As I have been writing on this for some time, I think it is time to put together a short summary of all the problems with arguments put forward in the health care reform debate. As there has been so much misinformation out there, I am sure I will miss something, but hopefully by putting everything in one place I will at least make it a little easier to rebut the arguments being offered.

I was going to write a well thought out, integrated summary, but as I am still under the weather, I think it best to put together something quick and simple, easy to read, and with links to the longer, more involved posts I have already written. So, the post will take the form of a list of statements made by the medical reform proponents, followed by a short summary, and then links to the relevant articles.

So, without any additional introduction, let us begin.

1. The public option insurance will just compete with existing insurance.

The public option will not compete. If it did , there would be no purpose to it. If the public option charged market prices, and had to offer a return on investment comparable to the free market, then it would work just like a public company. That being the case, there would be no reason for it, as the same tasks would be carried out by some private company.

As the purpose of the public option is to provide insurance the other insurers do not find profitable to offer right now, ti must be offering insurance at prices below market, at least to some segment of the population. And that being the case, it will be taking a loss. As a result it will need government subsidies to operate. And being subsidized, it will not be competing, it will be able to undercut prices without worry, as it will have the taxing power of the US to fall back upon.

The funny thing is, the "monopoly power" the government always worries about int he private sector (which never really exists -- see "Saving Us From Lower Prices "), would actually be vested in this entity. It would be participating in the market, but without any concern about costs or profits, capable of doing whatever it wanted as profitability is not an issue.
 
References:  Bureaucratic Management ,The Bureaucratic Mind ,The Inevitability of Bureaucratic Management in Government Enterprises, The Insurance Sham, Symmetry and Asymmetry in Government, Confirmation, Yet Again

2. The public option will cut costs by removing waste

Given what I wrote in #1 this is just absurd. As the public option will, of necessity, be offering insurance , at least to some groups, below market, and likely will end up offering below market insurance to ever larger groups, it will be operating at a constant loss, requiring infusions of government money. So whether or not it "cuts costs" is a bit of a non-issue, as even if it were to cut costs, it would lose those savings many times over in losses.

But ignoring that there is still a fat this argument overlooks. No the public option would not have to pay dividends or issue bonds, but it also doe snot have the incentives to efficiency that come from having to answer to shareholders, or having one's own money invested. It may "save" money, but the lost efficiency is a bigger loss. However, that will be addressed in a future point.

References: Cutting "Costs", Misunderstanding Profits, Again? ,Government Efficiency, The Insurance Sham, Two Examples of "Inefficiency" in Capitalism

3. National health care (single payer) is cheaper due to cost savings

This is a rehash of the old communist argument that communism is more efficient as it does not have the "overhead" of capitalism, such as advertising, or payment of dividends. What this ignores is that those costs are part of an overall system which inspires greater efficiency than the competing economic models. Yes, capitalism "wastes" money on advertising, but the gains in terms of efficiency, inspiration to cost cutting and so on make up for it many times over. But once you remove the "waste" you also lose the benefits, as  you have destroyed the system

References:Cutting "Costs", Misunderstanding Profits,  Again?, Government Efficiency, The Cost of Big Government, Two Examples of "Inefficiency" in Capitalism

4. Rationing won't be necessary.

A good in limited supply cannot be provided in infinite quantities. There will always be some mechanism determining who owns a given good or service. Under the free market, private property rights and free exchanges determine ownership, while the freely set market price ensures that anyone willing to pay the market price can get as much as he wants.

Once you involve the government and leave the price system behind, there will always be rationing. Whether explicit, through delays to reduce the number of procedures provided, through services being discontinued by "cost benefit analysis" or other subterfuges, the state cannot just provide as much health care as anyone wants, they will have to impose limits in some manner.

Anyone who argues the state will not have to ration is lying.

References: Who Will Decide, Life Is Not Fair - And Trying To Make It So Makes Things Worse, Shameless Self-Promotion

5. The public option will avoid rationing

This argument is premised on the idea that the public option is real insurance. But as I showed in #1, the public option is not an insurer in the traditional sense. Traditional insurers (when not burdened with government mandates) cover services based upon the contract signed by insurer and insured. As the public option will not only be available, but appears, at least under present plans, to be mandatory, people will not have the luxury of negotiating for insurance, they will buy it or be fined. And the insurer will not be bound to cost-benefit analysis. He has the wealth of the US at his disposal, so, at least initially, I anticipate the public option will provide more generously than private insurers (see #10 below). But, as it covers more and more Americans, and costs mount, I fully expect to see the public option scale back coverage, especially as governmental cost benefit analysis becomes more common. As insurance is mandatory, and the insured have no other option, they will be unable to leave the public option, so will simply have to accept whatever services it decides to cover. As they must carry insurance, and no one but the public option will touch them, they will have to accept thos rulings, leading to de facto rationing for large numbers of Americans. (see #6 for a distinction form private insurance.)

