Obama's Road to Healthcare Serfdom

President Obama is desperate to pass sweeping healthcare reform and now has resorted to pure socialist rhetoric to encourage Americans to support his plan. In his Saturday radio and internet address, President Obama encouraged Americans to call upon "what's best in each of us to make life better for all of us." Fortunately, an accurate account of history and a long line of great thinkers point out the contradiction in the President's remark, which is an obvious appeal for Socialism.

The most notable of these thinkers is F.A. Hayek who educated readers about the unintended consequences of government planning in his famous work The Road to Serfdom. His central thesis can be summed up by the line, "What has always made the state a hell on earth has been precisely that man has tried to make it his heaven."

Hayek believed that through the inevitable mismanagement of resources and goods at the disposal of the state, all forms of collectivism lead eventually to tyranny. Hayek used the Soviet Union and Nazi Germany as examples of countries that had progressed through the phases of collectivist governments and reached the point of tyranny. Hayek argued that disagreement regarding the practical implementation of any economic plan combined with the inadequacy of the planners' resource management would necessitate coercion in order for anything to be achieved.

This progression from planning to tyranny is critical when considering proposals for healthcare reform that require greater government involvement in the healthcare market. Proponents of such reform would have their audience believe they have no interest in controlling the healthcare decisions people make. However, if we consider the natural progression of a new "government option" or "co-op", we can reasonably conclude that it will end with allocation formulas and government planning boards deciding what kind of healthcare services an individual can and can't receive -- in other words, it will end in tyranny.

Here's how: The government plan will initially be funded through taxing the wealthy and by collecting premiums from enrollees but will quickly outgrow this revenue. It will have to broadly increase taxes on the majority of Americans making it more difficult for them to afford private health insurance.

At the same time, the government plan will not offer reimbursement rates that match those of private insurers. This will cause healthcare providers to charge individuals more with private coverage to make up for lost revenue at the expense of the government plan. As a result, rates for private insurance will increase.

Finally, the government will require individuals to purchase coverage that meets a broad set of regulations determined by the government. These burdensome regulations will ensure that only the most costly private plans remain in existence but the government plan will keep its rates lower in comparison by padding itself with taxpayer dollars.

The result of increasing taxation and private premium rates will push more and more people into the government plan. The number of individuals signing up for the government plan will overwhelm the planners' expectations. In response, the government plan will implement tighter and tighter rationing mechanisms to determine the appropriate allocation of resources. What's best for the individual will be replaced by Obama's mantra, "what's better for all of us."

Only the wealthiest among us, like government officials, will be able to avoid this fate and procure required healthcare services in a timely fashion by traveling to places that provide it. However, in the future it won't be the United States but perhaps India or China. And so ends the road to healthcare serfdom.

President Obama and liberals in Congress would no doubt mock the above scenario and say it could only be perpetrated by a Nazi, racist or someone seriously delusional at best. According to the President, a "government option" will not only be self-sustaining (after an initial infusion of taxpayer dollars) but will benefit every American (even those who are happy with their current coverage) by keeping private insurers honest and their premium rates reasonable. However, a review of recent history proves these claims to be disingenuous.

Regarding the self-sustaining nature of government insurance we have to look no further than Medicare. The following figure provided in the 2009 report from the Social Security and Medicare Boards of Trustees illustrates that since its inception Medicare has never been self-sustaining based on its dedicated revenue from payroll taxes and premium payments despite the fact that it reimburses at rates 20% less than private insurers. Medicare has relied on increasing contributions from the general fund revenue for years and this trend only shows signs of increasing.



Regarding the claim that a government option will keep private premium rates down we have to look no further than the state of Massachusetts, which provides a case study in what is likely to happen if the administration creates a new government subsidized insurance plan. In 2006, Massachusetts passed sweeping healthcare legislation which included the creation of a new government subsidized insurance plan called Commonwealth Care. The plan was projected to cost taxpayers $725 million per year however; by 2008 the cost had risen to $869 million representing a 20% increase over the projected yearly costs! Private insurance premiums rose by 7.4% in 2007, 8-12% in 2008 and are expected to rise 9% this year. By comparison, nationwide insurance costs rose by 6.1% in 2007, 4.7% in 2008 and are projected to increase 6.4% this year.

