24 March, 2010

Distributism and Obamacare

A favorite charge against distributism is that it is just another form of socialism. This is based on a false assumption taken from the name of the movement, that distributism is nothing more than the redistribution of wealth. While distributism desires to establish a wide distribution of wealth, the means of accomplishing that goal are not socialist in nature. In fact, the moral and philosophical foundation of distributism is completely incompatible with socialism. This is why I sometimes refer to distributism as “distributist capitalism,” as a distinct form of capitalism compared to “monopolistic capitalism” (the capitalism under which we live).

Obamacare has become law; but what were the alternatives? After all, even the most “conservative” pundits agreed that our system, as good as it was, had flaws that needed to be addressed. Since both liberal and conservative commentators looked to the economic aspects of these problems, we distributists should put forth ideas based on distributist principles for solving these economic issues that constitute flaws in how our health care systems are managed.

What exactly were these flaws? How could they have been addressed by distributist principles? We have had a chance to hear the answers offered by our “leaders” and we should rightly be disgusted. While the liberal socialists secretly wrote up the monstrosity that is Obamacare, the only alternative consistently offered by the “conservative” (monopolistic) capitalists was to allow insurance companies to compete across state lines. The real irony is that they were denouncing the monopolies in the states, but their solution was still based on the principles of monopolistic capitalism that would ultimately result in larger and more powerful monopolies.

Before addressing potential distributist alternatives to the only options being considered, I think it would help to clarify exactly what we are discussing. For over a year, this has been called a debate on “health care.” This is a deliberately misleading label. The debate was never about health care, it was about the economic aspects of paying for health care – specifically through health insurance. By labeling it “health care,” however, those who have shoved this bill down our throats claimed the right to accuse those who opposed the bill as being opposed to health care itself. This is a very old tactic they use all the time. The so-called conservatives were, as usual, completely duped by this move. Lacking any substantial philosophical foundation, the “conservatives” allowed themselves to be tricked into making statements which, upon further reflection, no reasonable person – including conservatives – can support; even going so far as saying that health care is not a human right.

There is a basic fundamental difference between inalienable human rights and the means to secure them. We have a right to earn a living, to have food and shelter, to employ weapons in defense of ourselves and others, and, yes, a right to health care. However, the undeniable existence of these rights do not constitute a guarantee of their accomplishment. The acknowledgment of these rights is merely the foundation for establishing a social order in which the rights can be achieved. After all, we also have a right not to be attacked, robbed, or raped. Therefore, we pass laws prohibiting assault, robbery, and rape; we employ a police force and a judicial system to enforce those laws and help protect us from those who choose to break them; and we can use weapons to defend ourselves against immediate threats against these rights. Why must we do these things? Because the existence of a right does not guarantee its fulfillment. I have a right to be able to earn a living, but that does not guarantee me a job if I am not qualified for those that are available. The same principle is true regarding health care.

The government take over is unacceptable because it eliminates freedom. Freedom means we have the choice to do what we should, but it has already been clearly revealed that our choice in the matter of how we obtain health care is being taken away by this new law. I have the right to arm myself, but I have the freedom to choose whether or not to do so and to chose what kind of weapon I wish to use. The government is not proposing to provide me with a gun and penalize me if I don't own one of the three models it deems acceptable, but it is now going to do exactly that regarding health insurance.

In debating the problems with obtaining health care in the U.S.A., the two sides of our “leadership” offered two unacceptable “solutions.” The liberal (socialist) side offered a complete government take-over. (They deny it is a take-over, but the provisions of the law virtually guarantee that outcome. It is merely political tactics that allow them to accomplish the same thing without explicitly declaring it to be the intention.) The conservative (monopolistic capitalist) side only seemed to argue for a larger version of what we already have. Other than ambiguous statements acknowledging that problems exist and need to be addressed, I didn't hear them offer many solutions beyond allowing insurance companies to compete across state lines.

The reason that the conservative option of allowing insurance companies to compete across state lines is (by itself) unacceptable is that it will ultimately result in fewer insurance companies as they consolidate to form larger monopolies. Larger, more powerful monopolies will ultimately result in fewer choices at higher costs for the average person. This needs to be understood; the initial price cuts that would undoubtedly take place if the conservative proposal were to be implemented would only be made in order to establish a larger monopoly. These price cuts WILL be reversed once competition is eliminated to the point where they are no longer required. That is exactly what has happened within the states. That is the way of monopolies. If something is in demand, and one source can afford to buy out the competition, or, due to its monopolistic access to resources, offer that thing at a lower cost than the competition, it will do so. When that source controls a sufficient majority of the supply, it will raise prices simply because it can get away with it. This is a basic and accepted principle of monopolistic capitalism.

