Health care-funding the revolt to freedom

[This is the fourth in a series of articles dealing with the issues involved in the health care debate. For readers who wish to read or review the previous posts, here are the links: 1.) Health care needs a revolt to freedom, not socialism, 2.) Health care- what the revolt to freedom requires, 3.) A health care approach based on responsible individual freedom]

Judging by some of the responses I've received to the previous posts in this health care series, I think it's important to make it clear that the illustrative features I talked about in my last post are not suggested components of some government run health care scheme. I oppose the government takeover of the health sector. It should also be clear from the ideas I've outlined that I oppose perpetuating the third party payer system in any form, whether as a single payer government run approach, or in continuation of the existing private corporate structure. One of the keys to improving the health sector's cost efficiency is to restore the responsible decision-making role of individual payers, so that price signals in the health market once again reflect the aggregate response of buyers to the sufficiency, quality and cost efficiency of the goods and services available to them in the health marketplace.

The ideas presented are also intended to illustrate possible ways of activating another key to cost efficiency, which involves recognizing that those who seek the health sector's ultimate product (health) also play a critical role in producing it. Like production workers in any other economic sector they must accept their responsibility for carefully and efficiently executing their part in the production process. And like other production workers, they need a work environment that offers tangible incentives for them to do so.

Unfortunately the discussion of health care reform has bogged down because of proposals based on outdated nineteenth and twentieth century concepts of economic activity. According to these concepts, the world is divided between workers and owners, managers and resources (including human resources), producers and consumers. By contrast, the paradigm of twenty-first century economic activity has begun to emerge most distinctly on the internet. The very concept of networking outruns the dialecticism of the past. The components of a network are at one and the same time consumers and providers of information. As conduits for its flow, they also modify, redirect and reshape its contents for different purposes, in a way that defies and transcends the distinction between consumption and production. On this account, the very idea of 'ownership' has to acquire new flexibility, so as not to interfere with the flow, modification and exchange of information that creates the network's activities and their economic value.

Social networking internet activities like Facebook are a good illustration of this new reality. The people who turned the Facebook software engine into a profitable enterprise mainly depend on advertising for their revenues. In a sense, such sites are like fairgrounds or expositions. Because they generate a large flow of visitors businesses will pay for the privilege of advertising their goods and services to the passing crowds. However, who produces the shows and other activities that attract the crowd? It's the visitors themselves. They gather in order to show off to one another, with photos, videos, writings, conversation etc. To be sure, just as the performing artists in other media (TV or the theater for example) enjoy what they do, the performers on the social network get pleasure (entertainment value) from their participation. But they also provide the attractions that gather the crowd. They are at one and the same time performers and spectators, producers and consumers, workers who own and manage an enterprise that is, in many respects, identical with themselves.

(At the moment, by the way, the economic model for internet activities takes no proper account of this new reality. But thus far unsuccessful attempts by Facebook and others to impose fees for services that people have hitherto obtained without charge are symptoms that the existing model is facing pressures that will inevitably lead to its modification. The new model will doubtless have to recognize and make use of the fact that charges people resist when they see themselves as consumers become logical and palatable as part of a paradigm that recognizes and remunerates the indispensable contribution they make as performers and producers. As consumers, they may be loath to pay admission to be part of a performance they themselves help make possible (that's like making performers pay for admission to a benefit concert for which they freely provide all the entertainment) But if they share in the profits generated by its existence, they will more cooperatively pay something toward maintenance and operating expenses for the privilege of realizing their share of the advertising revenue that is going at present entirely to someone else.)

The idea of replacing existing insurance policies with individually owned health provident accounts aims to initiate the health sector's move to a twenty-first century paradigm of economic activity. Ironically, though it represents a major change in the administrative structure of health care finance, in other respects the funding structure for those who presently earn employer funded access to health insurance as part of their pay would remain pretty much as it is. Some questions (like portability, for instance) would take care of themselves, since individual ownership of the health provident account means that the relationship between the insurance fund manager and the individual would be unaffected by changes in employment. Employers would pay the insurance fund manager in the name of the employee, just as they do now. But just as someone's employer doesn't decide where they have their checking or savings account, the employer would not decide where the employees establish their health provident fund accounts. This would in no way prevent employers from developing and promoting plans in concert with a particular insurance fund management firm. If the resulting cost and services package was attractive enough, a large number of their employees would sensibly prefer it. But the decision between competing fund management firms would be made by the individuals themselves.

This also opens the way to the creation of contributor pools based on associations and affiliations apart from work. Individuals could form such groups drawing from people in similar circumstances in their church, their service, fraternal or sorority groups, etc. Those who work for small and medium size businesses, for example, would take whatever level of contribution they receive from their employer and go in search of others being funded at a similar level. Once a large enough initial pool has gathered, the sponsoring organization would work out terms with an insurance fund provider, just as larger employers do now. Such groups would doubtless become a permanent feature of the system, identifying themselves with people at different income levels in order to appeal for their participation. So in addition to choosing among competing insurance fund providers, individuals would choose among different contributor group plans to find a package suited to their funding level and needs. Plan groups might be named after a particular employer (the GE plan, the Ford plan, etc.) or after a particular religious denomination, union or service organization (the Southern Baptist Association plan, the AFL-CIO plan, the Kiwanis plan, etc.)

