize the provision of health care for affected people. In the long run, part of the solution is to get rid of the health care exclusion in the internal revenue code as part of fundamental tax reform. If that happened, it’s less likely that health insurance would be tied to employment (and losing a job is one of the main ways people wind up without insurance).

Reposted from International Liberty