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The paradox of “free” healthcare

“If Michael (Moore) thinks healthcare is expensive now, just wait when it’s free.”

P.J. O’Rourke, in a remark attributed to him in this nice takedown of Moore’s latest “documentary”, Sicko, a film making the case that we would all be better off in having tax-funded healthcare free at the point of use, like the magnificent British National Health Service that is the envy of the world (cue sarcasm alert, sounds of hollow laughter).

Arnold Kling has thoughts on the movie. Here is what I wrote about some of the issues arising when people want healthcare free at the point of use (ie, they want someone else to pay for it).

Do not misunderstand me: private healthcare in some countries, such as the US, is far from perfect. For a start, it does not have a lot to do with unfettered laissez faire capitalism, as anyone who has encountered the powerful American Medical Association will point out. The insurance system in the US encourages inflated prices for treatment, and there are other regulatory and legal costs which have become a lot worse in recent years. But if Moore thinks British cinema audiences will be wowed by his paean of praise for Britain’s Soviet model of healthcare, he needs to have his head examined.

Mind you, I have often wondered whether Moore is for real, or a sort of performance artist secretly working for Dick Cheney.

(Update: further thoughts on whether Moore is a clown damaging the already-weak case for socialised medicine can be seen here.)

37 comments to The paradox of “free” healthcare

  • Paul Marks

    Mr Moore believes that it is “the people we elect” who are the problem – i.e. if people did not elect Republicans government would provide X, Y, Z well.

    He is not alone. I remember Mr O’Hagen of the “Daily Telegraph” denouncing the lack of government money spent after Katrina. He could not be convinced that vast sums of money had been spent – the argument was “look at the poverty, look at the distress – therefore the evil Republicans have not spent….” (his latest article was about a “brave” speech by B.O’B. , writers like this are the reason I do not tend to buy the Daily Telegraph much anymore, I first check the newspaper and if there are no offensive articles or cartoons I buy it – which means I do not buy it very often).

    I had hoped that a Labour government in the United Kingdom would cure people of the belief that the “public services” were bad because of evil Conservatives.

    However, people either tend to pretend that the “public services” are now good (an absurd pretence) or they claim that Mr Blair is “really a Tory”.

    Perhaps it will be the same with Mr Brown.

    I have no doubt it would be much the same in the United States.

    Some leftists would say that the government scheme worked (no matter how big a mess it was), and others would say it was because Mrs Clinton (or whoever) was “really a Republican” (“she supported Barry Goldwater in 1964″ and so on).

    of course the real reason that American health care is so expensive is the knock on effect of the subsidies (Medicare and Medicaid and the others) and the vast web of regulations (on insurance companies, on H.M.Os and on everything else).

    But there is no sign of any roll back of government.

    Most people do not even understand that “government is the problem not the solution” (no matter how many times Ronald Reagan told them this).

  • If anyone truly needs further evidence of the hypocrisy and arrogance that defines Michael Moore, check out this latest rant. He’s complaining that Apple is stealing his spotlight by releasing the iPhone the same time as his movie.(Link)

    Boo freaking hoo.

    Quick story- A bleeding heart liberal friend of mine has been talking up the Sicko movie for months. Recently he developed a bad case of migraine headaches that prevented him from working. He has no insurance. He went to an emergency room at Vanderbilt Medical center here in Tennessee, and they were able to get him a quick MRI diagnosis that determined what the problem was accurately, thus leading to a quick dose of drugs that immediately releaved the pain and got him back to work. He will be paying in the thousands for the treatment, but he stated that considering the pain he was in it was worth it.

    He has given up pimping “Sicko” for obvious reasons.

  • Ham

    I don’t think the major problem with the NHS is that ‘someone else’ pays for one’s health insurance. The NHS’s critical failing is that healthcare policy is managed by people in Whitehall. Anyone who advocates that is crazy. A health insurance ‘voucher’ system is significantly more sane, although, of course, still not philosophically aligned with libertarianism.

  • Sylvain Galineau

    Moore is a closet capitalist. He has established a product line, a brand name, an image, a message carefully crafted for a particular audience and the revenue streams that go with them.

    Case in point : when his movie was leaked on Google Video, he reacted like any self-interested movie mogul would :

    “Every filmmaker intends for his film to be seen on the big screen,” Moore said. “This wasn’t a guy taking a video camera into a theater. This was an inside job, a copy made from a high-quality master and could potentially impact the opening weekend boxoffice. Who do you think benefits from that?”