In considering all this, it's important to keep in mind that any ideas I put forward are just for illustrative purposes. The good thing about a structure that empowers people for freedom is that it gives them the opportunity to think out and explore possibilities no one else would see.

A crucial question remains to be considered. How can we make provision for the people who, for economic or other reasons, are in no position to obtain employer funding for a health provident account? There will always be people with characteristics that make them rather like the kids on the playground that nobody wants on their team. Wouldn't the government have to step in to provide the funding and negotiate a group plan on behalf of indigent, infirm or high risk individuals or families? Government funding appears unavoidable, however, only to those who assume that there are no people with surplus resources to invest who would take an interest in helping to provide for the hard cases simply because it's a chance to do some good. The world is full of the foundations and institutes launched and sustained by resources people provided for no other purpose than to do some good. Folks like Gertrude Himmelfarb have done painstaking work suggesting that such good will may be relied upon to meet certain kinds of needs.

Indeed, for centuries, the provision of health services to people in need was a particular focus of well doing in cultures under the influence of Biblical morality. In communities throughout the United States the names of hospitals and medical centers call to mind their Biblical roots (Holy Cross, Shady Grove Adventist, Lutheran Memorial, Methodist Hospital, Mercy Hospital, Good Samaritan, Cedars-Sinai and many others that make an impressive list of saints' names and Biblical places.) The remarkable thing about our time isn't that ten percent of our people may have no assured access to health services, it's that (even by the estimates the socialists use to justify a government takeover) as many as 90% do. A Significant proportion of the system that achieved this result was built and maintained by the faith and goodwill of people in the private sector. Why should we believe that a government takeover is the only way to take care of the people not yet included?

Of course, as a matter of public order, safety and happiness it's natural for the sovereign (in this case the people as a whole) to take an interest in the health facilities of the society. The first care would be to do nothing that unnecessarily constrains or creates impediments for the existence and proper functioning of those facilities. The next would be to assure against malfeasance and abuse, through the civil courts and enforcement of relevant criminal statutes. But just as people have done with respect to education since the earliest years of the republic, so with health care, it makes sense for the government to make sure that, in the exercise of its proper powers and the conduct of its activities, it favors and supports those private activities judged most conducive to the public good.

In one of the famous Federalist papers (no. 36) Alexander Hamilton alludes to the fact that it is a feature of wise tax policy to work in such a way that the surplus of the rich contributes to the activities that address the situation of those in need. He was not suggesting anything like the schemes of confiscatory income taxation the socialists are so fond of. He was discussing the fact that the imposition of excise taxes on the items of more discretionary consumption accessible to those with greater surplus resources "coincides with a proper distribution of the public burdens." Without the need to develop and sustain the costs of an expensive, cumbersome and ineffective government administration, wise tax policy can second the good impulses of private individuals. It can thereby increase and help to sustain their commitment to actions that aid those who might otherwise be neglected. Thus it fulfills the proper hope of those who wield sovereign power, which is to serve, insofar as possible, the good of all the people.

In this regard the first aim of public policy would be to encourage adoption of an approach to health insurance that restores the proper role of individual freedom and responsibility. One way to achieve this would be to exempt from Federal taxation in every respect those who adopted an approach consistent with this objective. This would include both the insurance funds themselves (both as to the individually owned accounts and the investments or other income generating activities related to the general funds) and the transactions involved in their use.

This exemption could include allowing health insurance companies to emit tax-free financial securities (similar to tax-free municipal bonds) with the particular intention of raising capital for use in funding individual accounts for the 'hard cases'. Such bonds could then be marketed with particular attention to charity minded individuals. Instead of scoffing at the idea that needs should be met through charitable giving, this policy would aim to make charity a marketable commodity, that allows good intentions to feed upon themselves in order to nourish and increase the resources available to fulfill them.

As with the desirable features sketched out in the previous article in this series, this suggestion is simply meant to illustrate an approach consistent with individual liberty and responsibility. People with greater knowledge and expertise, encouraged to think along these lines, will doubtless come up with better tailored proposals. Unfortunately, the present focus on socialist concepts doesn't offer such encouragement. Stuck in the rut of archaic nineteenth and twentieth century thinking, the current health care policy debate doesn't encourage the development of decentralized approaches based on individual goodwill and initiative, approaches that would be far more in synch with the opportunities and possibilities that can be empowered by twenty-first century networking and globally targeted niche-marketing techniques.

Aside from being more up-to-date, such twenty-first century ideas would also take account of the timeless moral principles that must be respected when dealing with life and death matters like health care. As we have noted, one of the reasons for mounting opposition to the Obama faction's socialist proposals is the perception that banal bureaucratic calculation would usurp the judgment of concerned and loving individuals when it comes to dealing with the health crises of family members and other loved ones. Though the perception attaches to particular provisions of the Obama proposal, the concern is properly raised with respect to any health care approach that displaces individual freedom and responsibility. Bureaucracies may or may not reliably make decisions that are better informed or more consistent with cost-effectiveness. They will never reliably make decisions with greater love. Love must reflect the voluntary commitment of individuals to the welfare and happiness of other individuals. The works of love transcend rules and calculations, at least in part because the rationale of love takes as its denominator a being perceived to be of infinite worth. The value of an individual's life can therefore never be quantified or measured by any ruler except the loving heart. Beyond the requirements of justice, by respecting individual freedom and responsibility we make it more likely that our approach to health care gives love its due.