09 September 2009

Medical care and Federalism

The concept of the United States is that we live with a federal system, a system of multiple governments each addressing the areas that they are given to address and conforming to the representative system that provides citizen input into that level of government.  To find out where medical care should be addressed, the outlay of powers is given in the US Constitution in broad context, to reserve a very few areas for the National level so that there is continuity as a Nation on these few items.

Those who have been pushing 'the public option' or 'single payer plan' run into the problem of monopsony where there is but a single payer in a given market. When one purchaser has an overwhelming or sole presence in the market for any good or service, it has untoward market power to demand pricing acceptable to it by varying how much of those things it is willing to buy so as to establish an acceptable price point to the monopsonist.  Such markets can be static or dynamic, and can include such things as: the labor market, welfare causing a change in the rate of exploitation as compared to a competitive market, minimum wage, and other areas where competition drives costs down so as to gain more market share.  Any National government does have, within its power, to create a monopoly position by granting such a monopoly to a private concern, although this was discouraged as far back as Adam Smith who pointed out that only in those areas of National need (such as defense of the Nation, protection of critical labor skills, etc.) should that be done.

On economic ground I, too, had examined a monopsony use for medications, not medical practice, but have been dissuaded from that by the cogent analysis of other writers.  Indeed I was unaware of the term  monopsony until it was explained, then the problems of it became self-evident in that it restricts market efficiencies to provide the greatest number of goods and services from multiple competing agents seeking multiple competing buyers so as to properly value a given good or service until such time as innovation changes the price point for that within the market.  The elimination of the multiple purchasers is just as, if not to some degree far worse, than having monopoly or oligopoly in which sellers fixing prices seek to maximize their profit in uneconomic ways.

Beyond that, however, is the much abused 'commerce clause' of the US Constitution along with the 'general welfare' clause in Article I, Section 8, in parts which are separate listings:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;


To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;


The 'general Welfare' clause is in regards to taxes, duties, imposts and excises that go into the general treasury to pay for our common defense and the federal government's other activities.  It is not a separate power in and of itself to the general welfare but a reason why these fund sources are to be used and what they are to be used for: paying for the other items in the federal government, not for some vague generalization of 'general Welfare'.  All the other things in the federal government are part of the 'general Welfare' but are a discreet subset of the entire general Welfare of the People, as written in the Preamble.  That clause is about taxes, duties, etc., things that we call 'revenue', not about the provisioning of goods and services.

In the 'Commerce clause' we get three distinct areas that the federal government is to play a role: in commerce with foreign Nations, amongst the States and with the Indian Tribes.  The 'regulate' is to regularize, not dictate to others what to do and how to do it.  If these three items (foreign Nations, the States and the Indian Tribes) must have logical connection to each other and the power described.  That power is one that seeks to work with autonomous and independent, indeed Sovereign, units so as to create agreement amongst those in negotiations to regularize the way commerce is conducted.  As a Sovereign power cannot dictate terms of a civil treaty with an equal, the federal government cannot do so with the States and the Indian Tribes.  If these things did not act in a similar manner they would be called out separately in the Constitution and provided for with their own clauses as was done with taxation and other revenues.

This power has been abused by the federal government to reach into individual States, individual markets and exercise power and influence in those markets without consent of the State Legislatures and Governors who are at the level of office of Sovereignty for their States as that of the head of foreign Nations and Indian Tribes.  The Raich decision is one in a long series of expansions of federal power into areas it is not given to work in and attempting to tell the States how they must comply with federal regulations in a venue where the federal government has no given power to it.

That we know by two Amendments to the US Constitution that tell exactly what those things not specifically handed to the federal government are:

Amendment IX

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Amendment X

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

If it is not handed to the federal government, then the rights and power are retained by the people and may be exercised by the States or the people as they choose amongst their States. Thus the federal government retains no monopoly or monopsony power over medical care.  What the federal government CAN do is encourage the States to work with each other to set up their own methods of providing these things, but the States are on the hook for that and there is no compelling any State to do what it does not wish to do in that realm.

No matter how 'good' it might be for the federal government to do anything outside of its given powers, it is powerless to do so: it is not handed those powers and can only be given them by Amendment.

Thus I can see no place for even such things as Medicair or Medicaid save as voluntary acceptance, at best, of government largesse.  Already that market presence distorts the market, causes problems with the subsidies provided to citizens on the cost of treatment for them by creating uneconomical price points that are not market driven but cost driven.  When a good or service is subsidized, either by setting abnormally low prices and paying producers directly (such as in State owned ventures seen in other Nations) or via subsidy to purchasers, we find imbalance in the system that tries to adjust to these non-market based drivers that then inflate the cost or artificially hold the cost low with detriment to infrastructure and encouraging new market competition.  Other treatment venues that are held by the federal government, namely the VA system and Indian health services system, provide medical care that is not high quality, not in enough supply and treats patients in a sub-optimal manner as there is no incentive to treat them better.

