Hostile Takeover: Resisting Centralized Government's Stranglehold on America

by Matt Kibbe

  Value has been rising, to be sure. Medicine can do all sorts of things it couldn’t in our grandparents’ time. But medical inflation has been rising too. Indeed, it’s plagued health care for half a century now, and has reached the point that it’s the single largest driver of federal debt and deficits. It’s not as if the government hasn’t been trying to fight rising costs. Bureaucrats have come up with every solution you can think of—from local restrictions on the number of hospital beds to repeated attempts to impose price controls. Nothing has worked. The one solution that hasn’t been tried is the only one that can actually work: abandoning the centralized model and returning power to patients.

  PROGRESSIVELY WORSE

  SO FAR, I’VE BEEN TELLING ONLY THE DOLLARS-AND-CENTS PART OF the story. There’s also the political story, the long twilight struggle of ideas between top-down government and individual freedom.

  That struggle can be traced all the way back to Teddy Roosevelt’s Progressive Party platform of 1912, which—stealing an issue from the then-rising Socialists—included a promise of national health insurance. Democrats under Woodrow Wilson picked up the idea, and every Democratic president since has attempted to make it a reality. Franklin D. Roosevelt tried it in his Social Security plan in 1935, but had to back off under pressure from the medical community. John F. Kennedy and Lyndon Johnson tried again in the ’60s, falling back to a “seniors and poor people first” strategy, and succeeded with enactment of Medicare and Medicaid in 1965. Jimmy Carter tried for the whole kahuna again in the late ’70s, only to fail miserably. Bill Clinton picked up where Carter left off, and almost secured passage of Hillarycare in 1994, but was famously foiled by a united GOP and a handful of centrist Democrats. That plan, however, hadn’t smoldered on the ash heap of history for very long before a fallback plan known as Kids First was picked up in 1997 by a senatorial duo: Ted Kennedy, the famously progressive Massachusetts Democrat, and Orrin Hatch, the Utah Republican. It soon became law as the State Children’s Health Insurance Program, or S-CHIP.

  Essentially a big Medicaid expansion, S-CHIP revived the Left’s fortunes after their disastrous repudiation in the ’94 elections. Ever since, they’ve been on the offensive, pushing incremental initiatives, like HMO reform and a Medicare prescription drug benefit, waiting patiently for the day when yet another Democratic president and Congress could resume the fight. And of course, it finally happened, in March 2010, when President Obama and a Democratic Congress managed to ram Obamacare into law, on a strictly party-line basis.

  With this last step, the Left’s nearly century-old dream is almost realized. All that remains is for Democrats to stave off repeal of their handiwork until 2014, when the machinery of centralized medicine will finally roar into full operation.

  The history of the past seventy years is a history of a steady loss of patients’ freedoms. The consolidation of ever more power in Washington spells destruction for what remains of individual choice in our health care system. This is why we must repeal Obamacare and replace it with policies that focus on patients first, promoting price transparency and portability, and ultimately getting at the root cause of our current ailments: section 106 of the tax code. We must decouple health care from third parties payers.

  PATIENT-CENTERED CARE

  IN THE WORDS OF RONALD REAGAN, “THERE ARE SIMPLE SOLUTIONS, just no easy ones.”

  Let’s begin by asking ourselves: What would health care look like if we reversed the mistakes of the past seventy years? What if we put patients first? The answer is: We would have a health care system where patients are truly in charge and the rest of the system exists for their benefit.

  A key way to measure progress in this effort is by how many millions of people move from centralized to decentralized sources of health coverage—how many Americans obtain good, private health insurance from the private market, or what I call “true insurance,” as compared to the number who rely on “government-based” coverage. Unlike group health benefits, whether public or private, true insurance is personal, portable, and individually owned and controlled.

  Here are some general strategies that can help make this vision a reality:

  Focus on reducing costs and expanding freedom, not on “expanding coverage.”

  Reduce reliance on third-party payment.

  Promote price transparency for all consumers.

  Equalize the tax treatment of health benefits (don’t discriminate in favor of job-based coverage).

  Defend true insurance and promote access to the individual market (as opposed to favoring the group market).

  Make participation in all federal health care programs, especially Medicare, truly voluntary.

  Increase consumer choice and competition within federal health benefits programs.

  Convert all federal health care subsidies into defined contributions, including Medicare and tax code section 106 (the exclusion from tax, for employer-sponsored health benefits).

  End Medicare price controls. Let doctors charge more than the Medicare rate, and allow private agreements between doctors and patients.

  Prevent rationing by letting Medicare beneficiaries voluntarily add their own money on top of what Medicare pays.

  Until the income tax is abolished or replaced by a flat tax, give individuals greater control and security through strengthened Health Savings Accounts.

  Call for state-based medical-malpractice reform.

  Permit insurance to be purchased across state lines.