So what solutions can distributism offer? As I list my own thoughts on this, remember that the issue is not health care itself, but the means of acquiring it.

The problem of high insurance costs:

There are at least two sides to this problem. One is the lack of competition within the states. It must be remembered that one of the fundamental problems with monopolistic capitalism is that it can only survive as a plutocracy. Powerful insurance industry lobbies get laws passed to secure their monopolies. Even if they are not powerful enough to actually eliminate other insurance companies, they use their influence to limit their competition and make it difficult for new competitors to enter the market. Such laws are the antithesis of distributism. Distributism would revoke such laws in favor of ones that allowed, or even promoted, the establishment of more competitors. This would not only drive prices down on the basis of competitive supply and demand, but would also open the opportunity for the creation of more jobs. The "conservative" call to allow interstate competition between insurance companies would create competition, but would not do anything about what caused the intrastate monopolies to exist.

Another side of this problem is the cost of health care itself. There are several factors driving these costs, and many of them are also caused by plutocratic manipulation of our laws and our courts. Ridiculous awards in medical cases, often against large institutions (because that's where the money is) that are not actually responsible for what had happened, further restrict the establishment of new competitors among the providers of medical care. Only very large organizations can survive such things. These awards also drive up the cost because the insurance that medical practitioners and institutions need to get in order to protect themselves from these lawsuits is expensive and those costs get passed on to patients. Distributism's answer to this is the same as it would be for any other system; the legal system needs to be reasonable. Cases against hospitals where the individual physician (not employed by that hospital) were clearly at fault need to be thrown out of court. Penalties applied must not be based on the emotional outcry caused by the incident, but on the ability of the penalty to discourage similar behavior or mistakes while not discouraging new competitors to the medical market. This is something that would need to be more fully explored.

Another factor is the lack of public awareness of the actual cost of medical treatment and of running particular services in a hospital. Emergency rooms lose money and that loss is absorbed by the other services provided by a hospital. There are also the losses brought on by providing care for those who cannot pay. Yes, it is true that hospitals will turn away those who cannot pay, but the law only allows them to do so if the doctor says that doing so will not risk the life of the patient. I used to work for a hospital and personally entered in the write-off of nearly a million dollars for a patient whose insurance had run out. That patient (the victim of an accident) remained there receiving the most expensive level of care until he passed away. These and other reasons are why getting two aspirin at a hospital costs almost as much as a whole bottle at the store. Let's face it, we demand the best medical treatment in the world, but the best costs the most. Expensive schooling, equipment, facilities, and research will always be factors in the cost health care. Therefore, we need to revoke laws that prevent or discourage more competitors providing each of these necessary things. That will help bring the cost of health care down, and consequently bring down the cost of health insurance.


The problem of those who truly cannot afford health insurance:


I find it truly ironic that the Obama administration decries the plight of the poor who cannot afford health care insurance, but also revoked the tax benefits for charitable contributions that could have helped them. Just methods of taxation are another topic for discussion, but distributism would, at the very least, revoke laws that establish barriers to charitable medical services. Distributists generally recognize that tax laws would need to be changed gradually in order to avoid completely disrupting economic society. Some initial steps in those changes could be more tax incentives for individuals and companies to contribute time, money, and supplies to charitable medical institutions. These institutions would then grow and more of them would come into existence. They would be better able to provide quality medical care for those who cannot afford insurance, and would do so much more effectively and efficiently than any program run by the government.

The refusal of our government to allow the providers of alternative treatments and medicines to make medical claims about these alternatives also hurts the poor. I can already hear people loudly proclaiming that the developed drugs are better than the alternative or natural treatments. If you believe that's true, then why not have the studies to prove it? When dealing with the poor, the point is not always what medicine is the best, but what is sufficient. If a manufactured drug is twice as effective as an alternative treatment, but costs ten times as much, why deny the poor the opportunity to save some money while still getting the treatment they need? If the alternative works, it should be readily available through the medical community. As long as alternatives are denied the opportunity to make medical claims of their effectiveness, as long as research is only funded by private corporations with a vested interest in selling their product, the poor will be forced to pay more than necessary for sufficient treatment of their ailments.


The problem of those with pre-existing conditions:

Before addressing the problem itself, I think that some clarification on the nature of insurance itself needs to be made. It was once explained to me by someone inside the industry in a way that made it so clear, and looks so obvious, that I remain amazed that more people don't see it. Insurance is nothing more than legalized gambling. In the case of medical insurance, you and the insurance company are actually placing bets regarding your health. The truly stunning aspect of this is what each side is betting. The insurance company is betting that you won't get sick, and you are betting that you will. The insurance company, being the gambling institution, gets to set the odds. As with all legalized gambling institutions, the insurance companies win the bet the vast majority of the time. However, when they lose, they often pay out much more than they were paid by that policy holder. Demands that an insurance company take on people with pre-existing conditions is nothing less then forcing them to take a bet that they know they have already lost. After all, why would anyone bet that you won't get sick if they know you already are sick? It is basically saying, “I have a condition that's going to cost you $1,000,000 in payments. You have to cover this for a compensation of a few thousand dollars a year.”

