By Doug Casey, founder, Casey Research
How to reform the U.S. “health care” system is a continuing topic in the news. I put that phrase in quotes because it’s a misnomer. You don’t insure your health – that can’t be done. You can only insure that the costs of medical care, if your health fails, will be covered. Saying “health care” makes people think that someone else will magically assure their health, which is impossible. Collectivists like to use the phrase as part of their continuing war on what words mean, and how people think.
Health is something you do for yourself with proper diet, exercise, and lifestyle decisions. Medical care is something very different; it’s what you need for acute trauma or disease. People want good health, but all insurance can give them is hospitals, doctors, and medicines – all of which are scary.
In any event, there does seem to be universal agreement on two related matters. One, that Americans are overweight, underexercised, and overmedicated. Two, that the U.S. medical care system is “broken” and something needs to be done. I have a radical proposal, even though there’s not a chance in hell it will ever be adopted or even discussed in public.
Here it is: Not only should there be no form of national medical care, but Medicare, Medicaid, the FDA, and all laws regulating anything to do with medicine and health should be abolished. Why? Because they are the actual cause of the crisis.
These schemes and bureaucracies will, in fact, eventually disappear. But not in a controlled or planned way. They’re going to disappear for the same reason the Soviet Union did – because they’re inefficient, uneconomic, and unsustainable. Although the U.S. medical system is technologically excellent, it’s long been way too overloaded with paperwork and legalism. Obamacare made it much worse, and ensures that the collapse is going to be bigger, sooner, and with more widespread consequences.
That’s the bad news. The good news is that you don’t have to be sucked into the maelstrom with everybody else.
The national “health care” controversy isn’t about a technical issue, like how to provide medical care cheaply. It’s about basic ethics. Do you have a legal or moral obligation to pay for the consequences of some stranger’s bad habits or bad luck? I’m not, therefore, going into statistics or throwing out reams of numbers about costs. That only serves to distract from the essence of what this is all about.
It’s said to be a tragedy and a scandal that millions of Americans don’t have medical insurance. My first reaction to that is: So what? A lot of people feel they don’t need insurance because they’re young, healthy, and risk-oriented. Others don’t want it, because they can afford to self-insure. Insurance is not a necessity; it’s just a financial planning tool. Up until the 20th century, nobody on the planet had health insurance.
The whole issue of medical insurance basically arose during World War II, when the government locked the country down with strict wage and price controls. Employers couldn’t legally induce workers with cash money, so they offered benefits, prominently including medical coverage. This was an especially rich benefit during the high-tax war years, because it was tax-deductible to employers while tax-free to employees.
A perverse consequence of insurance being institutionalized was that it taught the public that someone else should, and will, be responsible for their medical expenses. The presence of insurance induced people to see doctors, and demand services, much more often than would otherwise have been the case, since these things were now “free.” This artificial demand has put a lot of upward pressure on medical costs over the years. There was once a time when a person set aside money for medical care to maintain his body much as he would to maintain his car or his house; it wasn’t considered either a critical or a potentially onerous expense. Prudent people might have a major medical policy, with a large deductible, in case lightning struck. A poorer person might have to rely on any of numerous charities and fraternal organizations; peer pressure and social opprobrium kept the moral risk from hypochondriacs under control. But that was before the government stepped in and took the place of religious, charitable, and fraternal groups.
People whine about companies denying them insurance or denying coverage for preexisting conditions. These complaints are (barring fraud) almost completely without merit. If insurers are prevented from denying coverage for preexisting conditions, then many people won’t seek coverage until they’re sure they have a problem. It subverts the entire basis of insurance, in effect trying to force a company to pay for a house fire after the dwelling has already burned down.
Do insurers owe the public coverage? No. The fact is that nobody owes you, or anybody else, anything. If you don’t qualify for a policy, that’s unfortunate. You also may not qualify for joining an athletic team. Or getting into a school. Or working for a certain employer. Or a thousand other things. I’m sorry. But tough. Your choices are to either do something to improve your circumstances or, if you can’t, find an alternative. One person’s bad luck doesn’t constitute a mortgage on another person’s life.
The Angel of Death
I would make the case that the government, directly and indirectly, is solely – not mainly, but solely – responsible for runaway medical costs and the presumed necessity of having insurance. Let me give you a few examples.
The FDA, widely promoted as a guardian of health, would better be named the Federal Death Authority. It alone is probably responsible for more deaths every year than the Defense Department in the typical decade.