References: Who Will Decide, Public Insurance, The Insurance Sham, Symmetry and Asymmetry in Government, Shameless Self-Promotion, Confirmation, Yet Again

6. You already have rationing by insurers

I cannot write this better than I did in "Envy And Analogy":

I have been reading the many arguments for socialized medicine made by the left wing posters on TH, and I have to say they are uniformly weak. And not just because they ignore all the evidence for the failure of socialized medicine wherever it has been tried. Instead they are weak because they have only two real arguments, either they argue by comparing incompatible examples, yet pretend they are somehow analogous. Or else they resort to appeals to class envy.

First, let us look at the arguments by analogy. Whenever someone mentions government rationing of health care, it appears the formulaic response is either to mention HMOs or to point out how long someone has to wait to see a doctor or wait in an emergency department.

Allow me to rebut the HMO analogy with an analogy of my own. If I walk into McDonald's, they have a limited menu. I cannot order black truffles or falafel. However, McDonald's is not restricting my choice, as I can walk into a different restaurant. However, if the government decreed that every restaurant MUST serve McDonald's menu, THAT is a restriction of my freedom. See the difference? I can choose to join an HMO and restrict my own choices in exchange for lower premiums, or I can choose some other coverage or pay out of pocket. Once the government decrees what coverage will be provided, I have no choice. Thus their analogy between managed care and government managed care is inappropriate.

Similarly, a wait and rationing are worlds apart. One need only think about breathing to see the difference. If the government decrees you cannot breathe, it is a lot different than holding your breath for a minute. Yes, the free market has only limited resources as well, but in the free market, when demand exceeds supply there is incentive to expand. In the government, when demand exceeds supply there is no incentive. In fact, to have "underplanned" is a fault, and so workers take efforts to hide a lack of supply to save their jobs, making the government prone to actively deny a lack. All of which means the free market is much more likely to correct any shortfall than the government ever is. (Visit a government office waiting room and one for a fully private company, not a pseudo-private one like a utility, and tell me which one has adequate staff and which doesn't.)

Of course when analog fails, then class envy begins. When someone points out, even if in an HMO you can still pay out of pocket,t he reply is "The poor can't". And that is the voice of envy. If you start to think about this, you will see why. Rather than arguing for elevating the poor, this argument amounts to "the poor have to take what they can get, so everyone else should have equally lousy coverage." It is the same as a blind man arguing everyone else should have their eyes put out. And just as we would not accept the latter, we should not accept the former. The misfortune of one should not be used as an excuse to drag down the rest. That the system does not provide perfection for everyone does not mean the best alternative is to provide inadequately for all.

And when both of those fail, they fall back on the last refuge of all big government advocates, arguing the free market is not perfect, and thus proposing an even more imperfect government solution. Worse still, most [of the] flaws they describe are either the result of prior government interference or of our runaway tort system. So, they are not even blaming the free market for imperfection, but using the fruits of past government meddling to argue for more.

It is not very convincing, at least I hope not. I know I don't see it as persuasive. I just hope the rest of America sees through it as easily.

There really is nothing to add.

References: Who Will Decide, Envy And Analogy, Shameless Self-Promotion, A Passing Thought on ObamaCare

7. The free market made health care expensive and/or left too many people uninsured and/or prevented individuals from obtaining care and/or left one in six people (or one in six children if they are going for the rhetorical throat) unable to obtain care. At the very least, our system fails to provide for its citizens what every other civilized nation on earth does.

The government loves to blame the free market, be it the banks ("The Endless Cycle of Intervention"), utility deregulation ("Coincidence is not Causation") or medical costs, they can always find a way to pin blame on those evil capitalists. Even those nominally on the right seem to enjoy joining in this game ("Smaller Government , Fair Weather Friends and Special Cases") However, what they often fail to point out is that the "free market" which "failed' most often was already burdened with countless government interventions. Meaning that the "free market" did not fail, prior interventions failed.

