Obama’s Impossible Health Care Proposal

July 23rd, 2009 - by Quincy

Even if one doesn’t recognize the immorality of government redistribution of wealth, the clear irrationality of the proposed government health care scheme should dissuade even the most fervent socialist.

Medical care is a scarce resource. The emotional and intellectual rigors of the medical profession naturally limit the number of individuals willing and able to work as doctors. Government licensing requirements further compound the problem by preventing the market from aligning particular medical needs with the appropriate level of medical expertise. Even if unaware of the economic principles that predict inadequate supply, anyone who goes to a doctor’s office will experience the consequences of this scarcity first hand: patients have to make appointments and wait to see a doctor. So there is a problem: medical care—a necessary resource—is also a scarce resource.

A rational response to this problem of scarcity would be to reduce regulatory burdens that prevent qualified individuals from providing medical services. “All States, the District of Columbia, and U.S. territories license physicians. To be licensed, physicians must graduate from an accredited medical school, pass a licensing examination, and complete 1 to 7 years of graduate medical education.” Bureau of Labor Statistics Without a government license, it is a criminal offense to provide medical care, and ‘medical care’ is defined so broadly (see statute examples below) that these licenses go far beyond their purported purpose of protecting consumers.

Even if we must license health care providers to protect individuals from selecting someone unqualified (a dubious proposition), the present one-degree-fits-all approach is certainly overkill. Others have already researched this issue. “Nonphysician providers of medical care are in high demand in the United States. But licensure laws and federal regulations limit their scope of practice and restrict access to their services. The result has almost inevitably been less choice and higher prices for consumers. Safety and consumer protection issues are often cited as reasons for restricting nonphysician services. But the restrictions appear not to be based on empirical findings. Studies have repeatedly shown that qualified nonphysician providers–such as midwives, nurses, and chiropractors–can perform many health and medical services traditionally performed by physicians–with comparable health outcomes, lower costs, and high patient satisfaction.” The Medical Monopoly: Protecting Consumers or Limiting Competition? by Sue Blevins

So if America’s political leadership were really interested in making health care more affordable, the rational course of action would be to deregulate the profession. Unfortunately, America’s political leadership is not interested in solving the health care problem; it is interested in expanding government power and bribing voters. So it is promoting an irrational course of action that is designed to appeal to the unthinking herd: government health insurance.

Consider the facts. People want health care, but there are not enough health care providers to meet everyone’s needs. Hence there are long lines at doctors’ offices, and health care is expensive. Consequently some people can’t afford health care. Now consider the consequences of government health insurance. Suddenly those people who couldn’t previously afford health care will be able to afford it, but the number of health care providers will not increase. So the lines at the doctors’ offices will get longer, and the cost of health care (unless restricted), will increase. In other words, reducing the cost of an already scarce resource without increasing the supply will not solve the scarcity problem, it will amplify it. Government provided health insurance will not make health care more available, it will simply increase the number of individuals competing for that health care. Furthermore, if government restricts the prices of health care to prevent them from increasing, the number of qualified individuals willing to join the profession will decrease. Clearly, government subsidized health care wont work; the plan is irrational.

But maybe we shouldn’t really worry about rationality. Maybe we should just have the audacity to hope that the problem will fix itself. Who knows, maybe an altruistic group of otherwise unoccupied but eminently qualified individuals will appear at the doors of the hospitals and doctors offices around the country and offer to combat the disease and decay of mankind. Or maybe we should just say yes we can enslave the medical profession and require it to work more hours for less pay. When you don’t value individual liberty or individual responsibility, anything is possible with the proper application of force.


Sample Statutes


“any person who practices or attempts to practice, or who advertises or holds himself or herself out as practicing, any system or mode of treating the sick or afflicted in this state, or who diagnoses, treats, operates for, or prescribes for any ailment, blemish, deformity, disease, disfigurement, disorder, injury, or other physical or mental condition of any person, without having at the time of so doing a valid, unrevoked, or unsuspended certificate as provided in this chapter or without being authorized to perform the act pursuant to a certificate obtained in accordance with some other provision of law is guilty of a public offense, punishable by a fine not exceeding ten thousand dollars ($10,000), by imprisonment in the state prison, by imprisonment in a county jail not exceeding one year, or by both the fine and either imprisonment.” California Business and Professions Code Ch. 5 Art. 3


“It is unlawful for any person to practice medicine or osteopathic medicine in this state without holding a license or permit to do so, as provided in this article. A person who violates this article by unlawfully practicing medicine or osteopathic medicine commits a Class C felony.” IC 25-22.5-8 Sec 1-2