Although its $5.1 billion annual budget is huge and represents capital that could have been spent developing new technology, it’s trivial compared to the agency’s real costs. The FDA is why it typically takes ten years and hundreds of millions, often billions, of dollars to develop a new drug. It’s a major reason why drugs are as expensive as they are, and why relatively few are ever approved.
Does it ever keep potentially dangerous products off the market? Of course. But the desire of drug companies to survive and grow is – surprisingly, to people who are sponges for anti-capitalist agitprop – actually a much better guarantee. The argument might be made that if the FDA approved nothing, then no one would ever die of dangerous drugs.
Various laws make the sale of body parts illegal. Which means thousands die every year while waiting for a kidney or a liver. Poor people, who might have a much better life by trading a kidney for $25,000, are denied that opportunity. Or that of selling all their usable body parts upon death in exchange for a large fee payable while they are still alive.
“Consumer protection” laws encourage contingency-paid ambulance chasers to sue everybody for everything that can go wrong in a medical situation, adding many billions to medical costs every year. Medical malpractice coverage, for which many specialists pay several hundred thousand dollars a year, is only a small part of this cost. To defend against predatory litigation, doctors are forced to practice “defensive” medicine, which prescribes numerous tests, drugs, and procedures, which are useful only as legal prophylactics.
The AMA (American Medical Association), a lobbying organization and wannabe trade union, artificially restricts the number of doctors that can practice in the U.S., both through state licensing laws and limiting the number of medical schools.
In the face of these and many other government-imposed costs that make medical care hard to afford, most people now feel the necessity for insurance. Unfortunately, the cost of administering insurance is huge – both for the insurer and for the doctor. Half the employees in a typical doctor’s office do nothing but shuffle paper for private insurers, Medicare, and Medicaid.
As late as the 1950s, a doctor would make house calls, and a hospital stay cost about what a hotel stay did. Those days could reappear if the government with its laws, taxes, and regulations disappeared. The opposite is likely to happen, at least over the short to medium term, as the government takes over the remaining parts of the U.S. health care system.
In fact, in a free market, technology would be noticeably driving costs down in medicine, as it has in every other area of life. The forces agitating for “reform” carp about expensive CAT scan machines driving up costs – but they’re just the equivalent of the primitive X-ray machines of a few generations ago. In other words, providing the same quality care you would have gotten 50 years ago costs much less today, in real terms, because of technology. Insofar as some costs are higher in real terms, it’s only because the quality of the procedure is vastly higher. I defy anyone to show me an example where this isn’t true.
Most of what’s said about the importance of medical insurance is simply hysteria. The fact is that Western medicine is superb for managing acute disease or injury – in essence, traumas and diseases caused by bacteria and viruses. But it just doesn’t lend itself to routine maintenance of health. Other than good genes, the keys to health and longevity are diet, exercise, and an intelligent lifestyle. But that entails self-discipline and taking personal responsibility for the state of one’s health.
Unfortunately, most Americans seem to think their health is the responsibility of their doctor – or the government. They’re more inclined to let technicians substitute heroic measures to maintain them in wheelchairs or in bed with tubes up their noses when their bad habits catch up to them. Of course, if someone wants to survive as a veritable vegetable into their dotage, they have every right to – as long as they do it on their own nickel. The problem arises when these types go to a voting booth, recognizing that they can now get their betters to pay for the consequences of their bad habits.
It’s said that the average Cuban is much healthier than the average American, and this is attributed to their socialized health care system. This is half true. The average Cuban is definitely healthier than the average American. That’s because he eats many fewer calories, and those are largely composed of unprocessed, low-additive sources – processed food is both unavailable and unaffordable in Cuba. The Cuban gets vastly more exercise than the average American – he has to walk everywhere, and mostly does manual labor. Of course the average Cuban is much healthier – but it has absolutely nothing to do with the medical system.
I’ve been to Cuba a number of times, and toured their hospitals and labs. They’re primitive – actually embarrassing. The quality of a country’s medical care depends largely on the amount of wealth it has. If you get sick in Cuba, you’ll find there are plenty of doctors to care for you. But they’ll have little or no equipment manufactured after 1959. They’ll have few modern drugs. And their training will reflect the fact there’s no capital to explore new technologies.
Medicare, Class Warfare, Death, and Other Good Stuff
Here’s an observation: Everybody is going to die sooner or later. This brings us to the twin boondoggles of Medicare and Medicaid, which old people and poor people have been led to think is their birthright.