Then again, that is the pattern of government ( "The Endless Cycle of Intervention"). They criticize the fee market for being less than perfect, and promise perfection form state intervention. When the state fails to deliver, they claim it was fom a lack of power or money or some other failing. And when it fails again, the next excuse is offered. And so on, and so on. In other words, blaming the free market for not being perfect, they offer up an even more imperfect government solution, and use its very failures to argue for still more government involvement.

And that is the pattern medical care has followed. No, at no point was every individual covered for services they could want or need. And at no point in time will that ever be true, either. But prior to the passage of medicare/medicaid, individuals were , for the most part, able to obtain live saving care, and even some non-essential services. If you read the debates and argument offered for medicare/medicaid you will see there are very few allegations of people not receiving care, instead the argument is about the humiliation of relying on charity or having to ask for free services. In other words, we destroyed a system that worked to help the poor save face.

And make no mistake, we destroyed a system with those changes. If you look at the problems in today's system, they all have an origin close to the government. Excepting tort law, every one relates to the government attempts to maintain their faulty medicare/medicaid programs and the many extensions which have arisen since their creation. Either policies directly relating to those programs, or policies intended to "keep down costs" in order to keep those programs viable. In every case, our "free market" problems are government problems.

I won't bother going into the specifics, as the posts in the links below do a very good job of refuting those, the 47 million uninsured, the wonderful free care in other nations, the 1 in 6 uninsured children, I have addressed them all if you just follow the links below.

References: Government Efficiency, The Insurance Sham, High Cost of Medical Care, Clarification of My Argument for a Free Market in Medicine, There ARE NOT 46 Million Uninsured!, A Most Dishonest Commercial , Recipe For Disaster, How To Blame the Free Market, Shameless Self-Promotion, Envy Kills, The Devil is in the Definitions (And Assumptions), A Useless Measure, First Kill All the Lawyers, Looking Back at Katrina, AARP Proves They Are Partisan Hacks and other Thoughts on Health Care Reform, A Thought on Healthcare

8. The government will reduce costs

This is simply illogical. As I showed in several posts above, the supposed "savings" of government intervention come at the expense of destroying the market forces that keep costs low and drive improvements. That means any savings will be very short term only, and offset by much greater losses of future improvements. In addition, as government ventures inevitably move toward a bureaucratic managerial style and bureaucratic management is inherently less efficient when applied to for profit ventures, there is simply no way the government could truly show any gains. Of course, on paper, using the numbers for the last day fo free market operations, and their short term savings due to lack of advertising and dividends and so on, they may make it appear they are more efficient, but that ignores the many benefits that will never materialize thanks to the loss of for-profit management. Of course, as there is no way to know how much was lost, the subterfuge may work, at least among certain groups.

References: Cutting "Costs", Misunderstanding Profits ,Bureaucratic Management ,The Bureaucratic Mind, The Cost of Big Government

9. Government management will be more efficient

This is either meaningless or false. Efficiency is a term with no fixed definition, so it is possible to redefine the term so that any statement about efficiency is true. If we look at services provided in terms of the output of future government cost-effectiveness panels, I have no doubt the state will be "more efficient", as private ventures will not abide by such rules. Similarly, if we define "efficiency" in terms of "wasted fund" on things such as dividends and advertising and compliance costs, it is possible the government venture may come out ahead (though I have doubts that government compliance costs will be lower).

On the other hand, in purely economic terms, measuring the total satisfaction per dollar spent and comparing it to the economy before the government got involved, then we would find a net loss. And that is a logical necessity, as if there would be more satisfaction from following the plan put forth by the government, then some private venture would have done so. In fact, if we have a full nationalization, be it open nationalization or a covert nationalization through "single payer", there will be a tremendous loss of satisfaction, as there will be no effective price mechanism for health care, and the assignment of resources will become arbitrary, which will inevitably result in bad allocations and disappointment.

All of which means, that in any meaningful sense, the efficiency of government run health care will be much lower, not higher.

References: The Inherent Disappointment of Authoritarianism ,Bureaucratic Management ,The Bureaucratic Mind ,The Inevitability of Bureaucratic Management in Government Enterprises, Government Efficiency, Who Will Decide, Clarification of My Argument for a Free Market in Medicine, The Cost of Big Government, Two Examples of "Inefficiency" in Capitalism, Big Government Creates New Problems, A Potential Problem With Universal Insurance

10. Public insurance can coexist with private health care

Public insurance is but a step along the road to single payer. This has even been acknowledged by those on the left, though they no longer admit this as they have decided to get behind the "public option". Still, the way this will destroy private insurance is obvious. If all are required to hold insurance, then the public option will either have to charge below market or else subsidize some or all purchasers. If that is the case, then anyone who qualifies would be foolish not to take the public insurance. (They may even initially speed this acceptance by providing better services than private insurers. Why not? It is on the public's dime?)