“(a) ‘Practice of medicine or osteopathic medicine’ means any one (1) or a combination of the following:

        (1) Holding oneself out to the public as being engaged in: (A) the diagnosis, treatment, correction, or prevention of any disease, ailment, defect, injury, infirmity, deformity, pain, or other condition of human beings; (B) the suggestion, recommendation, or prescription or administration of any form of treatment, without limitation; (C) the performing of any kind of surgical operation upon a human being, including tattooing, except for tattooing (as defined in IC 35-42-2-7), in which human tissue is cut, burned, or vaporized by the use of any mechanical means, laser, or ionizing radiation, or the penetration of the skin or body orifice by any means, for the intended palliation, relief, or cure; or (D) the prevention of any physical, mental, or functional ailment or defect of any person.” IC 25-22.5-1-1.1

New York

“The practice of the profession of medicine is defined as diagnosing, treating, operating or prescribing for any human disease, pain, injury, deformity or physical condition.” EDN Title VIII Article 131 §6521

“Anyone not authorized to practice under this title who practices or offers to practice or holds himself out as being able to practice in any profession in which a license is a prerequisite to the practice of the acts … shall be guilty of a class E felony.” EDN Title VIII Article 130* Sub Article 4 §6512

4 Responses to “Obama’s Impossible Health Care Proposal”

  1. Sean says:

    I think it is pretty clear there are good reasons – economic and otherwise – to license medical professionals. Perhaps the licensing requirements or exclusive scope granted by these licenses needs to change, but doing away with them altogether seems silly to me. Perhaps we could segment the medical field more. For example, if doctors are too scarce, we could license limited doctors who can do a smaller set of things current doctors can do, but require fewer requirements for licensing (e.g. instead of 4 years of med school for doctors today, maybe require only 3 years of focused med school for someone a limited doctor).

    Additionally, we’ve seen how easy it is for snake-oil salesman to peddle medical wares under the guise of homeopathy, alternative medicine, faith healing, or other non-scientific nonsense, some line dividing so-far-as-we-know legitimate medicine from known illegitimate medicine is valuable. I know I don’t have time to find & read scientific research on every possible treatment myself, so I’d like to know I can trust a medical practitioner upfront to be using real medicine (litigation thereafter is cold comfort). Note that you can still get homeopathy but you can’t get a homeopath to do surgery or prescribe drugs. I don’t see a problem with that.


    Obama’s plan will cost an additional $1T in the next ten years. That’s massive and we can’t afford it. However, according to a preliminary CBO estimate, healthcare can be extended to more people without a massive increase in federal liabilities. For example, the Wyden-Bennett bill would be “roughly budget neutral” and would sweep away other, less efficient, programs like Medicaid, CHIP, Federal Health Benefits Program, and State CHIP.

    Is health insurance something the government should get into? I don’t know. It seems many people want health insurance but can’t qualify or afford it. At least for those who can afford, but don’t qualify, clearly there is some kind of market failure going on. For those who can’t afford health insurance, it doesn’t seem reprehensible to me for the government to step in, if we can prevent the costs from suffocating the country. Drawing the line between “can” and “cannot” afford is tricky, but that shouldn’t mean we abandon efforts to draw it.

    Eventually I can’t see how we can stay away from a forced monopsony. As we find ways to learn more and more about our predispositions and likelihood of different diseases, defects, and conditions, we’ll chip away at the purpose of health insurance: to pool risk among lots of people to protect the future sick at the expense of the future healthy.

    For example, if DNA testing is kept out of the hands of insurers, it will exacerbate asymmetric information problems and exaggerate existing moral hazard concerns. At some point if the testing is accurate enough, these problems will swallow up any health insurer. If this kind of testing is shared with insurers, the level of insurance will shrink to whatever “unknowns” are left after testing, and people with known high likelihoods of expensive diseases will be left to pay for care themselves or get whatever the government is offering for care.

    So eventually, I think our current system is going to disappear and some force will be required to get the future healthy to pay for the future sick. This could be requiring health insurance for everyone, the way we require car insurance (although you can ditch your car if you can’t afford insurance, there is no analog for your body), or just insuring everyone with some universal government-sponsored plan.


    Back to scarcity, the claim (of which I’m not totally persuaded) that there are long lines for treatment, tells me medical care is underpriced currently – that is to say people are paying with time rather than money. If true, this tells me the problem is “time costs” don’t benefit anyone, thus don’t encourage entry into the field. To expand the number of people demanding treatment will drive up costs – either time costs or money costs. If we can hold down time costs, the increasing money costs *will* encourage more people to enter the medical profession – licensing notwithstanding.