Medicare was certainly one of the worst things to ever happen to U.S. society. It has placed an onerous and completely unrepayable mortgage on the backs of the younger generations, while it has transformed old people into irresponsible medical mooches. As the country ages, you’re going to see an active environment of generational warfare, abetted by the equally poisonous but smaller swindle of Social Security. Meanwhile, Medicaid acts to create a new form of class warfare between those who use it and those who pay for it. Although the government calls all of these programs “insurance,” that is completely untrue. They are politically motivated welfare programs, which not only cater to the proletariat but have actually aided in creating a proletariat.
Medicare has degraded the care seniors would otherwise get by imposing price controls on services. Many doctors won’t accept Medicare patients for that reason. Those that do tend to give them short shrift because the fees are fixed by procedure, and they won’t do things, like speak to them on the telephone, that aren’t covered. At the same time, there have been numerous Medicare frauds, where the government is billed for lots of things that never occur. Third-party pay systems always leave the door open to fraud.
The fact of the matter is that “insurance” is the wrong word when it comes to medical expenses for elders in rich countries. You’re not protecting against an unforeseen, long-shot risk; sickness is almost as inevitable as death once the typically flaccid and obese American retires. At best it could be called “prepaid medical,” except that it’s not prepaid. That’s what the $100 trillion unfunded liability of these two boondoggle programs is all about.
That $100 trillion figure is widely known, but its practical implications are never discussed. Let me tell you what it means: the whole current conversation about some form of national “health care” is a ridiculous fraud, comparable to a convention of bankrupts discussing plans to retire in luxury.
The U.S. is bankrupt on all levels even without the $100 trillion liability. There’s simply no feasible way to keep a generation of decrepit Baby Boomers on life support for a couple of decades. How will available care be allocated? There are only two possible alternatives. According to who can pay for it. Or according to who is considered the most deserving.
When someone pays his own way, there are no grounds for resentment – except from sociopathic personalities. Real problems arise, however, when someone, on some criteria, must determine who gets how much of what. Will there be “death panels” under a nationalized U.S. system? Certainly not to start with. But as the number of people using a “free” system grows and the amount of capital to maintain it diminishes, of course there will be committees to decide who gets how much of what, and for how long.
There will also be (at least initially) beneficiaries of national “health care”. Drug companies will find that suddenly a lot more people can afford their products. The coffers of hospitals (50% of which are losing money now) will be filled with government funds. One big class of winners will be psychiatrists. Most current insurers have limited benefits for mental illness, in that most mental illnesses can hardly be proven to exist; the diagnosis can be a figment of a shrink’s imagination. And some people just like to talk about their problems to a soothsayer, despite the fact psychiatrists rarely, if ever, effect a cure. Mostly they just pass out psychoactive substances (but serious ones, not the fun, recreational type), which, if anything, just disguise the symptoms of someone’s mental turbulence. But this specialty stands to reap a bonanza.
Personally, I think it’s unseemly for a rich person to liquidate his fortune on medical care to extract a few more painful months at the end of life. But maybe that’s just because I prefer a “live fast, die young, and leave a (relatively) good-looking corpse” approach to the matter. Everyone may not feel that way. And no one should begrudge the rich the right to extreme measures to extend their lives, simply because the rich will direct capital to innovative technologies – expensive at first – that will eventually become cheap and available to a wider market.
What’s a Life Worth?
Some may object – when I say everyone should pay his own way and the state should have absolutely no involvement in healthcare – that I’m putting a price on a human life. They say that a life has “infinite” value. But like most of what you hear in this ridiculous debate, that’s a lie, told by the duplicitous and believed by the unthinking. There are lots of ways to figure out what a life is worth. How much can be negotiated for ransom on a kidnapping? How much is a thug paid for a “hit”? How much is the annual premium for life insurance? How much is the present value of someone’s estimated lifetime earnings?
But what we’re talking about here, in the context of national medical insurance, is how much you’re willing to pay to keep a complete stranger alive.
Let’s play a game. You see a homeless person – someone clearly unable to foot his potential medical bills. Would you, on principle, pay $100 to save his life? Perhaps, if he had a nice smile and said “please,” $1000? Maybe, if you were feeling flush, and he convinced you he’d repay it. $10,000? Unlikely under almost any circumstances. $100,000? Fuhgeddaboudit. But what happened to the “infinite” value of a life?