The real problem with pre-existing conditions is why people with them are applying for new insurance. In some cases they simply couldn't afford it. Fixing the barriers to charitable medical treatment would go a long way for most of these people. In other cases, they simply chose not to get insurance even though they could have afforded it. Charitable services could also address the needs of these people when they are in dire need, but charity also requires that we hold them accountable for their own choices. It is fundamentally unjust for those who can afford it to use up the resources people establish to help those who cannot.

The largest group impacted by pre-existing conditions, however, are those who get their medical insurance through their employer. Because the policy is with the employer, rather than with the employee, the loss or change of job forces the loss or change of insurance. If insurance policies were required to be directly with the insured, rather than with the employer, the loss or change of job would not force the loss or change of insurance policy.

This change would not eliminate the reduction of costs through group policies. Insurance companies could still make deals with employers to offer package deals for employees. Such offers are given in order to increase the number of people who have policies. Having the policy be with the employee increases the chances that the insurance company will keep a policy holder even if he does change jobs. What insurance company would not like that? At the same time, it would increase competition because, when an employee changes jobs, the insurance company working through that new employer would want to offer a better package or lower premium to entice the new employee to switch to their company (and stick with it if they leave that company).

However, that change alone will not completely address the problem of pre-existing conditions. Even though insurance companies would likely offer coverage for at least some pre-existing conditions in order to gain or keep customers under the changes I propose, some conditions are just too costly for them to take on. Remember, we are talking about gambling here. Additionally, allowing people to keep their same insurance policy when they change jobs doesn't address the problem of people with insurance getting dropped when it comes time for renewal. Therefore, other solutions need to be offered. Just as we require other gambling institutions to guarantee that there will be winners, the insurance gambling institutions need to guarantee options that will provide just coverage.

Such changes would be allowing or requiring options for insurance that only covers major illnesses and emergencies. You could add other options to cover recommended yearly checkups, and maternity (when applicable). These options by themselves would reduce the cost of health care. The point is that people are often limited in what policy options they have. They will be more limited under Obamacare. By requiring policies to offer more optional choices, coupled with requirements to offer long term or even lifetime policy options, we would greatly help address the issue of pre-existing conditions.

I believe that, in a truly competitive market, an insurance policy that only had to provide for normal check-ups, maternity, emergencies and major illnesses would have a fairly low premium even if it were a lifetime policy that could only be canceled for failure to pay. Remember that we are discussing gambling here. The average person does not get a major illness, which means the house (the insurance company) will win the bet the vast majority of the time. When they do lose, they will have to pay out big, but that cost will be easily offset by the income from all of the other policy holders that don't get a major illness.

In conclusion:

By revoking or changing laws that effectively establish barriers to greater competition in the medical market within states, and those that establish barriers or drive up the cost of medical schooling, treatment, research, and equipment, distributism would help to increase the number of medical providers and bring the cost of medical care down through greater competition.

By revoking or changing laws that allow extreme awards and drive up the cost of insurance in general, distributism would help reduce the cost of the medical business itself, which, combined with competition, would help reduce the cost of medical care.

By revoking the tax barriers that discourage the charitable contribution of time, money, and resources to organizations that offer medical treatment to those in need, distributism would help to address the medical needs of those who cannot afford the cost of medical care or insurance.

By allowing, or even funding, research on the comparative effectiveness of alternate treatments and medicines with “advanced” treatments and medicines, distributism would help provide greater access to affordable and still effective health care for those in need.

By establishing laws that allow individuals and families to keep their insurance policies when they change jobs, and by requiring options for long term and even life time policies, distributism would help alleviate the problem of people losing their insurance for pre-existing conditions when they change jobs or have to renew their policy.

Not all of these solutions require distributism, but they are economically compatible with distributist capitalism in more ways than they are with monopolistic capitalism or socialism.

4 comments:

  1. That was a really good article David, and brings up some great points. Let me through out another idea about insurance companies. As you say, insurance is a legalized form of gambling, but does provide some measure of economic stability to the payer in case of a tragedy. The answer here, might be the establishment of insurance cooperatives which operate on a non-profit basis to serve those who participate in them. The benefits would be dependent on the health of the cooperative to some degree, but the group as a whole would get back everything they put in to it about from the cost of overhead (facilities and salaries of full time employees). As I understand it, this would also be in line with the principles of distributism.

