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Free Liberal: Coordinating towards higher values

Free Liberal

Coordinating towards higher values

The Complete Private Medical Option

So-called Public Option is Not the Only Option

by Fred E. Foldvary

With the government dominating medical services, people will be shocked when costs rise and services are rationed and choice is limited. It is very touching how people have such trusting faith in the benevolence and competence of government chiefs. I would like someone to explain to me whether government chiefs are born that way, or whether they become wise angels when they obtain a government office. People eventually become disillusioned by reality, until the next election, when they place their hopes and fantasies on the next shining candidate.

There was much talk of a “public option” for health care, where people could choose a benevolent and competent and inexpensive government medical plan rather than be subjected to incompetent, costly, service-denying private insurance. But suppose the government-dominated medical services end up with long waiting lists, fraud, high costs, and poor service. Why not offer a completely private medical option for people who wish it?

Here is how it would work. Individuals or families would register with the federal government as members of the complete private medical option (CPMO). Members of CPMO would:

1. Be liable for the legal costs of medical providers if they sue for malpractice and lose the lawsuit.
2. Not pay taxes for medical services. CPMO members and their employers would not pay the medicare portion of payroll taxes. CPMO members would be exempt from sales taxes on medical products.
3. Be exempt from licensing laws and drug restrictions. They would be able to obtain and use any medical drug, even not approved by the Food and Drug Administration. They would be able to hire medical services from anyone, licensed or not. They would be able to obtain any health or medical service, drug, or supplement.
4. Be able to buy medical plans and insurance from any provider world-wide.
5. Have complete choice on what their insurance covers, as they would be exempt from any state restrictions and mandates on medical insurance and provision.
6. Be fully responsible for any medical costs resulting from illness or injury if their insurance or medical plan does not cover it, a responsibility that could not be voided by bankruptcy.
7. Be required to provide medical insurance for their children.
8. Pay income taxes on medical insurance and benefits provided by their employer, at the same rate as money income.
9. Deduct from taxable income all medical expenses including insurance payments, drugs, and supplements.
10. Not be eligible to receive any governmental medical benefits, including Medicare, except for emergency services.

Members of CPMO would in effect establish a free market in medical services, and they would be able to obtain insurance at low cost, since they are less risky and would be able to craft a contract that would have high deductibles and only cover services they wish to buy.

Many members of CPMO would join health service cooperatives that would provide the members with mutual aid. The co-op would hire doctors and a nutritionists to provide preventive care and advice. Possibly they would offer recreation and exercise facilities. These co-ops would provide true health services, to keep the members healthy, rather than just treating them when they fall ill.

Why do the federal and state governments not offer a complete private medical option? The refusal to do so implies that the state chiefs fear that government-dominated medical services are more costly, less effective, and less reliable than a purely private plan. As underpaid doctors abandon the governmental medical plans, the government will have to provide less medical service. Think about that when you get on a waiting list for several months for a medical treatment that the chiefs think is not so urgent or important.

This article first appeared in the Progress Report, Reprinted with permission.

Dr. Fred Foldvary teaches economics at Santa Clara University and is the author of several books: The Soul of Liberty, Public Goods and Private Communities, and the Dictionary of Free-Market Economics.

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There are other forms of this that are possible. The entirely private option doesn't use third party insurance at all, since such corporations can only exist with the protection of the state. Instead, primary care doctors are employed at private firms to offer onsite health care to their employees and families and the employer pre-pays care by subscription at local hospitals, which also includes specialist care for the doctors who practice there. Malpractice becomes a matter of employee discipline rather than an external tort action. Large enough firms will also own their own hospitals and hire their own specialists.

Drugs and devices are provided by the employer at no cost, however I doubt that regulatory hurdles that keep us out of the era of patent medicine should be dismantled so quickly, just because doing so is an article of faith among libertarians.

If a VAT is adopted, it would be paid on outside care or drugs purchased from the pharmacy by the employee, however free drugs would be considered non-exempt under any subtraction VAT, along with the Doctor and Employee salaries, so they could not be deducted from the employer business income tax (which would function like a hidden subtraction VAT on employer revenue).

Of course, if you wanted to insist on only Land Value Taxes, either individuals would pay their own LVT or, if their firm had a land trust (and possibly arranged to build the houses), then the employer could buy homes for employees, sell them the structures and have the trust both hold the land and pay the LVT for its employees. Of course, when you add it up, the amount collected under such an arrangement will likely strangely mirror the amount collected under a VAT. Of course, the more services employee-owned companies provide in lieu of government, the lower any tax will be.

# posted at by Michael Bindner

I made such a suggestion before. If you click on the link in my screen name, you will get to the blog entry I wrote about how advocates of government care reacted.

In one word: horrified.

Of course they're horrified, Ayn. The problem in their eyes is that somebody would fail to take the necessary steps to save themselves from a preventable disease. Progressives would then have to watch them die of that disease, and that would break their little hearts, it would. To avoid feeling bad, they would feel obliged to pay for our health care.

So, to avoid feeling bad, and thus having to pay for our health care, they're going to avoid that problem completely by forcing us to buy health care.

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