    Hmmm. Who indeed would benefit from the publicity ? Let me think for a minute…And if it does impact the box office results, whose pocket is really hurt ?

    So patents on pharmaceuticals are evil. Music and film copyright are evil. Except for Mr Moore’s books, movies and products. Another self-appointed ‘cultural exception’.

    Interestingly, only an American was able to create a global anti-americanism product where each country used to have their own colorful local providers. Coincidence ?

  • If anyone truly needs further evidence of the hypocrisy and arrogance that defines Michael Moore, check out this latest rant. He’s complaining that Apple is stealing his spotlight by releasing the iPhone the same time as his movie.(Link)

    Boo freaking hoo.

    This from the same reputable source that brought us Senator Lieberman Names Mel Gibson as His Running Mate.

  • Looks like I posted a dumb link. Thanks for pointing it out Joshua, I should have been more careful.

    Moore is still a douche though.

  • Stephanie

    Alas, I suspect that Moore and his fans will have their way, or something close to it. At last count, 60-some percent of Americans favor universal health care. Americans might not be as hopelessly head over heels for the government as the rest of the West, but they love their statism nonetheless.

    I do wonder why Moore chose to highlight Canada, Britain, and Cuba, though. I don’t support government funded health care (single payer or otherwise), but I’m under the impression that there are countries with systems that are, from a practical perspective, less dysfunctional. (I hear France mentioned from time to time.) I mean, seriously. Cuba? I don’t get it. Of course, I don’t really get the left’s obsession with single payer, either. I don’t see them demanding we have a single payer system for food or housing just because some people don’t afford those.

    (At least I hope they’re not demanding it. Brr.)

  • Brad

    60-some percent of Americans favor universal health care

    Of course a goodly number of people favor something that they think is mostly free. Everyone thinks when a new program of handouts comes into play, that they will make out somehow. I’d say the near majority of the people in the US don’t know that even with the set of entitlements we have now we can’t possibly pay for all of them much less foisting universal health care on top of it.

    People favor it because the government refuses to come perfectly clean on the costs and the necessary rationing that it will entail. A government that goes beyond protecting life and property wouldn’t last long if they presented all the costs for their actions. People would see very quickly that they are effectively broke by the burden. Of course, if a private corporation tried to delude its shareholders in a similar fashion they would be in jail in short order. Just another example of that which is illegal for the masses is good public policy when the magical line of government is crossed. And, further, no one cares to closely examine the nature of that pixie dust that makes it illegal on one side and perfectly normal function on the other – force and coercion.

  • Millie Woods

    Paul, the quote from Hillary Clinton that she was a Goldwater girl should be taken with several tons of salt. First of all she is a hopeless liar. One of her quotes consisted of her account of befriending a black girl on an opposing high school soccer team because the young woman in question was being teased and bullied by everyone else. There’s one big problem with that story. Mrs. C. is sixty years old and soccer as a school sport was virtually unknown in the US until about twenty years ago and I very much doubt that she was in high school at age forty. Similar accounts of her accomplishments don’t survive close scrutiny. Hillary C. is a classic wannabe and one has only to hear her droning on in utterly shallow platitudes to realize that there is definitely no there there.

  • dearieme

    She claims to be named after Sir Edmund Hillary who climbed Everest. Unfortunately, he did it some years after her birth. Clearly he too was part of a vast right-wing conspiracy.

  • pete

    Maybe Moore would like to know how Blair has transformed NHS dentistry. In 1997 I enjoyed NHS dentistry as I had done for years. Now I struggle to find NHS dentistry at all, get a different foreign dentist every time I go, and have ended up at the queueing at the local dental hospital because of botched NHS treatment on two occasions.

    Thankfully I am healthy apart from my dental problems. In most years I only ever used the NHS for dental treatment so now I don’t use the NHS at all. For dentistry I’ve admitted defeat and gone private.

    Blair has transformed NHS dentistry from a good service to no service at all.

  • Midwesterner

    Blair has transformed NHS dentistry from a good service to no service at all.

    Serious question, pete. How much can be laid at the feet of Blair and how much of the deterioration can be attributed to the seemingly inevitable time/performance failure curve of all socialized programs?