  Earlier, I quoted a Canadian doctor who was awakened to the brutal reality of centralized medicine. Health care, he realized, is a serious business—and should be treated like one. Dr. David Gratzer has emigrated to the United States to practice medicine more freely, and offers Americans a hard-earned perspective:

  American health care is expensive. And Americans aren’t always getting a good deal. . . . True, government bureaucrats would be able to cut costs—but only by shrinking access to health care, as in Canada, and engendering a Canadian-style nightmare of overflowing emergency rooms and yearlong waits for treatment. America is right to seek a model for delivering good health care at good prices, but we should be looking not to Canada, but close to home—in the other four-fifths or so of our economy. From telecommunications to retail, deregulation and market competition have driven prices down and quality and productivity up. Health care is long overdue for the same prescription.43

  As I’ve said, before any positive steps toward patient-centered care can be made, we must fully repeal Obamacare—scrap it and start from scratch. A majority of the public is with us. So are a majority of the states; more than half have sued to overturn the law in court.44 So is a majority of the current House, which has passed a full repeal bill. So is a near-majority of the Senate, including every single Republican. Voters have approved repeal wherever the idea has appeared as a state ballot initiative, including in Missouri, Arizona, Oklahoma, and Ohio.

  Voters have made up their minds. They want Obamacare pitched into the dustbin of history, right along with eight-track tapes and Marxism. In November 2010, the president’s health care law was the top policy issue for voters, well ahead of others. Supporting the unpopular law played a big role in the defeats of scores of Democratic candidates, incumbents and challengers alike. Seven of the eight House Democrats who switched their position on the bill from “no” to “yes” in March of that year were defeated by Republicans in November. Before the election, Democratic candidates were spending more money on advertisements opposing the health care bill than for it. Among that rarest of species, the incumbent who bravely defended his pro-Obamacare vote, two were especially vocal: Senator Russ Feingold of Wisconsin and Congressman Earl Pomeroy of North Dakota. Both lost.

  FIGHT FOR YOUR RIGHTS

  LIKE SO MANY IDEAS IN THIS BOOK, OUR SUCCESS IN MOVING AWAY from an imposed, top-down health care bureaucracy requires that each of us must rise up, from the bottom up, and take our rights back from the insiders in Washington. As we mov
e to get government out of the exam room and out of our hospital bed, we also have to build up a strong and flourishing market for patients—health care’s customers—that can never again be colonized by political agendas and industry interests from the top down.

  The problem with reliance on third parties—whether it’s your employer limiting your choice of health care plans or your government limiting your access to treatment—is that the decision-making power is concentrated in a central location and managed by someone who isn’t you and doesn’t know or care about you.

  A “patient-centered” approach, by contrast, means the customer is always right and the folks who undergo treatment also control the dollars and make the important decisions about their own care. After all, shouldn’t those decisions always be made by the people who are sick, along with their loved ones, their doctor, and other trusted advocates?

  Here are seven principles that might constitute a new Patient’s Bill of Rights. Note that not one of these rights is protected under the government takeover. In fact, most are violated by it.

  Every intelligent, adult human being has a right to make his or her own health care choices.

  Patients have a right to shop around and take their business elsewhere.

  Health care professionals have a right to be paid for their services, at market rates.

  Doctors and patients should have the right to freely enter into contracts with each other.

  Individuals should bear the consequences of their own free choices.

  Taxpayers should be free to opt out of government insurance programs.

  Communities should be free to help those who are less fortunate through private charity, unencumbered by federal mandates and regulations.

  These are rights worth fighting for; rights consistent with the right to “life, liberty, and the pursuit of happiness.” I am losing patience with the status quo. After all, someday any one of us might be lying in that hospital bed. That is not the time to discover that someone else, someone from the government, whom you do not know and will never meet, has determined that treating you, or your wife, or your mother is, in the words of Obama adviser Robert Reich, “too expensive, so we’re going to let you die.”

  CHAPTER 12

  A TIME FOR CHOOSING

  WHO WILL CONTROL YOUR FINANCES IN RETIREMENT, YOUR HEALTH care and your savings? Who decides—you and your family, or politicians and bureaucrats? Bottom up, or top down? These are questions every American must answer as we inevitably confront the future of entitlement spending in America.

  They’re not easy questions; but not choosing is still a choice. Not choosing relegates our progeny—your children and grandchildren—to a dark economic future of more debt, less opportunity, and no security in their retirements. Refusing to answer, letting politicians continue to kick the can down the road, is exactly the head-in-the-sand strategy that put Greece and Italy at the mercy of foreign lenders. Are Americans willing to prop up a welfare state mentality like the one in those bankrupt countries? There, because of a national sense of entitlement, it was assumed that someone else would keep paying for cradle-to-grave government support programs even as the demographic shifts in those countries—fewer young workers paying for more and more retirees—made default inevitable. It was always a question of when, not if.

  Entitlements are a problem. They’re a problem because they’re budget-busters, to be sure. But the deeper problem is that they threaten your freedom. Why, after working so hard to be financially independent our entire lives, do we accept total dependency in retirement, letting someone else decide for us what we have earned, what we deserve?

  The good news is that there is a proven better way to manage our health and retirement needs in later years. In private enterprise, employers have moved away from old top-down pension systems, so-called “defined benefit” systems, where someone else determines what you will get in retirement. Now more and more employees are freer and less dependent on the goodwill and long-run financial viability of employers; you can invest in your own future every week with “defined contribution” plans that belong to you, are controlled by you, follow you wherever you go and wherever you work, and stay with you and your family forever.

