Off-topic political post: "FAQ on Free Market Health Insurance"

I've received multiple e-mails in response to my recent letter to the editor in the May 11, 2008 New York Times advocating a free market in health insurance. I appreciate the fact that the correspondents all took the time to read my letter, see my affiliation with Freedom and Individual Rights in Medicine (FIRM), search for the FIRM website, find my e-mail address, and then write me with their comments and questions.

The various correspondents posed a number of good questions about the nature of a free market in health insurance, as well as some more fundamental issues on individual rights and the proper role of government in health care. I've had several stimulating rounds of e-mail discussion with folks from around the country. And even though we didn't always agree on some important issues, all of the e-mails I received were polite and articulate, and I appreciated the many thoughtful remarks from all of the writers.

One correspondent recommended that I post my responses online so that other interested parties would have a place to read a more fully developed and explicit explanation of the ideas related to a free market in health insurance. I thought that was an excellent suggestion. Hence, I've paraphrased and collated an essentialized set of questions (and my subsequent responses) in the form of this brief FAQ.

The permanent location for this FAQ will be:
<http://www.westandfirm.org/blog/2008/05/faq-on-free-market-health-insurance.html>

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Q1) In a free market for health insurance, should insurers be able to exclude someone based on a pre-existing condition?

Q2) Why should whether I live or die depend on whether an insurance company finds it too costly to pay for my care? Should my fate be determined by whether a corporation finds it profitable?

Q3) How would a free market guarantee that all Americans will have necessary health coverage?

Q4) What if someone has a bad disease through no fault of his own, can't afford the treatment, and no insurance company will cover him? Who will pay for his care?

Q5) Isn't the purpose of a government to promote the common welfare of all citizens?

Q6) Your position is very harsh and Darwinian. If you were dying of cancer and could not afford treatment, would you really say to yourself, "Oh well, this is my random bad luck, no one has an obligation to treat me and so I must die"?

Q7) Isn't it my social obligation to subsidize the health care of those who can't afford it?

Q8) I agree that health care is not a "right", but isn't it moral for the US government to raise taxes to improve the overall welfare of the nation? Universal health care (ideally administered through a free-market mechanism to the greatest extent possible) would be a good use of that power.

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Q1) In a free market for health insurance, should insurers be able to exclude someone based on a pre-existing condition?

A1) Yes. In a free market, insurers (like any other businesses or individuals) are entitled to set whatever terms they wish for the products they wish to sell. Similarly, customers can choose to accept those terms, decline them, or negotiate with them for some other mutually agreed-upon alternative.

It's also important to note that our current system is far from a free market -- at best it's semi-free. Insurance companies are under numerous government constraints about what sorts of services they must/must not offer, who they can/cannot exclude, what sorts of prices they can charge, when they must accept customers, etc. For instance, some states require that a healthy 22-year old man must pay the same premium as a 60-year old man with multiple chronic health problems. Some states require that insurance companies that offer small group policies must accept every group that applies and must accept every member of the group regardless of lifestyle choice or health condition. Constraints such as these make it difficult for customers to purchase insurance in the first place. These constraints are the cause of our current problems and it is those contraints that I wish to see repealed. (For more details, please refer to "Moral Health Care Vs. 'Universal Health Care'" by Lin Zinser and myself.)

Q2) Why should whether I live or die depend on whether an insurance company finds it too costly to pay for my care? Should my fate be determined by whether a corporation finds it profitable?

A2) One should reverse that question. Should an insurance company be obliged to run at a loss? For example, there are many people who wish to force insurers to cover expensive treatments that are of minimal (if any) proven efficacy, such as bone marrow transplant in patients with late-stage breast cancer. If or when such laws are passed, insurance companies don't survive for long or else they pull out of local markets where such laws are in force, thus depriving all the other residents of that locality the possibility of purchasing insurance from that company. If an insurance company cannot be profitable, then they can't provide coverage for anyone.

More fundamentally, should an insurance company be obliged to pay for your care purely because you need it, regardless of the cost to them? The fact that you have a need does not create an automatic obligation on others to fulfil that need.