    The cooperative would have considerable negotiating power (assuming a fairly large user base), and could potentially help people lacking in resources to a point by accepting service in lieu of payment.

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  2. Tim,

    I think such an idea would be a great addition to what I've proposed.

    Thanks!

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  3. You pointed out how "health care" is used as a political device to tilt the debate in a way that encourages nonsense-talk. It's an important point that goes much deeper than your investigation here.

    "Health care" logically denotes something entirely different than what we have come to accept. The modern meaning of the term requires the following premise: that the sum total of all natural processes culminating in the human form is apparently a physical body so defective that its basic maintenance requires intervention from a specialist who wields sharp instruments and synthetic chemicals--without which the body would soon deteriorate and die.

    Just yesterday I spoke with a health specialist who assured me that I need to consume substances from all of the "food groups." How curious that the human body, for its continued well-being, requires the milk product of an entirely different species in order to thrive! You mean I need to consume dairy products in order to achieve optimal health? Of course, everyone knows that.

    I wonder how other species possibly get by. The natural world must be a terrible place of disease and sickness; it's a miracle that other organisms can survive at all without a food pyramid and medical experts to dispense health to them.

    You brought up the economic dimension of health care. I appreciate that. In fact, some acquaintances of mine have lately been worried that the new health care legislation represents an economic crisis. Honestly, these people have no imagination at all.

    Do you know what would be perfectly terrible? It would be for people to forsake self-destructive habits and become healthy through some completely natural process. I'm skeptical that the natural state of the human body is a state of disease.

    Healthy people? We'd be ruined! What kind of healthy people visit doctors and hospitals and buy drugs? Healthy people avoid those troublesome things like the plague. Any health care economy will rely on sick people to produce revenues. How does that promote health?

    As I see it, the Distributist position is that "health care" is just like anything else worth having in this world: it's naturally produced by individuals, families, and small communities for their own use and enjoyment. Health care is a private virtue, it isn't a business at all. What do you exchange or barter for health? We have to leave behind us the notion that health is something we get from experts.

    Health care is the wise practice of those who treat their own bodies with restraint, temperance, respect, and dignity. It is what Thomas Edison once claimed: the care of the human frame, a proper diet, and knowledge of the cause and prevention of disease. Do those things require the exchange of obscene amounts of money? Hippocrates didn't think so.

    I realize that we live in a world of accidents and emergencies. I think there is a legitimate role for insurance in that regard, probably very much like what you have described. Accidents and emergencies, however, do not constitute anywhere near the bulk of the "health care" economy. According to Dr. Stephen Aldana, mostly we treat ourselves so poorly that we can't avoid a health crisis sooner or later. Odds are, we'll be sick plenty. Of course we will--the economy demands it. It's the invisible hand... remember? I suppose in many ways our health culture turns the recent "Obamacare" legislation into just what we deserve.

    John Gatto said that, were we to unbundle much of the medical nonsense which guards the privileges of a dishonest profession, the standard of health around the world would soar.

    I think that "unbundling" nonsense is where we ought to start.

    Sorry for the long comment!

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  4. Mr. McCombs,

    Thank you for your thoughts. Being rather long-winded myself, I don't mind long comments in the least. I agree with your sentiments entirely. I think that much of what passes for health treatment and recommendations for health could be dispensed with without much harm to individuals or society. Besides, we all know that the four REAL food groups are sugar, alcohol, caffeine, and fat. Seriously, we thrived as a species for millennia before there was a government department for health. There will always be a need for doctors, just as there has always been such a need. Illness, disease, and injury happen in the healthiest of societies. However, the mode and manner of medical treatment certainly does not need to be what it is today.

    While the philosophical foundation of distributism regards economics merely as part of the overall moral life of society, distributism itself specifically addresses the economic aspects. In contrast, our society, based on monopolistic capitalism, has been trained to separate economic activity from other aspects of morality as much as possible. The phrase, "It's nothing personal, it's just business," typifies this. Monopolistic capitalism depends on the view that greed is actually a virtue that needs to be cultivated and honed in order to bring about the best economic situation. That is the basis of the "Economic Man" theory. It is the basis of Adam Smith's view of economics.

    What I am feebly attempting with this blog is to introduce the aspects of that philosophy that would tie economics to morality, to get people to really examine our overall economic structure and see that there is a fundamental injustice built into it. The desire to better oneself economically is not wrong, doing so at the expense of others is. We do not have true economic freedom in our society and, without it, we cannot have true freedom overall. Therefore, while I will undoubtedly touch on other aspects, the focus will be on economics.

    In regards to the new legislation being an economic crisis. It merely shifts our economic model from one unjust mode to another. Of course, like many bad ideas, it does so in the name of "justice." Our plutocracy has, once again, lurched further toward what Hilaire Belloc called, the Servile State.

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