There are individuals who have catastrophic medical needs (or other needs) that are entirely beyond their control.  An in-depth discussion could be had about whether it is the proper role of the public at large to assist those individuals, and thus the role of government to levy taxes on all other individuals to pay for such exceptionally needy individuals’ care. 

One can easily argue that the constitutional role of government is to tax and spend only for the “common” good of its citizens rather than for the private good of any individual.  This would mean that government could only dole out funds for services that are shared by and available to the citizenry as a whole (roads, police and fire protection, national defense, a court system to resolve disputes, etc.) rather than for any particular person or individual (or class of individuals by race, age, economic status, health condition, number of children, marital status, etc.).  Since taxation is imposed to some degree on all citizens, directly or indirectly, one can argue that government funds (all derived through taxes, of course) should only be spent in ways that benefit all citizens: the common good.  The winners of that policy debate to this point have been those who say government is not limited merely to “common” good, but that it can decide to help people by various classifications and particular qualifications: economic status, health, age, number of children, etc. etc.  In essence, the winners have determined that we can and should have “forced charity” (an oxymoron, of course) in the form of mandated contributions from all to provide for the needs of some. 

When you consider the progressive nature of taxation and that it is not really across the board, then it even looks worse: government taxes people by class (forces their “charitable” contributions) to redistribute the funds to people deemed worthy.

For this post, we’ll focus on government role in health care:

However, to narrow the debate down to whether a particular person is “deserving” of the mandatory charity is one thing.  That is not the point of this writing.  This writing is specifically to answer questions I hear about whether government should take a broader-based role in the regulation and administration of health services, either directly or by a takeover (via significant additional regulation of) medical providers or even the health insurance industry.

I will start with some propositions that I believe are indisputable, but then, lest there are those who wish to dispute them, provide support.  (1) People are fallen and self-centered by nature. (2) The "government" is really a group of people.  (3) Government is less accountable to and responsive to the public at large than private business. (Also, the larger the governmental unit--i.e. the federal government compared to a city government—the less responsive and accountable it is to the people it is supposed to serve.)  (4) Government direction of resources, or provision of services, is always going to be or become less efficient and less effective than private provision of the same services would be. 

1.         The Bible teaches Christians that humans are by nature fallen (selfish, self-motivated, looking-out-for-number-one) and that "straight is the gate and narrow the way and few there be that find it” (in other words, few will live a selfless, Christ-like life of putting the needs of others ahead of needs/desires of self).  I believe the Bible on these topics. 

Some might believe the Bible simply because they have been taught that the Book is true, which is fine; but I believe that real life confirms it as well.  As I look around and interact with other humans, it is not hard for me to believe: most humans seem to do what is in their own best interests, if they can get away with it, using whatever power available to them, even if it costs others.  If the Bible is true, then we must assume these facts to be true as we design an economic and/or political system.   

2.         Both businesses and government are run by people.  Humans make decisions, either alone or in concert with others.  “Government” only makes decisions and does things as the people who are appointed or elected to fill government posts make decisions.  Businesses (even those “evil, big corporations”) are run by people.  It’s not a faceless, mindless “bureaucracy” that decides things, but human beings.  Those people are selected (by higher management) or elected (i.e. by boards, shareholders, etc.).  There are limited numbers of people to whom any person feels accountable.  The people to whom a person feels accountable affect that person’s decisions. 

What is it to be accountable?  It means someone can affect your security, your job, your income, your self-interests.  Put simply: they can fire you!  Out of self-interest/self-preservation, you will try to please the people to whom you feel directly accountable. 

Fallen humans will, by and large, do what it takes—make the decisions necessary—to protect self.  This is true as a general rule of humans in government and humans in private business.  If one cannot agree with this, then we need to find out what is not clear about point #1.

3.         If a business fails to please its customers, it goes bankrupt because customers will stop doing business with it.  If government fails to please its "customers" - tough cookie to the customer! Government still takes your money and delivers a second rate service or product and you the customer have to take it, pay for it, like it or not …or go to jail!  Part of the difficulty here is that in the government context, the customers who pay are not the same customers who show up to collect the services.