An individual’s life may have infinite value to him – although I pity the fool for whom that’s true, because that person almost certainly has no sense of honor. The life of a good friend or close relative may have great value to a person – but if it’s too great, the person probably suffers from a severe lack of self-respect. Are you willing to become a pauper to keep someone else alive? So, of course there’s a price on life.
I’ll go further than that, however. Most people “in need” don’t actually even have a positive value. Most of them have negative value – not that I would actually pay money to see them disappear; they’re not worth that much to me. They’re “in need” because they made chronically bad decisions, generally over the course of a lifetime. They made chronically bad decisions about diet, exercise, and lifestyle that compromised their health. They made chronically bad financial decisions that left them without the means to provide for themselves. They usually have serious character flaws and were probably not good friends to other people, which is why they have no friends to come to their aid. As a subset of that, they’re almost never productive members of society – in other words, they apparently consumed as much, or more, as they produced for others – which is why they have nothing left over.
It’s cosmically unfortunate how the human body goes into decline. It reaches a peak between age 20 and 30, and then starts its trip down the slippery slope. The decline is usually slight (at least for those with good habits and genes) to 40. A few systems start creaking and clogging by 50. Absolutely by 60, when friends start most conversations with an inquiry about each other’s health – something none of them could have imagined 30 years earlier. From that point forward, only a near-sighted fool can’t recognize that the Grim Reaper is dogging his steps.
Since it’s part of the human condition, one might ask how others have dealt with this eventuality through history. In poor societies, the oldster might have been expected to politely bid a farewell to loved ones and honorably recuse himself, so he wasn’t a liability to those he cared for, consuming their limited resources. An Eskimo might have walked out onto an ice flow. An Asiatic might have walked off into the forest. A noble Roman, seeing the end approach, might have even fallen on his sword as an alternative to lying in the corner like a sick dog, mewling and puking, turning into an embarrassment to everything he once was.
But until the development of the modern welfare state, decrepitude was an event one confronted on his own, with family and friends. The modern American’s entire approach to life, and death, is degraded. Modern industrial society produces enough surplus wealth that issues of ethics and aesthetics can be treated like the leftovers of a fast food meal some fatso throws in the dumpster. In today’s America, it appears medical care is now everybody’s problem – which means the individual has no responsibility. What happens to you will soon be the province of regulations and bureaucrats.
The entire “debate” about national health care is unseemly, and its likely product will accelerate the descent of the U.S. into an ethical, economic, and medical abyss.
So, what should you do, with current medical insurance rates ranging up to an unbelievable $4,000 a month for a family in some jurisdictions? (I know, you’re thinking that’s a misprint, but that’s the going rate for a top plan in some Manhattan zip codes.) My suggestions are simple; the subject doesn’t require a 1,000-page piece of legislation:
Engage in a serious program of proper diet, exercise, and proper lifestyle. It’s inconvenient sometimes, but if you don’t, you’ll look like all those other people out there. If your body starts falling apart prematurely (they all fall apart eventually), it’s not the fault of society or your insurer. This is the ultimate solution to today’s “medical crisis.”
For personal insurance, get absolutely the largest deductible available. It’s insane trading dollars with an insurer.
Consider doing all your important medical and dental work abroad. Technologies and skills in the Far East and Latin America are at, or sometimes even above, the level of those in the U.S. But costs are a small fraction of those in the U.S.
If you have a company, get a large deductible policy and allow employees to self-insure for the deductible. Your lawyer should be able to draw up a plan where the savings go into everyone’s pocket.
But enough of that. I just dropped my big bag of Oreos, and I need to figure out just the right way to swing the hammock so I can pick it up.
Perhaps the bottom line of the above is that, as Hobbes observed, life can be solitary, poor, nasty, brutish, and short. But who reads Leviathan anymore? Better to refer to some of the best playwriting since Shakespeare, namely Deadwood, the HBO series. It gives, among other things, a realistic view of medical technology not so very long ago. The characters often speak in Shakespearian blank verse to boot, although not in the quote below.
“Pain or damage don’t end the world. Or despair, or f*****g beatings. The world ends when you’re dead. Until then, you got more punishment in store. Stand it like a man… and give some back.”
That’s the view of Al Swearengen, the series’ lead character. He’s a realistic, hard-bitten kind of guy. But his personality can win you over, despite his many flaws. More so because despite being a cold-blooded cutthroat, he likes to explore the philosophical implications of his actions. So, while many people today ask themselves, “What would Jesus do?” when confronted with a moral dilemma, I find it equally enlightening to ask, “What would Al Swearengen do?”
Founder, Casey Research