    Not to say he had no effect on the rate, but has any program ever improved or even held its value over the long haul? I’ve been thinking for a bit and haven’t come up with anything yet.

    Were the good old days really good are just better than the present but still worse than before we personally remember?

  • I do wonder why Moore chose to highlight Canada, Britain, and Cuba, though. I don’t support government funded health care (single payer or otherwise), but I’m under the impression that there are countries with systems that are, from a practical perspective, less dysfunctional. (I hear France mentioned from time to time.)

    I’ve wondered about this a lot too – because it’s not just Moore, it’s the healthcare debate in general in the US that seems to revolve around Canada and the UK. (Bringing Cuba into the mix is a Moore original, though…) Don’t know much about the NHS, but Canada’s “system” is total crap, and very few Canadians will seriously try to defend it to you. Moore himself spoofed it a bit way back when in Canadian Bacon. It’s about the WORST example you could choose – and easily the most straightahead socialist system in the West (save possibly Sweden, of course). Countries like Finland and Germany manage pretty decent BigGuv healthcare systems – why not show us these places?

    My own going theory (admittedly not a very good one – largely because it credits Moore with the ability to anticipate the flow of public policy discourse) is that he’s deliberately choosing the extreme cases to goad Conservatives into using USSR-based straw mans. Their side can then “compromise” for a Finnish-style system.

  • Tedd McHenry

    I do wonder why Moore chose to highlight Canada, Britain, and Cuba, though.

    I think he just wants to see how far he can go. Stretching the truth beyond all credibility is his way of challenging himself as an artist. With each successive film he distorts reality more.

    Choosing the UK, Canada, and Cuba must be a great thrill for him. More than a few Americans have had direct experience with these systems, including among Moore’s fans. With Bowling and F-9/11 he could count on his target audience having little or no knowledge of and personal experience with the most distorted subjects.

    This is Moore’s “with me or against me” moment. If he can sell this to his base, he can sell them anything.

  • guy herbert

    I’ve addressed his comparators before. I think it is simpler than that.

    The UK (strictly speaking England, since the Scots and Welsh systems are slightly separate), and Canada, because they are readily accessible and speak English.

    Cuba because in the lefty lexicon ‘Cuba’ is another word for wonderful, because they can be relied on to join in with propaganda, and because the US’s silly continuing boycott makes the comparison provocative. He wants the “Michael Moore hates America” publicity. “Michael Moore makes misleading comparisons with our closest allies’ incomprehensible health bureaucracies,” doesn’t have the selling ring to it.

  • Stephanie

    Brad,

    Of course a goodly number of people favor something that they think is mostly free. Everyone thinks when a new program of handouts comes into play, that they will make out somehow. I’d say the near majority of the people in the US don’t know that even with the set of entitlements we have now we can’t possibly pay for all of them much less foisting universal health care on top of it.

    That same survey also found that people would be willing to deal with up $500 in additional taxes each year to fund the program. Now, survey questions can have problems, and saying you’ll pay an extra $500 a year is different from actually doing so, and any program might end up costing more, but still, it’s not a good sign. (Though I do have to wonder how many people only said yes because thought that they’d be able to ditch their current expensive insurance and still get health care for $500 a year.) I think the majority of people are kind of ignorant about the economic issues, and genuinely see no moral problem with using force to make one group of citizens work for another group.

    I could be being overly pessimistic, though.

  • Re: “free at the point of use (ie, they want someone else to pay for it).”

    Sorry – But “free at the point of use” does not necessarily mean someone else pays for it at all.

    Technically it’s about ensuring treatment is delivered without any need to pay for it there and then when you need it, because it should already have been covered.

    Everyone who works is in fact paying through the nose for the national health service.

    The real problem in the UK is that this is all run incredibly ineptly by the state, so that the service you get “at the point of use” has much to be desired.

    Granted there are those who do end up not ever paying for it – but they are not the reason it is pants.

    That is down to the clunking inept hand of the state ensuring much of the cash goes to waste and things don’t work as they should.

  • MarkE

    Free at the point of use can apply to services covered by insurance, as the insurer will often pay the provider directly, yet these services still tend to be better than the equivalent provided by government.