    The government is not incapable of affecting both supply and demand. For example, somethings which could be done to increase the number of providers include giving grants to medical/nursing/tech schools, subsidizing these students, providing tax breaks for new providers of healthcare, or many other things.

    Ultimately if artificial labor scarcity is the primary cause of high costs, I’d prefer cost problems to greater quality of care problems.

  2. Quincy says:

    Sean, the difference of opinion between you and I about the licensing issue stems from a difference in our choice of ethical systems. Your arguments are grounded in utilitarian ethics: an action is good or justifiable if it results in the greatest good for the greatest number. Conversely, I believe that an action cannot be justifiable if it violates individual rights, even if it does result in the greatest good for the greatest number.

    Take as an example, your argument in favor of licensing medical professionals. The premises as I understand them are as follows:
    1. People in need of health care should receive scientifically approved medical care.
    2. Unless the medical field is regulated then there will be individuals who attempt to defraud others by marketing harmful or non-helpful medical products and services.
    3. Some people will not be able to distinguish between the charlatans and the legitimate service providers, and some of these people will be harmed.
    4. So many people will be defrauded and harmed by charlatans that restricting everyone’s individual liberty through a government licensing scheme is justifiable because it results in the greatest good for the greatest number.

    The fourth premise is where the ethical disagreement is most clear. I believe that restricting the liberty of individuals who wish to purchase or provide legitimate, unlicensed medical services is unjust. So the likelihood that some individuals would suffer because they make bad choices concerning their health care does not justify violating everyone else’s rights.

    A more subtle disagreement arises in the first premise. You argue that government should differentiate between legitimate and illegitimate medicine by licensing the former and criminalizing the latter, but how should government determine legitimacy? Should government assume that any treatment that eliminates the target disease or corrects the defect is legitimate, regardless of whether it causes suffering or is morally objectionable to the patient? What if the patient believes that morality is more important than eliminating the disease? You see, before you can determine the legitimacy of a treatment method, you have to enshrine a particular medical goal. I strongly disagree that government should dictate to a patient or physician what his or her medical goal should be. Certainly, if a medical provider harms a patient by selling services which do not further the patient’s stated medical goals then there are grounds for legal action. Note that it is important to differentiate cases in which the medical provider harmed another intentionally, knowingly, or recklessly, from cases in which the medical provider’s actions caused harm through ignorance. The former case provides grounds for criminal punishment while the latter only provides grounds for civil damages.

    Our foundational ethics disagreement leads me to disagree with your general comments about health insurance as well. I don’t think that the purpose of health insurance is “to pool risk among lots of people to protect the future sick at the expense of the future healthy.” That may be a social planner’s purpose for insurance, but social planners have no right to make decisions on behalf of others. An individual’s purpose in buying insurance is to ensure against his or her own potential risks. I don’t think that there is anything immoral about an insurance company refusing to insure a high-risk individual. Need does not give one individual a moral right to take from another. Otherwise, the hungry thief would be no thief at all. No one has an absolute right to medical care, and I don’t agree with the position that a healthy individual should be forced to pay for the medical expenses of the sick. It is certainly charitable for one person to assist another, the fact that we think an act is charitable doesn’t give us the right to force others to do it.

    Ethics aside, though, is it clear that government licensing is the best method for eliminating medical fraud? What about private credentialing services, private rating systems, and personal relationships? Looking back to times prior to government licensing, was the problem of medical fraud a bigger problem than it is now? Personally, before I entrust myself to a doctor for any major treatment, I seek out recommendations and comments about the doctor’s reputation and expertise. The fact that the government has put its seal of approval on a provider doesn’t reassure me at all.

    As to whether there really is a shortage of licensed doctors, consider the following article from The New York Times: http://www.nytimes.com/2009/04/27/health/policy/27care.html

    In summary, I reject utilitarianism as an appropriate tool for moral judgment (I still owe you a broader explanation of why), so I reject the proposition that the need of one or many individuals can justify wronging others. Consequently, even if it could be shown that government licensing and government insurance would provide the greatest good for the greatest number—a claim of which I am thoroughly unconvinced (there are fatal incentive problems there)—I still believe that such a course of action would be immoral and therefore unacceptable.

  3. Tea Party says:

    Hey, great blog.

  4. Quincy says:

    Here is an article by the Wall Street Journal asserting that Obama’s health care takeover will exacerbate the shortage of doctors.

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