The people running private businesses have limited power.  They can only try to convince people to buy - voluntarily - their products or services.  They invite, entice, and may even beg customers to give them money in exchange for their product or service.  But they have no power to force their customers to give up their money and buy.  If a customer thinks the price is right—that there is a fair exchange of value, my money for your offered goods and services—then they buy, and the business will (assuming they did not promise more than they can actually deliver for the cash they will receive) makes a profit and stays in business.

If a business operates inefficiently, they must charge more to deliver a good or service.  If they do that, then a competitor will go into the same business at a cheaper price, or better service, or better product, and force the inefficient one to get better or go broke.  Thomas Sowell once said that those who decry businesses for doing things to make money are apparently forgetting that the only way businesses make money is by providing other people with what those other people want; i.e. by filling a desire or need of others.  Business (doctors, hospitals and even insurance companies) can only be in business by treating people fairly overall; providing a fair exchange of value for value (services/products of value provided by them for a price/fee exchanged by their customer).  Whenever a customer/person does not like the value they are being provided, they can stop sending their money to that business.  Either NO-ONE provides the service you want for the price you are willing to pay, or else someone else does and you buy it from them.  If enough people agree with your judgment of the relative value of what the first company provided, voila that company is out of business and the more efficient competitor is prospering.

And the humans who make the decisions to run the company know this.  If they are rational human beings, they do what they can to be more efficient and provide the most value they can for the price they charge.

Government is an entirely different animal.  (If only we had the same “voila” power over it, in the areas where it serves us so poorly!)  Government has the power of the police and army and courts to enforce their "sale" of products or services to their "customers."  They have no competitors.  Their "customers” have no alternative where they can "shop around" for a better deal.  And, generally speaking, the people who pay the price (involuntarily, in the form of taxes) are not even the people who get the product or service. 

4.         When the profit motive and fear of competition are eliminated, what do you suppose humans making the “government” decisions will do?  Whatever is in their own interests and within their power.  At best they don’t worry about being efficient; after all, even working hard is not rewarded in a government job.  At worst they may actively seek to make their own position more necessary, to secure their own job.  Thus any time a government benefit is offered, the self-interest of the people running the program is to gain more job security.  How?  To make sure as many people as possible “depend” on them and their program.  The rational government employee will seek to find recipients for their services, recipients who don’t have to pay anything in order to receive the benefits.  Not a hard sell at all, given that generally, humans are self-interested on the receiving end also!

Numerous individuals (school superintendents, consultants, and welfare workers, for example) have told me that it is imperative to spend all money that is allocated to your agency/program/department each year.  If you don’t, your budget will be cut the following year.  It is not important how many people you help, but how much of your money you have spent.  In whose interest is that?  The government worker, but not the people they serve nor the people who are forced to provide the money.

If you (as a government worker) spend your budgeted funds inefficiently, who cares?  Your boss is happy because you used up your budget, which is part of his, which helps assure that his will also be renewed for the following year.  You don’t have “buyers” who can choose to stop paying you for your service: the people getting the service aren’t the ones paying for it!  So you have happy recipients (they get it for free) and no competitor to take them away from you or to woo the dollars away from you (since your power to tax assures continued revenue).

The nature of mankind, on both the deliverer and receiver side of the equation, assures that government services (those delivered outside of a competitive market sector) will be delivered with less efficiency.  For the money “paid” there will be fewer net goods and services provided since there is no competition to hold the provider accountable.  All you have to do is get the politicians to impose the taxes to create the revenue.  If a politician can convince more people that they are getting services in excess of what they contribute in tax dollars than the other way around, what self interest of the politician is served?  Job security. 

If a service or benefit is free to you, are you more likely to accept it?  If I insist on buying your lunch are you more likely to join me for lunch?  As a matter of fact, might you select a larger entrée and add dessert you would not if you buying your own?  In the health care marketplace, this translates into people obtaining services they would not really need.  They over-consume, because someone else is paying the tab.  More services are delivered less efficiently, and fewer people are paying.  This is a collision course with reality check.