    The problem is that government services are provided for the benefit of the government and its employees; the NHS exists so the government can claim to be providing a service to citizens, and it is run by people who (perhaps sub-consciously) are more concerned with their own welfare than that of the patients (who are often seen as an obstacle to the efficient running of the organisation. I once had the misfortune to find myself employed by the NHS, and found the PCT was run for benefit of the (highly militant and vocal) ancillary staff; the administration lived in fear of this group, and were too weak to have the necessary confrontations when their demands became excessive. The doctors and nurses who are always trotted out to justify any increase in expenditure (“investment” in the jargon) could be taken for granted as they were susceptable to blatant emotional blackmail.

    The administrators themselves were not above playing political games though, I was only employed because the manager I reported to had to have only qualified direct reports to justify her status and salary, but the job was within the abilities of a first year trainee. As soon as I realised I gave notice. They may have found someone as expensive as me, but my pockets are clean (ish).

  • Anthony

    San Francisco kicks off its own health care system Monday.

    I’m curious to know what Samizdatistas expert in the various health care systems think this one most resembles.

  • JB

    Almost 50% of total US healthcare spending is by the government. Medicare reimbursement rates have the same market effect as the soviet price setting bureaus – they determine the rates that everyone pays for the vast majority of health procedures – public or private. The US system has all of the problems one would expect from a socialist system.

    Every day there are commercials on TV by car insurance, home insurance and life insurance companies. There are comparatively few (practically none) for health insurance. The industry is highly regulated and there is little competition. Consumers have very little price information and are unable to “shop around” for value.

  • Alsadius

    That’s actually a very old O’Rourke quote – I know it was used in Parliament of Whores(1991), and possibly earlier. Nonetheless, it’s just as valid as the day that he thought it up.

  • HJHJ

    JB is correct about US “healthcare” (in fact, its medical care, which is rather different thing) but in reality the effective figure is over 50% when you include tax exemptions for employer-provided medical insurance.

    The US and UK systems are very different in many ways but they also have a lot of problems in common. Medical licensure, the monopoly power of producer organisations and the fact that there is little price/quality competition (because the user doesn’t wield purchasing power) means that they both are hugely unsatisfactory and extremely expensive for what you get. Overall, the result is Americans are effectively obliged (albeit usually indirectly) to buy a lot of very expensive care and us in the UK get similarly expensive care but because we spend less, we get less. In both cases, the system makes it expensive and of lower quality than it should be because of the absence of a free(r) market.

  • Paul Marks

    I do not hold tax exemptions to be a subidy, so I would tend to go along with JB calculation or about 45% of all health spending in the United States being government (i.e. taxpayer) spending. However, I fully accept some of the other points HJHJ makes.

    Although I am a “flat tax” man I would have no problem with the actual extention of the tax exemptions to INDIVIDUALS. Even the moderate ex Mayor of New York (Rudy G.) strongly supports this Cato Institute proposal – which would mean that individuals would be better able to buy their own health cover (rather than have it tied to a job).

    San Francisco:

    I see that they are not even promising “universal coverage” for another 18 months and that their forms ask questions about levels of income (so they can tie in the extra 5% tax).

    The promises sound like the Mitt Romney system in Mass – which (he hopes) will not be shown up as a total mess till the race for President is over. He may well get his wish, and these systems tend to take a few years to decay (as the example in Canada shows – for the first few years it was O.K., it is only in the last few years that people are really starting to see what a mess it is, I hope this will be noticed in the United States).

    I dislike Mitt Romney, he calls himself a “conservative” (in the Ronald Reagan American sense), but supported every bit of the big government welfare-state agenda in Massachusetts (he even managed to increase taxes, before the new health plan was even thought of, although he denies it).

    I am told that, as a non American, that I do not understand how important good looks and money are in the United States and as ex Governor Romney has both (lots of hair, unlike Fred Thompson and others, and endless millions of Dollers) he will get the nomination – I hope this is wrong.

    As for the rest of the San Francisco proposal – it sounds a bit like the French system.

    On Cuba:

    Like so many countries the “free” medical care there is a farce (in reality one either pays bribes, has poltical pull – or does without). I agree with Guy Herbert about the motives of Mr Moore for going there.

    Lastly:

    Remember the march towards total government health continues.

    For example, the program to “help our children” under President Clinton has grown from four billion Dollars to tens of billions of Dollars today. There are now moves to take it up to over 70 billion Dollars (on top of everything else).

    It fits in with Mrs Clinton’s vision of children as belonging to the Federal government (the lady would say “the community” or some such) with the vast majority of them dependent on the government for basic stuff.