As Massachusetts is finding out, the biggest problem with any government-run healthcare "option" is cost. In the previous months, advocates for a government option have fumbled over themselves to convince the American people that this plan would actually save money over the long-run. Unfortunately, the CBO put an end to this idea with its projection that current legislation being offered by the Democrats would cost a trillion dollars over the next 10 years and skyrocket after that time period was up.

Now with Liberals' hopes shattered that they can push through a government option based on the false promises of saving money and increasing competition, it seems as if they've realized their only hope is to resort to old socialist tactics of appealing to emotion and calling for unity. Of course we shouldn't expect them to say what they're now plainly advocating for; doing so would mean permanent death for their desired reform. Hayek recognized this dilemma for the modern liberal movement almost fifty years ago and wrote in The Constitution of Liberty:

The common aim of all socialist movements was the nationalization of the "means of production, distribution, and exchange," so that all economic activity might be directed according to a comprehensive plan toward some ideal of social justice...The great change that has occurred during the last decade is that socialism in this strict sense of a particular method of achieving social justice has collapsed. It has not merely lost its intellectual appeal; it has also been abandoned by the masses so unmistakably that socialist parties everywhere are searching for a new program that will insure the active support of their followers... many of the old socialists have discovered that we have already drifted so far in the direction of a redistributive state that it now appears much easier to push further in that direction than to press for the somewhat discredited socialization of the means of production. They seem to have recognized that by increasing government control of what nominally remains private industry, they can more easily achieve that redistribution of incomes that had been the real aim of the more spectacular policy of expropriation.

There should be no doubt, this fight over healthcare reform is much bigger than providing a public option or not; it's about changing the core principles this country was founded upon; it's about individual freedom versus the tyranny of socialism, even if those advocating for socialism have the good sense not to call it that.

Andrew Foy, MD and Brent Stransky are co-authors of "The Young Conservative's Field Guide", which will be available in stores and on-line September 8th. They can be contacted through their website at www.aHardRight.com.
President Obama is desperate to pass sweeping healthcare reform and now has resorted to pure socialist rhetoric to encourage Americans to support his plan. In his Saturday radio and internet address, President Obama encouraged Americans to call upon "what's best in each of us to make life better for all of us." Fortunately, an accurate account of history and a long line of great thinkers point out the contradiction in the President's remark, which is an obvious appeal for Socialism.

The most notable of these thinkers is F.A. Hayek who educated readers about the unintended consequences of government planning in his famous work The Road to Serfdom. His central thesis can be summed up by the line, "What has always made the state a hell on earth has been precisely that man has tried to make it his heaven."

Hayek believed that through the inevitable mismanagement of resources and goods at the disposal of the state, all forms of collectivism lead eventually to tyranny. Hayek used the Soviet Union and Nazi Germany as examples of countries that had progressed through the phases of collectivist governments and reached the point of tyranny. Hayek argued that disagreement regarding the practical implementation of any economic plan combined with the inadequacy of the planners' resource management would necessitate coercion in order for anything to be achieved.

This progression from planning to tyranny is critical when considering proposals for healthcare reform that require greater government involvement in the healthcare market. Proponents of such reform would have their audience believe they have no interest in controlling the healthcare decisions people make. However, if we consider the natural progression of a new "government option" or "co-op", we can reasonably conclude that it will end with allocation formulas and government planning boards deciding what kind of healthcare services an individual can and can't receive -- in other words, it will end in tyranny.

Here's how: The government plan will initially be funded through taxing the wealthy and by collecting premiums from enrollees but will quickly outgrow this revenue. It will have to broadly increase taxes on the majority of Americans making it more difficult for them to afford private health insurance.

At the same time, the government plan will not offer reimbursement rates that match those of private insurers. This will cause healthcare providers to charge individuals more with private coverage to make up for lost revenue at the expense of the government plan. As a result, rates for private insurance will increase.

Finally, the government will require individuals to purchase coverage that meets a broad set of regulations determined by the government. These burdensome regulations will ensure that only the most costly private plans remain in existence but the government plan will keep its rates lower in comparison by padding itself with taxpayer dollars.