As people realize the public insurance provides better services at lower costs, they will opt into it. If they do not qualify, then they will begin to lobby for a raising of the maximum qualifications. This will slowly draw more and more individuals into the public option. Logically, at some point, all insurance will be through this agency.

But the takeover does not need to wait for that eventuality. When the public insurer controls even a significant minority of the insured, the policies it sets will be adopted by many private insurers, the way DRGs were adopted by private firms from medicare and medicaid. Its billing practices will become the standard, as will its other policies. At that point, when private insurance mirrors public, with public being different only in price, either the public will move entirely to public insurance, or the government will propose a full takeover and a single payer plan to "save money". In either case, it will lead to the single payer plan that has supposedly been abandoned.

The simple fact that many ignore is that the "public insurance' is not competing in any meaningful sense, has the perfect conditions to establish a monopoly, and backed with the funds and legal clout of the government, has every advantage over the private companies. And, as I said above, once it gets a critical mass, even a large minority, the government arguments for single payer will gain a great deal of momentum, making it unlikely that the "public option" will do anything other than lead us directly to a single payer plan.
 
References: The Inevitability of Bureaucratic Management in Government Enterprises, Public Insurance, The Insurance Sham, Symmetry and Asymmetry in Government, Confirmation, Yet Again

11. Public insurance will change nothing for privately insured individuals

This is absurd. As I have shown, the small part of the public covered by medicare and medicaid has still allowed government policies to control the way health care operates, how much worse will it be when many times as many people are covered under the public option? Not to mention the amount of control the government has over medicine through regulatory agencies. If these cost-effectiveness panels hand down rulings, does it not follow that there will be tremendous pressure on private medical providers to follow their recommendations? It may seem on paper that the public insurance provider can somehow be isolated from the rest of the medical field and have no impact on privately insured individuals, but experience says that is not going to happen and policies set by the government for their insurance recipients will have a huge impact on those holding private insurance.

References: The Inevitability of Bureaucratic Management in Government Enterprises, One Real Life Example, Public Insurance, The Insurance Sham, Symmetry and Asymmetry in Government, A Potential Problem With Universal Insurance
 
12. Sometimes the government needs to correct the distortions and injustices of the free market

Let us put this in plain English. Since the "free market" is simply the recognition that individuals have rights to their property, unencumbered by government restrictions, what this means in plain English is "in some cases, we need to violate the rights of some individuals." And for some, I suppose that is not a problem. For those who promote the idea of "rights" to health care or housing or a job, the idea of violating stodgy old property rights is probably not an issue (see "Negative and Positive Rights") On the other hand, if the government was instituted to protect individual rights, then how could it be justified in violating those same rights?

Of course that is an argument from principle, and many "practical" types will not accept that, so I suppose I will have to offer up something more. And there are plenty of approaches. Whether my more recent argument that only systems with symmetrical rights are stable and productive(" Symmetry and Asymmetry in Government"), or my older argument that unpredictable behavior results in an inability to plan ("Predictability"), when a system does not respect all rights uniformly, the system begins to break down, leaving all individuals worse off. Then there is the final argument, that any attempt to bring "fairness" to a system, unless such fairness is defined as nothing more than a mutual respect for rights, will inevitably result in disappointment, as individual subjective definitions of "fair" will very rarely match the reality of the final outcome ("The Inherent Disappointment of Authoritarianism").

The simple fact is no system is perfect, there will always be fewer good than there is desire for those goods. The same for services. No matter how such goods and services are shared out, there will some who will find it unjust. So there is no system which will ever be anywhere close to perfection for all concerned. However, the free market does provide the greatest total satisfaction and also the greatest opportunity for mobility both upward and downward. In addition, by allowing the greatest total growth of wealth, it also ensures that there will be more goods and services overall, making it more likely even the poorest will have more than they would under any other system.