    And, of course, the program is not really restricted to children. As is often pointed out most of the Federal taxpayer money for the program is spent on adults in such States as Minnesta.

    The “bottom line” is as follows:

    It it is accepted that “general welfare” does not mean that the specific powers granted to the Congress (under Article One, Section Eight of the Constitution of the United States) are for the “common defence and general welfare” but RATHER that these two words are some sort of “general welfare power” that allows the government to spend money on any Welfare State program – well if this is the line followed the United States is doomed.

    This is so because it is very hard to argue against “compassion”, against the demands that the government (i.e. the taxpayers) “help the poor children dying of cancer” or whatever.

    Compassion is a virtue (it is the virtue of charity, not a dirty word – in fact one of the most important virtues), but a “compassionate government” is a terrible thing, something that (unless rolled back) leads to destruction of civil society and total breakdown.

    For those who doubt the above.

    Look at the cost of Social Security in the mid 1930′s when it was introduced – and look at it today.

    Also look at the cost of the Great Society programs when they were introduced in the mid 1960′s – and look at the cost of them today.

    The United States is not unusual in this respect. Welfare State programs grow out of control whenever they are introduced (in any Western country).

    So, no, it does not really matter if the hospitals are directly run by the government or “just” paid for by the government (i.e. the taxpayer). If such things become the norm – then eventually civil society is doomed.

    “But how can we roll back these schemes” – dealing with the “entitlement programs” (and other such) is the central political question of our time (not something I am going to try and solve in a comment).

    But I know this much – making the Welfare State even bigger is not the way to go (unless one actually wants to destroy civil society).

    This is why people like Senator Kennedy and Senator Clinton AND President Bush and ex Governor Romney should not be in politics – they are all in favour of adding yet more Welfare State programs (indeed they have already done so), in short they are a threat to the continued existance of civilization (it is as stark as that).

  • HJHJ

    Paul,

    I wouldn’t generally call tax exemptions a subsidy, but the special nature of healthcare tax exemptions in the US makes it so. At least that’s what Milton Friedman reckoned (he estimated the subsidy at $100bn per year):

    “Effect of Third-Party Payment on Medical Costs

    The tax exemption of employer-provided medical care has two different effects, both of which raise health costs. First, it leads employees to rely on their employer, rather than themselves, to make arrangements for medical care. Yet employees are likely to do a better job of monitoring medical care providers—because it is in their own interest—than is the employer or the insurance company or companies designated by the employer. Second, it leads employees to take a larger fraction of their total remuneration in the form of medical care than they would if spending on medical care had the same tax status as other expenditures.

    If the tax exemption were removed, employees could bargain with their employers for higher take-home pay in lieu of medical care and provide for their own medical care either by dealing directly with medical care providers or by purchasing medical insurance. Removal of the tax exemption would enable governments to reduce the tax rate on income while raising the same total revenue. This hidden subsidy for medical care, currently more than $100 billion a year, is not included in reported figures on government health spending.

    Extending the tax exemption to all medical care—as in the current limited provision for medical savings accounts and the proposals to make such accounts more widely available—would reduce reliance on third-party payment. But, by extending the hidden subsidy to all medical care expenditures, it would increase the tendency of employees to take a larger portion of their remuneration in the form of medical care.”

    http://www.freerepublic.com/focus/f-news/1357032/posts

  • Midwesterner

    Thank you for an excellent quote, HJHJ. I was fretting over how to address this point.

    Paul is absolutely right that it is very dangerous to ever think of a tax break as a subsidy, and yet in this case, that is exactly what it is. And it is an effective subsidy that has huge free market/free enterprise consequences.

    I also think it very important to acknowledge that selective tax breaks are a form of redistribution and need to be evaluated with those consequences in mind.

    More from that excellent article you linked:

    No third party is involved when we shop at a supermarket. We pay the supermarket clerk directly: the same for gasoline for our car, clothes for our back, and so on down the line. Why, by contrast, are most medical payments made by third parties? The answer for the United States begins with the fact that medical care expenditures are exempt from the income tax if, and only if, medical care is provided by the employer. If an employee pays directly for medical care, the expenditure comes out of the employee’s after-tax income. If the employer pays for the employee’s medical care, the expenditure is treated as a tax-deductible expense for the employer and is not included as part of the employee’s income subject to income tax. That strong incentive explains why most consumers get their medical care through their employers or their spouses’ or their parents’ employer. In the next place, the enactment of Medicare and Medicaid in 1965 made the government a third-party payer for persons and medical care covered by those measures.