Trying to get rid of a part of a system that works to model it on failed systems is not a pathway to success, but to failure.

When people talk about the 'failure of the health system' in the US, it is due to the very federal interventions that were supposed to 'help' and 'fix' the system, and yet these initiatives have had just the opposite outcome in neither 'helping' nor 'fixing' the problems they set out to fix.  Worse, still, is that by concentrating administrative power in a sole or oligarchical arrangement, lobbying then can be concentrated at one or a very few points by companies seeking greater income and wealth in the system.  The very same people who decry the current influence of Big Pharma and Big Insurance on government legislation should want just the opposite of a 'single payer' or 'public option' as this then concentrates the ability of those organizations to lobby and further change the system to their benefit.  This is strangely not understood by those that advocate that sort of system and yet want less lobbying power and influence.

Now if you follow this line of reasoning, keeping 'good wishes' and 'nice things' out of the picture because they are not part of the described power structure of the Union granted to the federal government but reserved by the people to use as they wish in the States, we get a major point of departure from the Left but also on the Right.

How so?

This system, that keeps the federal government out of doing things actively, also describes the market arrangement for those things outside of the federal purview.

First it is market driven, with little to no interference from federal government.

Second it is of the concern of the people and the States.

Thus from the first and the second, there is no 'national market' in health care services or their provisioning, but a large number of State and local markets.

To understand the problem of this on the Right, I will turn to Grace-Marie Turner in an article on the 27 AUG 2008 at the Wall Street Journal on this topic of a 'National Market':

States should be giving residents more options to buy policies that suit their budgets, not the priorities of politicians. Rep. John Shadegg, a Republican from Arizona, has proposed federal legislation that would allow people to buy health insurance across state lines.

But Congress could do more than simply knocking down the barriers to interstate health insurance. For starters, it could make health insurance more portable. One way to do that would be to change the tax subsidies already going to those who get health insurance at work and turn them into refundable tax credits. This would make the subsidies available to everyone, and help millions of people buy coverage who can't afford it now. It would also help people keep their health insurance when they lose their jobs or move.

Freeing Americans to buy health insurance across state lines would give people more choices in health care. And giving individuals a direct tax break for purchasing coverage would put armies of consumers to work to find affordable policies. That would force states to lighten their regulations or lose out to other, less regulated states.

The complex problems in our health sector are best cured by a bigger dose of market competition, not more government intervention.

In that first cited paragraph my problem with the Progressive Right is in clear view: the government has NO ROLE in creating a 'National Market' unless the States agree to it and the federal government cannot 'allow' people to purchase services when their States have already had their say in things.  From that first intervention we now get the fine idea in the second paragraph that the federal government should over-rule the States to provide 'nice things' for individuals who are going from State to State with the express reason of taking up residence in a State more to their liking for either economic, social or other reasons.  And how will this be supported?


Free money to EVERYONE!

What could possibly go wrong here, right?

Yes, let us further inflate the system so that people cannot take advantage of their new position with the costs inherent in any such a move because they want to move and can weigh the risks and benefits on their own.  Yes, let us overburden the system yet still more, no?  Perhaps this will be Medirelocair?  Medimoveade?

What the hell is up with these people?

The reason that these are discrete markets under the control of the people and the States is that is the way the system is designed from the outset.

Believe it or not a Nation with far more people runs in this way without much in the way of intervention from the National end of things.  It is also the largest representative democracy on the planet: India.  Hey!  If we are supposed to look overseas for good practices, like the Left so often wants, then how about examining India's medical system and seeing just how and why it works with little government overhead?  We might be able to provide more care, at lower costs and with better quality... but then neither the Left nor the Right likes the idea that power should be in YOUR HANDS and not in THEIRS.

If you truly want a better health care system you must: remove the 'oversight' from government, remove the subsidies for insurance, end the current system for new entrants and allow those already in them to either receive a lump sum cash payout or continue the system in a declining state as it loses individuals in it, and take the huge hit to our economy that comes from doing something wrong-headed and driving a once working system to insolvency by 'helping' it from the federal end of things.

So, to the Left: why do you want to concentrate power and the power of lobbying over our government at the cost of the citizenry?

And to the Right: just why do you want to expand federal power, expand un-economic practices and refuse to look at market based and consumer driven alternatives that actually work in other places?

Just why are both 'sides' of the political spectrum so enamored of more National power?

And just why don't they trust the people, trust our States and stop messing up with a system after their 'fixes' make the problem deeper and worse?

But then I am neither on the Left nor the Right, but a free man looking to see that our liberty is not trampled by those willing to take away necessary liberty for ephemeral security of health care by National fiat.

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