References: The Inherent Disappointment of Authoritarianism, Life Is Not Fair - And Trying To Make It So Makes Things Worse , One Sided History, The Insurance Sham, High Cost of Medical Care, Clarification of My Argument for a Free Market in Medicine, My Health Care Plan, Private Charity, Private Charity Take Two, Life Is Not Fair - And Trying To Make It So Makes Things Worse, Liberalism's False Dichotomy, Planning For Imperfection, Fairness and the Free Market, Greed Versus Evil, Recipe For Disaster, How To Blame the Free Market, Shameless Self-Promotion, Envy Kills

13. Tort reform will significantly cut costs, and is part of Obama's plan.

This one is particularly amusing as, until recently, many of the reform advocates argued that tort law had nothing to do with high costs and was just a red herring to distract people from the failure of the free market (or the greed of insurance companies or whatever reason was blamed for escalating costs at the moment.) Now that Obama is trying to burnish his "moderate" bona fides by pushing tort reform, the left is all over those greedy trial lawyers (well at least the greedy trial lawyers who don't donate to the DNC.)

No one is doubting that defensive medicine, malpractice insurance and the oppressive atmosphere that makes patients and doctors adversaries rather than collaborators does damage to medicine and drives up costs. My only thought is that the significance of those costs pales in comparison to the costs imposed by the countless government interventions. In addition, tort reform, for all the press it receives, is actually a harder solution to impose form above than rolling back government involvement. Even with legislation, lawyers could still find a way to wring absurd judgments out of sympathetic juries, but the government clearly can, by legislative fiat, simply do away with much of the meddling which drives up costs. (Not to mention that the easiest solution is a restoration of the unfettered right of contract,.which is about as likely to happen as I am to sprout wings. But any other tort reform is simply putting a band-aid on an amputation.)

All of which makes tort reform a good cause for grandstanding crusaders, and authoritarians looking to promise savings to finance their grandiose schemes, but as a way to reduce medical costs, it is a difficult answer with limited potential, and there are far better low hanging fruit to target.

References: High Cost of Medical Care, My Health Care Plan, The Problem With Tort Reform, Red Herring

Conclusion

I could go on and on, but I think these thirteen cover most of the serious arguments out there. Doubtless there are even more outrageous claims, promising the moon with no cost to the public, in fact I have heard a handful of such claims myself, but I don't think anyone who has seriously considered the issue thinks they are realistic positions. However, the baker's dozen statements above have, regardless of their absurdity, been accepted as plausible by politicians, news casters and others, so I think they deserve at least some consideration.

I realize there is quite a bit of overlap between the topics above, but as the proponents often are very careful to distinguish between single payer and public option insurance, or between what is the fault of the free market itself or greedy insurance execs or whatever, I wanted to make sure I covered all my bases so no one would say "yes, single payer would do that, but the public option..." Even though I know, and for the most part the left knows, that any public option is simply the long way to nationalization (that is what the euphemism "single payer coverage" hides, by the way), I still wanted to address each variation.

I also realize that the links I provide both repeat themselves and don't always seem fully on point. I tried to ensure that each article had at least a paragraph clearly and explicitly on topic, but in a few cases I may have included a link that seemed clearly related to me, but may not seem so to all readers. So, if you find something that seems a bit tenuously related, I apologize. They all seemed significant to me, but sometimes my thought processes can be a bit hard to follow. (Not just to others, sometimes I find old notes and have no idea what I was thinking.)

But enough closing comments. I think I have done what I set out to do, provide clear, concise answers to the arguments most often advanced and provide links to more complete answers for those who desire them. Of course in the weeks to come, as arguments get shot down regularly, I don't doubt the left will change once again what they are promising and why. So I am certain this is not my final word on the topic. I shall return.

UPDATE 09/14/2009

I forgot a link. While writing of the ways in which the free market is blamed for the failings of government, I forgot to mention the free market is often also blamed for the simple facts of reality. For example, we often hear about the horrors of child labor during the industrial revolution, which ignores the simple fact that child labor was a fact of life from the dawn of time, and only modern times have seen sufficient wealth to allow children to universally be freed from labor (ironically, excluding in agriculture and in poorer, no industrialized nations). This is covered very well in "Child Labor and the Industrial Revolution". As this differs a bit from blaming the free market for the failings of government, instead blaming it for the facts of life, I figure it should have been mentioned separately.

I also agree with Rich when he suggests that I should have paid more attention to mandate and similar topics. I tried to remedy that with my post "The Absurdity of Mandatory Insurance", but I still need to go into more detail on that important topic.