The result of increasing taxation and private premium rates will push more and more people into the government plan. The number of individuals signing up for the government plan will overwhelm the planners' expectations. In response, the government plan will implement tighter and tighter rationing mechanisms to determine the appropriate allocation of resources. What's best for the individual will be replaced by Obama's mantra, "what's better for all of us."

Only the wealthiest among us, like government officials, will be able to avoid this fate and procure required healthcare services in a timely fashion by traveling to places that provide it. However, in the future it won't be the United States but perhaps India or China. And so ends the road to healthcare serfdom.

President Obama and liberals in Congress would no doubt mock the above scenario and say it could only be perpetrated by a Nazi, racist or someone seriously delusional at best. According to the President, a "government option" will not only be self-sustaining (after an initial infusion of taxpayer dollars) but will benefit every American (even those who are happy with their current coverage) by keeping private insurers honest and their premium rates reasonable. However, a review of recent history proves these claims to be disingenuous.

Regarding the self-sustaining nature of government insurance we have to look no further than Medicare. The following figure provided in the 2009 report from the Social Security and Medicare Boards of Trustees illustrates that since its inception Medicare has never been self-sustaining based on its dedicated revenue from payroll taxes and premium payments despite the fact that it reimburses at rates 20% less than private insurers. Medicare has relied on increasing contributions from the general fund revenue for years and this trend only shows signs of increasing.



Regarding the claim that a government option will keep private premium rates down we have to look no further than the state of Massachusetts, which provides a case study in what is likely to happen if the administration creates a new government subsidized insurance plan. In 2006, Massachusetts passed sweeping healthcare legislation which included the creation of a new government subsidized insurance plan called Commonwealth Care. The plan was projected to cost taxpayers $725 million per year however; by 2008 the cost had risen to $869 million representing a 20% increase over the projected yearly costs! Private insurance premiums rose by 7.4% in 2007, 8-12% in 2008 and are expected to rise 9% this year. By comparison, nationwide insurance costs rose by 6.1% in 2007, 4.7% in 2008 and are projected to increase 6.4% this year.

As Massachusetts is finding out, the biggest problem with any government-run healthcare "option" is cost. In the previous months, advocates for a government option have fumbled over themselves to convince the American people that this plan would actually save money over the long-run. Unfortunately, the CBO put an end to this idea with its projection that current legislation being offered by the Democrats would cost a trillion dollars over the next 10 years and skyrocket after that time period was up.

Now with Liberals' hopes shattered that they can push through a government option based on the false promises of saving money and increasing competition, it seems as if they've realized their only hope is to resort to old socialist tactics of appealing to emotion and calling for unity. Of course we shouldn't expect them to say what they're now plainly advocating for; doing so would mean permanent death for their desired reform. Hayek recognized this dilemma for the modern liberal movement almost fifty years ago and wrote in The Constitution of Liberty:

The common aim of all socialist movements was the nationalization of the "means of production, distribution, and exchange," so that all economic activity might be directed according to a comprehensive plan toward some ideal of social justice...The great change that has occurred during the last decade is that socialism in this strict sense of a particular method of achieving social justice has collapsed. It has not merely lost its intellectual appeal; it has also been abandoned by the masses so unmistakably that socialist parties everywhere are searching for a new program that will insure the active support of their followers... many of the old socialists have discovered that we have already drifted so far in the direction of a redistributive state that it now appears much easier to push further in that direction than to press for the somewhat discredited socialization of the means of production. They seem to have recognized that by increasing government control of what nominally remains private industry, they can more easily achieve that redistribution of incomes that had been the real aim of the more spectacular policy of expropriation.

There should be no doubt, this fight over healthcare reform is much bigger than providing a public option or not; it's about changing the core principles this country was founded upon; it's about individual freedom versus the tyranny of socialism, even if those advocating for socialism have the good sense not to call it that.

Andrew Foy, MD and Brent Stransky are co-authors of "The Young Conservative's Field Guide", which will be available in stores and on-line September 8th. They can be contacted through their website at www.aHardRight.com.