  So you have to choose. Not choosing means that some politician or some gray-suited bureaucrat will choose for you. Whose best interests do you suppose he has in mind?

  A BLACK HOLE

  DEPENDENCY ON GOVERNMENT IS REACHING A TIPPING POINT. THE Tax Foundation estimates that 60 percent of Americans receive more in benefits and services from the government than they pay in taxes.1 Another analysis predicts that, even without counting Obamacare, by 2018 two-thirds of the population will be dependent on the government.2

  It’s no coincidence the three largest entitlements—Medicare, Medicaid, and Social Security—are the most challenging to reform.3 Today, more than one in six Americans depends on at least one of these three massive programs as an important part of his livelihood—nearly 60 million people in a population of 310 million.4

  More than 53 million Americans rely on Social Security. Their retirement checks are modest, averaging just $1,200 a month, or $14,400 a year. But, for a majority of the 40 million recipients who are 65 or older, Social Security provides the majority of their cash income; for one-quarter of seniors, it provides more than 90 percent of their income; and for 15 percent of them, 6 million people, Social Security is their sole source of income.5

  Medicaid, which started out as an additional source of support for people on welfare, has become the sole source of health coverage for 50 million Americans, including an increasing share of the middle class.

  Medicare, meanwhile, is now the sole source of health coverage for 48 million elderly and disabled Americans, because participation in it is effectively mandatory and private-sector alternatives (choice, in other words) aren’t permitted. And it’s the future that awaits us all, if yet another federal health entitlement—Obamacare—isn’t repealed.

  The growth of these programs, measured by rising costs, is breathtaking. In 1970, the big three consumed about 20 percent of the federal budget6; by 2010, their share had doubled, to 40 percent7; and by 2020 they’re likely to consume more than half the budget.8 If we do nothing, by 2050 the big three will consume 100 percent of all expected tax receipts, forcing Congress to either eliminate all other spending or borrow to pay for it.9

  And by the way, don’t forget that $100 trillion in additional future entitlement obligations that Washington intentionally keeps off the books. As I mentioned in the first chapter, these are promises that politicians have written into law but haven’t provided any way to pay for. We would have to put $100 trillion in the bank today to cover all that future exposure. (Remember, our entire annual national product is only about $15 trillion.) In the private sector, there’s a term for keeping books the way Uncle Sam does: illegal. When private companies hide their long-term unfunded liabilities, people go to jail.

  If it weren’t for grassroots Americans willing to rise up and question our senior management on issues like the growing national debt, Washington wouldn’t even be discussing the entitlement problem. The focus would still be on spending still more money we don’t have, like Greece, on stimulus, bailouts, and creating new entitlements.

  Now that we have their attention, the heavy lifting of cleaning up the company books can begin in earnest. Don’t expect this to be easy.

  LOSING OUR WAY

  IT HASN’T ALWAYS BEEN THIS WAY. BEFORE 1935, THERE WERE NO FEDERAL entitlement programs, unless you counted things like veterans’ hospitals and civil service pensions, which are basically compensation or rewards for past services rendered. During the vast bulk of the republic’s history—more than a century and a half—the idea that the government would dole out direct financial aid to large numbers of individuals was unthinkable.

  In the Founders’ day, essentially local or domestic functions were the province of states, towns, households, extended families, and p
rivate associations. Nobody imagined the federal government had any business meddling in such matters. Indeed, the Founders feared that if the federal government did meddle, if it tried to become a continental municipality or charity, national politicians, acting under the guise of compassion, would find ways to redistribute wealth and buy votes at election time, spawning dependency and centralizing power in the nation’s capital.

  The past seventy-five years have seen their fears realized. Since the Progressive Era, we’ve seen every constitutional barrier preventing Congress from getting into the charity and wealth transfer business systematically dismantled. The walls of federalism and enumerated and separated powers have been breached. Our traditional aversion to a steeply progressive income tax has been sapped. Our resistance to unearned welfare benefits and mass dependency has been overcome. The result is the modern entitlement state, something that looks more like the European model, top-down and “progressive.”

  The reach of the federal government has grown in three big waves: the 1930s, the 1960s, and our own day. Entitlements now represent more than half of federal spending. They’ve become the main engine of the national power structure. Walk down any city block in downtown Washington and you’ll see whole office buildings filled with people whose jobs basically depend on protecting and expanding existing entitlements and thinking up new ones. Those people include armies of lawyers and lobbyists who do nothing but monitor and think about entitlements for their clients’ financial benefit. And then there are the pressure groups like AARP and the National Committee to Protect Social Security and Medicare. These political “entrepreneurs” spend hundreds of millions each year trying to elect politicians who will protect and expand the entitlement state.

  On Capitol Hill, in marble hearing rooms that invoke the architecture of the kingly Palace of Versailles, the Democrats and the Republicans have colluded, in a bipartisan fashion, to continually grow “mandatory spending” and to saddle our children with top-down systems that they must fund but that will likely not still exist when they themselves retire.