Ron Paul: Obamacare Is Bad For Your Health

Date: 06/14/2010

Authoritarianism Is Bad For Your Health

by Ron Paul

The administration’s terrible healthcare reform bill is now law, but the debate over how — and whether — the federal government should be involved in providing healthcare services is not over. It is not too late for America to correct its course and stop the march toward a government run, “single payer” healthcare system.

Polls show that a large majority of Americans don’t want Obamacare. Congress should seize the opportunity to repeal the very worst aspect of this new legislation, namely the mandate that forces every American either to purchase health insurance or face an IRS penalty. This mandate represents nothing more than an unconstitutional, historically unprecedented gift to the insurance industry. I introduced the “End the Mandate Act” (HR 4995) expressly to prevent the administration from ever putting this provision into effect.

Instead of mandating the same failed entitlement healthcare schemes that are bankrupting Europe, Congress should fundamentally re-examine the case for free-market healthcare. Our current model, based on employer-provided health insurance, did not arise based on market preferences. On the contrary, it makes no sense to couple health insurance with employment. But federal wage and price controls instituted during World War II left employers with no alternative to attract workers in a tight labor market other than offering extra benefits such as health insurance and pensions. Over time these nonwage benefits became the norm, especially since employers could deduct the cost of health insurance premiums from their income taxes while individuals could not. The perverse consequence is that employees lose both their paychecks and their health insurance when they lose their job.

As reliance on third-party health insurance grew, patients became detached from the true costs of their doctor visits. In the 1970s the Nixon administration, along with the late Senator Edward Kennedy, championed the cause of health maintenance organizations (HMOs). Congress accepted the faulty premise that HMOs would reduce costs through centralized management of patients, when in fact the opposite was true: more bureaucracy would only lead to higher costs, less accountability, and worse patient care.

In recent years Congress has only intensified the problem with more laws and more regulations, especially with the disastrous Medicare prescription drug benefit. The drug benefit was another example of naked patronage to a politically-connected industry, and it exponentially worsened the federal government’s balance sheet. Obamacare will be the last nail in the coffin of our bankrupt entitlement system.

More laws are not the answer. Instead, we need to allow a market system to operate that reflects consumer choices while rationally pricing services. In a market system patients likely would pay cash for basic services, while maintaining relatively high-deductible catastrophic insurance for serious illnesses and accidents. The cost of most routine medical care would drop if the patient paid the bill on the spot, especially if doctors no longer needed to employ large staffs solely to deal with insurance and billing.

Let me repeat: we need a system in America where patients pay cash for basic services, and carry insurance only for serious illnesses and accidents. “Health maintenance” is the responsibility of each of us individually. We cannot continue to collectivize the costs of healthcare and expect things to get better.

Authoritarianism is bad for your health. Congress should end the Obamacare mandate and allow market-based medicine to flourish.

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  • Binu A

    Dr. Paul offers a substantial policy position from a notable healthcare background. Still, I think he puts too much hope in the ability of market forces to stabilize healthcare prices effectively. Fees may decrease if insurance is eliminated in the future, but can’t quality of services provided go down in accordance? Free market economics principles translate well to products and services, but is health a commodity? It can’t be traded or stored for the future, and as such, a libertarian policy towards it may not really be sustainable. There is no real cap on the price you can set for health services, or true absolute value you can assign to it. This is because a sick person may (and under the present system, often do) give up everything they own for the chance to be healthy again. Thus, I think doctor’s setting their own payment schemes can potentially have catastrophic effects- the poor and middle class may effectively be priced out of healthcare. And even worse, physicians will begin to directly view each patient in terms of the amount of compensation they can provide for their medical services.

    I think comparing the Obamacare package to a single payer option is not very accurate. Though government expenditures will increase with inflation during the period reform goes into effect, the government is by no means blanketing coverage over people, even if Medicaid’s boundaries are somewhat increased. And though the idea of patient’s paying doctors directly for each visit is presented, the question of who pays for expensive medications is not mentioned by Dr. Paul at all. It would be extremely shameful if in a society such as ours, medications for rare conditions could only be acquired by the very rich. Dr. Paul’s comments seem to go against government’s purported reason for existence. If it could not protect and care for its weakest citizens, why would we need this style of government at all?

    Dr. Paul’s idea of healthcare being improperly tied to job security is a very good point, and unfortunately, Healthcare Reform doesn’t do nearly enough to address this problem. If anything, like Dr. Paul suggests, it makes it worse, by forcing more people into a system of employer-provided coverage. Unfortunately this staple of American healthcare doesn’t look like it’s going anywhere any time soon.

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