Monday, May 7, 2012

The truth - and the lies - about health care reform

The inimitable Karl Denninger has produced one of the finest debunkings of the philosophies behind US health care reform that I've ever read.  I'm going to quote from it at some length, because I think it's very important to get the truth out there - and Mr. Denninger, to his eternal credit, is one of the very few sources I've found who is willing to tell the whole, unvarnished truth about this very sensitive subject.

It's a fact that virtually everyone has in fact "needed" medical attention "at some point" historically.  But America, and the rest of the world, managed to economically progress for hundreds of years without force-placed "insurance" or the government being materially involved in health care.

An honest inquiry is therefore forced to ask the following question: What happened?

That's relatively simple: Government happened.

Before EMTALA in the 1980s, passed under Ronald Reagan, if you didn't have health insurance or money and had a grievous health condition of immediate concern (e.g. a heart attack) you would be taken to a charity hospital or charity ward for treatment.  There various groups, mostly religious organizations, had purchased space and supplies and doctors donated their time to treat those who couldn't pay.  It wasn't a perfect system; you might in fact die.

. . .

So what was the truth of EMTALA?  The truth was that there were a handful of high-profile cases where someone had a bad outcome, and probably would have even with the law in place.  But EMTALA created the "need" for "universal" medical insurance because it forced everyone to be treated irrespective of ability to pay and irrespective of a provider's willingness to give care for no renumeration.

In other words government created this crisis -- intentionally.  And who cheered it on?  The Catholic Church which took their historical role as the source of charity care freely provided by people of faith and offloaded it onto government -- that is, you -- via the rank abuse of the government's monopoly on force.

. . .

But it gets worse.

Government also intentionally drives up the cost of care, making it difficult to afford in myriad other ways.  There are many drugs that cost $10, $20 or even $100 a day.  The pharmaceutical companies defend this pricing by pointing out that it takes billions of dollars to develop new drugs, and that if they cannot charge that sort of price then there will be no development.

But they don't charge that price everywhere -- only here.  In Canada the government forbids this sort of cost game, and the same drug is 1/10th or even 1/100th of the price it is here.  In other nations the government tells the drug companies that if they don't charge what they believe is a "reasonable" price they'll simply ignore the patents and make them on their own, and the company will get zero.

This is force, but it's rather funny how the drug companies, rather than simply walking off, take the lower price and supply the drug.  Why?  If it's below the cost of production they'd never do that -- so obviously it isn't.

Those same firms then get passed laws that make it illegal for you to buy something in one place at a mutually-agreed price and sell it somewhere else -- like here in America.  The drug companies claim that there's a "safety" issue with reimportation.  The truth is that counterfeiting is always illegal and always has been.

The effect of these laws is to force the United States consumer to pay the full cost of development of essentially every advanced drug and device in the world, which the rest of the world then gets to enjoy for reproduction cost plus a small profit, while we are literally forced to pay the bill for their development.

. . .

Then there's the health provider racket itself.  If you've been treated in a hospital or other similar facility and looked at the bill you've probably seen this.  $20 for an aspirin that cost 10 cents, $50 for a scalpel (that cost a dollar) and similar.  When you add up the numbers at the bottom you probably also saw that the "bill" was for $30,000 but the insurance company billed, and was paid, $2,000 -- and this was marked "payment in full."


It's generally illegal to discriminate against people who buy a thing of like kind and quality, especially when the "charge" presented is one of adhesion -- that is, you're deprived of any meaningful ability to negotiate up front.
It's rather hard to negotiate when you're flat on your back unconscious having a heart attack, right?

So what generated this "need" for health insurance?  It's simply this -- if you don't have it you'll be bankrupted, but the reason you'll be bankrupted is that you will be charged 5, 10, even 100 times as much as someone who does have it -- all in a concerted attempt to force you to buy that insurance up front.

Oh, that's illegal too -- it's called a "tied sale" and any attempt to impose one is against anti-trust law.  It's a per-se violation -- except in the medical industry, of course.

Proof that this is the case is found by the fact that you can get on a plane and fly to India to have a procedure performed at one tenth to one quarter of the cost in the US.  But there is no "insurance" and no treatment without money.  The hospital there is outfitted with US-supplied medical devices, the physicians were trained in our hospitals and the rooms look like something out of the Ritz Carlton and are priced more like them too -- instead of $10,000 a day.

In short as soon as you actually buy health care in a free market you find that the market price is one tenth to one quarter of what it costs here in the United States for like kind and quality.

So now, having carefully constructed this paradigm not by the market, not by natural forces, not because of the inherent qualities of medical care the government now comes in and attempts to mandate that you buy what a bunch of companies who conspired with government and among themselves to make such a service a "must have" put together!

We, the people, argue over whether this is equivalent to a mandate to buy broccoli.

No, folks, it is not.

The violation of your rights and of the Constitution, the raw, unbridled theft and fraud undertaken by this so-called "industry" playing on your fear of mortality and chock full of intentional distortions that are put together for the singular purpose of financially raping you, already happened.

What we're now arguing over is whether government should be able to codify that financial ****** into statute.

There's more at the link.  Bold, italic and underlined text is Mr. Denninger's emphasis.

(Some readers may be taken aback by Mr. Denninger's condemnation of the Catholic Church's involvement in health care reform.  Allow me to assure you, he's quite correct in his analysis of history.  He's written about it before, and I highly recommend that article for more background information.  Suffice it to say that in the 1980's, many of the Catholic hospitals of America - and the religious orders that operated them - were more than happy to allow EMTALA to remove from their shoulders the burden of charitable care.  Furthermore, many Catholic bishops were among EMTALA's strongest supporters, just as many liberal individuals and organizations in the Catholic Church were also outspoken supporters of health care reform in 2009-10.  In the light of those historical realities, it's extraordinarily hypocritical of the Catholic Church to protest at the way in which Obamacare has now affected it.)

Mr. Denninger's entire article is indispensable reading.  I give it my highest possible recommendation - and, fellow bloggers, if you'd please mention it to your readers as well, I'd be very grateful.  I think this is extremely important information, and I'd like to see it disseminated as widely as possible.



Dave said...

The trouble is that, while the foreign manufacture is above the marginal cost of production, it doesn't address the cost of research and development. When those countries say "make it cheap or we'll ignore your patent," they're offloading the cost of R&D to the US. If we reimport, or otherwise force the drug companies to produce at those prices, we'll bring research and development of new medications to a grinding halt.

Put short, the rest of the world is stiffing us for the development bill, and shows no indication of starting to play fair in the future.

dave said...

Followup: thanks to the magic of the Internet Wayback Machine, I was able to repost the more eloquent version of that argument I wrote about eight years ago. You can read it at

Peter said...

Dave, problem is, we can no longer afford to pay the price of that development for the rest of the world. Either they bear their fair share of the cost (to channel Obama!), or the drugs aren't going to be developed - period. The gravy train has left the station, and it's not coming back.