What can be done?

It cannot go on this way indefinitely.  Alexis de Tocqueville predicted that “America will last until the populace discovers that it can vote for itself largesse out of the public treasury.”

In 2006 more than 50% of American “taxpayers” paid less than $0 in income taxes; they actually got tax refunds in excess of the taxes that were withheld from them!  It goes without saying, then, that they got more net benefit—services or products—from their government than they pay for.  So we are to the point, now, that a majority of the voters are getting the benefits of the “common” services along with a disproportionate share of the individual (class-based, need-based, welfare benefits) products or services from our government.  “…largesse…”  The politicians’ security may well be assured…in the short term. 

This is not an easy hole from which to extricate ourselves.  But one rule of thumb of when you find yourself in a hole: stop digging!  You don’t get out by going deeper.

Much inefficiency is already forced into the health care system.  It (probably only rivaled by public education) is the area of our lives where government has already intervened the most.  As government regulations and subsidies increase, the ability and motivation to be efficient and effective declines.  Consider lasik surgery and cosmetic surgery by contrast.  These are two medical services in which there is little or no government subsidy and the services are usually not covered by private insurance.  Have you noticed what has happened in to the price and quality?  Prices have plummeted and quality has soared.  Competition reigns; it forces innovation and efficiency.  What areas of our economy have seen the most inflation and are most complained about (quality and service)?  Subsidized health care and public education.  This should tell us much.

The degree of government intervention—subsidy and regulation—has already had deleterious effects.  So more would be better?!  No! Stop digging.  We must reverse the trend, not slow or alter it.

At this point, the self-interests of the private business providers is to work the system—the politicians—to protect their turf.  Government manipulation of the free market is considered a given.  So a business (Big Co) now aggressively lobbies the politicians, even the politicians who promote fully socialized medicine, for regulation that exempts Big Co, hurts competitors more than Big Co, or even mandates services only available from Big Co!   Because the government has already intruded, now government has become part of the competitive playing field—not as a competitor, but as the competition rule-maker: an official who can be bought off. 

This is part of the growing problem.  The solution is not to capitulate and give up total control to the crooked official.

Insurance vs. government?

Insurance is a voluntary relationship.  You decide whether you would like an insurance company to assume part of the risk of you having health care needs.  The company, in exchange for assuming that risk, carefully calculates the risk and predicts their “average” cost, and builds in a relatively small margin for profit.  If they build in too much profit, a different company will undercut them.  We decide whether we want to pay them the premium.  On an average, most people will not receive as much back as they pay in—if they did, the company could not, and would not, be willing to take the risk.  Profit is their compensation for taking the risk, and allows them a margin for error to assure that small miscalculations will not result in bankruptcy—and default of their agreement to all of their policy holders!  Rational humans running these companies must operate this way…it is in their own self-interest.

Government is an involuntary relationship.  By its nature, it is an organization of fallen people making decisions in their own self-interest.  It vests extraordinary power in a few hands.  Rational humans acting in their own best interest will not act efficiently and will not seek to deliver the most possible service for the least possible cost, because they would eliminate their own or their colleagues’ jobs in the process.

So, should the “government” have greater control over the health care or health insurance industries?  Sometimes questions are best answered with more questions:

Do you want medical services to be provided less efficiently?

Do you want power over medical services—who gets and what they can have—to be concentrated in fewer hands?

Do you want the money invested in medical care to result in less quality and quantity of services?

Do you want to be able to decide whether to enter the buying decision for yourself, or have government workers decide who is eligible to receive, and who (different people) should pay for it?

Do you want doctors and nurses to be forced to work for what a government worker says is “just” compensation, or would you rather allow them to compete for your business, being paid more if they please their customers and less if their customers are displeased?

The answer lies well beyond the scope of this long post.  I hope I have raised at least some important questions.
Copyright 2007 Curt W. Ferguson