Q3) How would a free market guarantee that all Americans will have necessary health coverage?

A3) There's a premise in your question that I must disagree with - namely that it's the government's responsibility to guarantee health coverage for all Americans. It is not, any more than it's the proper role of the government to guarantee that every American has a job or a car. Health care is a need, but that's not the same thing as a right.

A right is a freedom of action that an individual possesses, such as the right to free speech. Rights impose no obligations on other people, other than the negative obligation to leave you alone. Rights are not automatic claims on the goods and services produced by others -- that is just state-sanctioned theft.

To further concretize the difference between a need and a right, consider an innocent child with a rare disease who will die unless he gets a bone marrow transplant from a matching donor. The only potential donor with the proper tissue match is someone who doesn't want to donate, for whatever reason (maybe he's scared of needles, maybe he's a Jehovah's Witness, maybe he's just an ornery old cuss). We'll also stipulate that the potential donor understands exactly what is at stake for the child, and that he correctly understands that donating bone marrow is a very safe procedure that would involves a few minutes of tolerable physical pain and a couple of hours of his time, but otherwise wouldn't impair his life afterwards. The fact that the child will die without that bone marrow does not mean that the child's family (or anyone else) has the right to strap that potential donor down and forcibly take a marrow sample from him against his will. The child's need does not constitute a right to that other man's bone marrow.

Q4) What if someone has a bad disease through no fault of his own, can't afford the treatment, and no insurance company will cover him? Who will pay for his care?

A4) The short answer is, "Anyone who wishes to do so."

If someone incurs an unfortunate random hardship (even though it is no fault of his own), it does not create an automatic obligation for anyone else to pay for it. Depending on the exact circumstances, I might be willing to voluntarily donate my own time/money to help him out. For example, in my capacity as a physician, I have personally waived my own professional fee more times than I can count out of voluntary charity for patients whom I've thought were worthy recipients. The same is true for nearly every other physician I know. And in general, Americans have been extraordinarily benevolent about voluntarily donating their time and money for innocent victims of natural disasters, disease, and man-made harms (such as 9-11 or the Oklahoma City bombings).

So if someone developed a bad disease that would cost him $100k, and either didn't get insurance or couldn't get insurance, then he essentially has to rely on the voluntary charity of others. His need (genuine as it may be), does not create a right to someone else's property or time.

This isn't limited to health care. The same would be true if an unfortunate homeowner didn't or couldn't purchase flood insurance, then his house was completely destroyed by a freak 100-year flood. His hardship does not constitute any sort of automatic claim on others' assets. Again, I (and many others) might be willing to be offer voluntary charity to help him out. But if no one is voluntarily willing to help him out, then he loses his house.

Furthermore, the very fact that such examples tug at the sympathies of normal decent Americans also means that those Americans will be forthcoming with voluntary charity. And I fully support giving to charities that are consistent with my values and priorities.

Q5) Isn't the purpose of a government to promote the common welfare of all citizens?

A5) No, the purpose of government is to protect individual rights - specifically to protect individuals from the predations of others who would use force to deprive men of their rights to life, liberty, and the pursuit of happiness. This includes protecting honest men from external enemies who would wage war on us as well as internal criminals who would use force to steal, murder, commit rape, etc. Hence the purpose of a government is to create and enforce conditions where men and women can freely and voluntarily exchange ideas, goods, and services to the mutual benefit according to their best rational judgment, without fear that someone else will try to forcibly rob them of those benefits. Man's essential nature requires that he uses his reasoning mind to create the values necessary for sustaining his life. Hence, protecting his right to the free use of his mind (and the right to voluntarily trade with others for the products of their thought and effort free from compulsion) is the basic function of a government.

When a government ceases to be the protector of individual rights and instead becomes one of the chief violators, then it undermines the very reason for its existence. It's akin to a government claiming that "we need to protect the freedoms of Americans from enemies abroad", and then imposing a military draft on young Americans to fight in a war (and violating those draftees' freedom and rights in the process).