    We are headed toward completely socialized medicine—and, if we take indirect tax subsidies into account, we’re already halfway there.

    The tax break drives the detachment of consumer from payer via third party payment, and therefore removes the major constraint on frivolous spending and efficient delivery of service while at the same time punishing self employment and small businesses.

    I encourage everyone to read that Friedman article you linked.

  • freeman too

    By having a large industry like the NHS the socialist ideal leaps forward. With tax-driven “free” health care there are tens of thousands of “incidental” jobs generated (managers and organisers, rather than medical staff) who are dependent on the state for their income.

    It follows that if you are paid by the state you would be foolish to vote for anything but a system devoted to maintaining it. In one fell swoop our Labour masters are guaranteeing voters committed to their cause and implementing the socialist paradise of central control.

  • Paul Marks

    Unless there is a tax exemption for money that individuals use to pay for health cover, getting rid of the employer tax excemption is not going to fly.

    Nor are tax exemptions incompatible with a flat rate tax.

    It would be a matter of “you pay X percent of your income in tax – but you do not pay tax on income you use to…”

    Malcolm Forbes has his faults (who does not?), but he is basically on the pro civil society side, and he is the top man on the R.G. staff. Sure New York under R.G. was no free market place, and he said some terrible things (on “gun control” and other such), but he was working in a city that was controlled (unions, council and so on) by the Democrats – and, considering that, he achieved a lot (first on spending, then on taxes, and also on other things).

    Overall, moderate though he is, I was quite impressed by Rudy’s 12 principles – although I prefer Fred Thompson (still I do not get a vote anyway). In an ideal world someone like Tom Tancredo or…. (but the world is not ideal).

    Still whether the R.G. or F.T. get the nomination they could beat Mrs Clinton (so even the establishment polls say), and they are both interesting people as regards policy (which President George Walker Bush is not and has never been) and it is policy that is important.

    My guess is that Fred Thompson will get the nomination (but the guess of an alien is not worth much), as he is so well known and is on the right (no pun intended) side of every basic question that matters to the Republican base (they would be choosing a man who thinks like them – but who can, because of his manner and other such, reach out to independents). It would be interesting to see who he choose as his running mate.

  • HJHJ

    Midwesterner,

    Yes, I liked the bit you quoted from the article too. What the medical care systems in the US and UK have in common is that because there is a closed shop of suppliers and because the user doesn’t pay directly out of taxed income, the providers can get away with lining their pockets and providing very poor value for money.

    I am inclined to disagree with Paul Marks about getting rid of tax exemptions on employer funded medical care. As Milton Friedman points out, tax exemptions on employer-funded medical care aren’t extended to the self employed (or the not employed) at the moment. Because the tax exemption costs so much (due to the US spending so much as a % of GDP on medical care) removing the tax exemption would allow general taxes to be lowered in compensation. Employer-funded medical care would decline and employees would just get the money instead. Once they’re spending their own money, there will be price pressures on providers and the cost will drop.

    Also, tax exemptions may not be incompatible with flat taxes in theory, but in practice they negate the point of flat taxes. Flat taxes are generally viable because they remove exemptions, thereby allowing a lower rate to be levied and are difficult to avoid and cheap to collect. Exemptions mean that a higher tax rate has to be levied and they create tax complexity and encourage avoidance schemes.

  • Midwesterner

    Paul,

    Nor are tax exemptions incompatible with a flat rate tax.

    It would be a matter of “you pay X percent of your income in tax – but you do not pay tax on income you use to…”

    That is clearly not compatible with flat tax. If fact that is precisely how exemptions are handled.

    However … A personal health expense deduction is compatible with a flat tax on the basis of a necessary cost of doing business. Example, to run a trucking company one must pay mechanics to maintain the trucks. The human body is clearly necessary for income or dead people would have jobs (besides voting in Chicago elections) therefore, it is a cost of doing business.

    But this is a dangerous row to hoe because one would have a difficult time not applying the same to a food allowance, and housing allowance, a transportation allowance, etc. At which point one has to wonder if it is even remotely a flat tax any more. I think a true flat tax will have no/zero/nada exemptions.