Q6) Your position is very harsh and Darwinian. If you were dying of cancer and could not afford treatment, would you really say to yourself, "Oh well, this is my random bad luck, no one has an obligation to treat me and so I must die"?

A6) Yes. My life is my own responsibility. Others may choose to voluntarily help me if am in need, but they should not be legally obligated to do so (i.e., they should not be forced by the government to help me against their will or punished by the government for failing to help me.)

If I needed $100,000 for a life-saving cancer treatment but couldn't afford it, I would of course do everything legal and moral to try to live. I might borrow money from friends and family, I might ask for charitable contributions, I might sign up for clinical trials of experimental drugs, etc. But I wouldn't hack into my neighbor's bank account and steal that money from his kids' college fund. Or steal $100 each from a thousand of my neighbors. Or ask the government to take it from my neighbors by force.

Similarly, if my next-door neighbor was the only possible matching bone marrow donor to cure my rare disease but he didn't want to donate a sample to save my life, I wouldn't strap him down and take it from him by force. If I had a brain tumor that required a delicate operation in order for me to live, and the only neurosurgeon with the necessary skill was unwilling to do the procedure, I wouldn't force him to perform the surgery at gunpoint (or have the government force him).

That's not being Darwinian -- that's just being moral. Of course, I would prefer to live rather than die of a terrible disease. But I wouldn't want to live if it costs me my integrity and my self-respect. A man can't "save" his life at the price of sacrificing his morality, since morality is the very means that a man survives as a man.

Q7) Isn't it my social obligation to subsidize the health care of those who can't afford it?

A7) No, you have no positive binding obligation to help others although of course you have the voluntary choice. Nor is this limited to health care -- it's an application of a more general principle. If I saw a child drowning in the ocean, in all likelihood I would try to save him if I thought I had a reasonable chance of success. And nearly everyone I know would feel similarly. But if a different passerby chose not to make the attempt for whatever reason, then that's his choice to make and one which I have to respect. He has the right to decide whether he wishes to try or not. Conversely, the drowning child cannot demand that a random passerby must help him as a matter of right -- only out of voluntary charity. If it turned out that a passerby was a strong swimmer but refused to help because he was a total jerk, then I might hold him up to public moral censure -- maybe he'd lose his friends, his job, and the respect of his peers. But the government should not send him to jail for failing to take a positive action that could have saved the child's life (assuming that he wasn't the cause of the child's drowning in the first place).

Just as a passerby should not (and currently does not) have a legally binding positive obligation to help a drowning child even if he is capable of doing so at no cost to himself, he should not be obligated by law to pay for my cancer treatment. There's a crucially important difference between him having the negative obligations not to steal from me or not to deprive me of freedom of speech (i.e., to respect my rights), and any purported positive obligations to pay for my health care or save me from an accident. Again, my right to free speech implies only a negative obligation on his part not to violate it -- it does not require a positive action on his part. On the other hand, any alleged entitlement rights such as a "right" to health care is essentially a demand by me for some forced positive action from others.

Q8) I agree that health care is not a "right", but isn't it moral for the US government to raise taxes to improve the overall welfare of the nation? Universal health care (ideally administered through a free-market mechanism to the greatest extent possible) would be a good use of that power.

A8) If we agree that there is no "right" to health care, then by what right does a government force one citizen to pay for the care of another citizen? That's what any system of "universal care" essentially amounts to. What you consider a moral use of government power is something I consider deeply immoral. And the experience of other nations shows that any attempted system of universal care ends up destroying the free market that makes quality health care possible.

At a practical level, if I needed major medical care and couldn't afford it, I'd much rather rely on a pure free market plus voluntary charity from my fellow Americans, than a British-style system of government "universal care".

Although critics of the free market regularly claim that it would lead to "people dying in the streets", this would not actually happen unless Americans were far more impoverished and callous than they are today. The free market is our best protection from that scenario. And if Americans ever became that impoverished and callous, then no system of government-run universal care would be sustainable or even possible.

On the other hand, the nationalized health systems routinely deny care to people who have theoretical "universal coverage". Those patients do end up dying because of the allegedly "compassionate" government system.