    HJHJ, I think Paul may be looking at what stands a chance of being done as opposed to what should be done. While I think I disagree with the ultimate philosophical consistency of the proposal in his first sentence, I think he is right, that by allowing an individual deduction, it would be easier to get rid of the business one. It would also incentivize people to switch to user-pays plans, which would substantially counteract the incentives presently in place for overspending. But never underestimate the medical lobby. They make AARP, The NRA, and the tobacco lobby look like Girl Scouts selling cookies to grandma.

    and Paul, on:

    My guess is that Fred Thompson will get the nomination (but the guess of an alien is not worth much),

    I disagree again. I think the guess of an alien is probably worth more than the guess of a voter. We tend to cloud our judgment with worries about ‘wasting’ our vote. With nothing on the line, someone not eligible to vote is likely to have a more accurate picture.

    I intend to vote for Fred Thompson regardless. If I am forced to choose between Rudy Guiliani and Hillary Clinton, I will vote for the totalitarian that 1/2 of the population thoroughly distrusts, rather than the totalitarian that has the trust of a much greater share of the population. If we are forced to elect a big government totalitarian, I want that person watched like a known criminal. Hillary will be. Rudy won’t. It really is that simple. Republican totalitarians are the worst possible kind because there is nobody else to oppose totalitarianism.

  • Paul Marks

    I think totalitarian is a bit strong – although I do remember Rudy ordering traders (who had commited no common law fraud) to be taken from their offices in chains (for the pleasure of the television viewers – and to mess up any chance of a fair trial these men might have) for supposedly breaking various regulations.

    I am no fan of the credit bubble financial services industry, but there are so many regulations (many of which are contradictory – i.e. if you obey one, you violate another) that the whole “crack down on white collar crime” was and is absurd.

    On the flat rate tax (of Steve Forbes and others).

    There are two rates – zero and whatever the other rate of tax is.

    If the rate on money spent on buying health cover is zero, this does not violate the flat rate tax.

    What is NOT going to happen is that the employers are going to lose the tax deduction for employee health cover, without something being put in its place.

    If one says “I am going to get rid of the employer deduction and not introduce an employee deduction” then than is a big tax INCREASE.

    However, I agree that Fred Thompson would be the better man (always opposed “gun control” and so on).

    Well anyway clearly Fred Thomspson better win the nomination – otherwise you will be voting for Mrs Clinton (and we can not have that).

    Seriously there is this question of TURNOUT.

    Would social conservatives really turn out for Rudy? Sure he now says that Roe V Wade was bad law (which it was). But do they believe him – will they turn out and vote for him.

    If the social conservatives (Catholic, Protestant and neither) just stay at home, then Mrs Clinton wins.

    The good thing about Fred Thompson is that he does not seem to really upset the ordinary leftists (they think of him as a harmless and rather friendly person).

    “And why should we care about that” – because if they sort of like the man they may not be motivated to come out and vote against him (especially as Mrs Clinton is not likeable).

  • HJHJ

    Paul Marks says:

    “If one says “I am going to get rid of the employer deduction and not introduce an employee deduction” then than is a big tax INCREASE.”

    True, but only if you don’t change other taxes. The tax exemption on employer-provided medical insurance costs, according to Milton Friedman, well over $100bn per year. Removing this would allow income tax decreases of the same amount. Indeed, it could be presented as an equitable tax cut for everyone, not just those lucky enough to have insurer-funded medical care. Employers would then stop offering this insurance and pay the same amount in salary instead so people would have a lot more in their pay packets. You’d also suddenly find that suppliers would have to compete and this would reduce cost.

  • Michael Moore will profit massively from his use of prison labor, i.e. the Cuban workers who both staffed and through their expropriated labor funded the hospitals that provided rock star treatment to their rock star guests. Cuba is a prison; the fact that a prison may take “good care” of its prisoners (as if that claim could be objectively reviewed in a country without a free press) and teaches full literacy of its prisoners for the reading of government licensed propaganda.

    I am more than a little pissed at libertarians for their failure to indict Moore for this unethical exercise. They got hypnotized, it seems, by the health care funding issue and missed the bigger issue of making profits off of slaves.

  • Paul Marks

    The last two comments are interesting.

    Yes I missed important points here.

  • Paul Marks

    I suspect that the last real chance that the United States had to avoid full taxpayer backing for health care were the H.M.O.s

    For all there faults the H.M.O.s got round part of the vast web of regulations that made private medical insurance so expensive.

    Of course a lot of regulations ended up being imposed on the H.M.O’s – thus undermining their work in holding down prices.

    Now the collectivists (not too hard a word) are making sure that more and more business enterprises are forced to provide health care – at the vast prices that the regulations and subsides have created.

    So these business enterprises turn in despair to polticians who claim that they will “do something” about their burden.

    Mrs H. Clinton for example.

    Too late they will understand that all the campaign donations will not help them when the lady comes to power.

    “But she will be watched” (Midwesterner).

    The first order of business will be the “fairness doctrine” (or something similar) this (and the threat of “anti trust” action or some other attack from government) will mean that there will be no contrary voices in the United States to that of the left.

    The vast majority of newspapers are already under their control as are most broadcasters. People like News International (the owners of Fox News) are businessmen (not heros) – they will obey if they fear their business will be destroyed.

    And talk radio will be easy to destroy – at least the non “fair” parts of it.

    “But the internet, the internet”.

    Most people do not get their news from the internet. And the left are now very powerful on the internet anyway.

    If Mrs Clinton wins Midwesterner will get to find out what “totalitarian” is.

  • Midwesterner

    If Giuliani wins, we find out what the eradication of non-totalitarians from the Republican party means. I want the Republican party to be opposing politicians who seek unfettered power. We’ve had one totalitarian president in the party (Bush 2). One more is the death of any hope for the Republicans or for any vestige of liberty.

    If H Clinton is elected, then at least the Republican party will be in opposition. Really, Paul, it is that simple.

  • Midwesterner

    Regarding HMOs, you overlooked the little fact that by federal ERISA law, HMOs could not be sued for punitive damages. Accountants discovered they could make medical treatment decisions without any consequence regardless of the physician’s opinion. The bar for a criminal conviction is justifiably set very high and what caused HMOs to be such a disappointment was that there was no contract enforcement mechanism available. Hardly a libertarian situation!

    HMOs have often escaped responsibility for poor medical care by means of ERISA, which creates a federal preemption for any state claim that “relates to” any employee benefit plan. If an HMO benefit plan is ERISA-qualified, and claims against the HMO go to matters covered by ERISA, the preemption applies and the claimant is thereby limited to administrative remedies which only call for the HMO to do what it was required to do in the first place. For example, if referral to a specialist is denied or if treatment is withheld, the HMO could only be forced to pay for or provide the referral or treatment, but no other damages would be compensable. The HMO, then, has nothing to lose by denying benefits.

  • Paul Marks

    Midwesterner:

    We both agree that Fred Thompson is the man (in an ideal world someone like Tom Tancredo, but the world is not idea and he has no chance whatever).

    Where we differ is that I would vote for Rudy Giuliani and you would not. As I do not get a vote it harldy matters (had I made different choices during my Cold War days back in the 1980′s things might be different, as it was I did not even get paid let alone get citizenship, – but that is another story).

    However, have some compassion for a Englishman like myself.

    Do you know that just about none of Rudy G.s 12 principles would be acceptable in “Conservative” circles in Britain?

    By standards of Mr Cameron and his friends Rudy is a rabid supporter of the free market (an “extremist” to be exact) and insanely pro gun (yes pro firearm rights – by British standards).

    “Yes, but you are comparing Giuliani to a complete scum bag” fair enough.

    However, I still think that Mrs Clinton would, if elected, acheive that sort of de facto monopoly over the media that F.D.R. and L.B.J. could only dream of (although F.D.R. did have domination over the radio – thanks to young administrators, such as L.B.J. in the 1930′s).

    The great conservative newspapers are no more (unless you count the Wall Street Journal – and that could be castrated with ease). And Mrs Clinton would be far more shameless in using things like threats of “anti trust” (and other regulations) to enforce a “progressive and enlightened” line on the media than someone like L.B.J. ever was – because Mrs Clinton honestly believes that she represents an enlightened elite who represent the true “General Will” as opposed to the selfish and false self “will of all”.

    The main line colleges (and the rest of the “education system”) will go along with all this. And the “Progressive” victory will occur.

    Although, of course, economic and social collapse would eventually bring the Progressive period to a close.

    I rather doubt that R.G. has any such grand plans.

    However, I again agree with you that Fred Thompson is the man.