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Intended Consequences

Mises Daily: Wednesday, July 04, 2001 by

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As Congress and the pundits continue to debate the so-called Patients' Bill of Rights, it becomes clear that much of the discussion reflects both cynicism and naiveté.  Conservatives who oppose the bill on both matters of principle and practicality say that it will invoke the "law of unintended consequences," in that it will open the doors for health insurance companies to face massive lawsuits, which are now prohibited by federal law.  Those lawsuits, they contend, will only drive up medical costs, making it even more difficult for Americans to receive decent health care.

(Calling a system that will enrich trial lawyers a "Bill of Rights" does violence to any historical sense of what rights mean, and especially to the meaning of the Bill of Rights in the U.S. Constitution.  However, that is something to be argued in a different paper.)

A way of rephrasing their argument is to declare "everyone wants quality health care for all Americans" or something like that, but the consequences of this latest bill, unfortunately, would simply transfer wealth to attorneys, an "unintended" result.  On the other hand, the supporters of this latest monstrosity from Congress declare that the only way to force insurers to give "proper" care is to "hit them where it hurts," in their wallets.  Inflamed jurors, they believe, upon hearing horror stories of people being denied care by a health maintenance organization (HMO) "bean counter" will award huge judgments to sympathetic plaintiffs, thus creating negative—but effective—incentives for HMOs to take better care of their clients.

The standard conservative arguments against this latest bill—which the Democrats have passed and which President Bush has threatened to veto—are that, while this is a bad bill, those who support it have good intentions and are just trying to ensure that people receive good and fair health coverage.  Furthermore, conservatives seem to believe that if they present logical arguments against this bill, then perhaps public opinion will come to their side and Congress will then pass something that is more "fair and equitable."

Unfortunately, the conservative critics are simply wrong.  There is no "law of unintended consequences" here, only intended consequences.  While Tom Daschle and his colleagues in the Senate, both Democrat and Republican, who support this bill state only that they are trying to bring "fairness" to the system, this is nothing more than a naked attempt to end private medical care as we have known it and to substitute a Canadian-style system of government-run medicine.  This takes place, of course, only after a major Democratic Party constituency—the trial lawyers—have been made even wealthier than they are now.

What we need to remember is a simple lesson in modern political history.  Democrats lost control of the U.S. Senate to Republicans in the 1994 elections on the heels of the massive failure of "Hillary-care," which was nothing more than an attempt by the government to nationalize health care.  What especially galled the Democratic supporters of government medicine were the "Harry and Louise" advertisements that the insurance companies ran after details of the plan came trickling out of Hillary Clinton's secret committees.

These ads were hardly radical, but they did point out just how costly the proposals would be, not to mention that the new rules would have made private payment for medical services a criminal offense punishable by prison terms, which is the situation that currently exists in Canada.  Following the election debacle, Democrats rightly or wrongly blamed "Harry and Louise," and now they have their opportunity for revenge.

As we have seen with the fiasco over asbestos—in which eight previously healthy companies have declared bankruptcy in the last eighteen months as the blizzard of legal claims mounts against them—it would not take much to drive many of the HMOs into the same condition.  Despite their size, a few multi-billion-dollar decisions would spell doom for private insurance.  We could then expect the government to step into this vacuum and create its own Canadian-style system to "bail out" U.S. medical care.

While most Americans are ignorant of the horrors of Canadian care—having been propagandized by the U.S. media, which for years has painted a false but rosy picture of medicine in Canada—it is a potential boon for politicians.  Because medical care is basic to our well-being, the political party that controls health care would wield huge amounts of power over individuals and their choices.  Furthermore, even though Americans would receive miserable care, they could easily be propagandized and manipulated into not wanting to give it up for fear of the unknown, just as has been the case in Canada.  Furthermore, the Canadian government has found that the patronage involved in controlling health care has created huge political benefits for those in power. 

Therefore, my contention is that this current drive to open HMOs to all kinds of lawsuits is not driven  out of sympathy for needy patients or any kind of belief in social justice.  Rather, it is an important step toward the total destruction of private medical care.  This is not to say that all supporters of the recent bill that passed Congress want socialized medicine.  Instead, they are the "useful idiots" who always seem to accompany the worst of leftist schemes to end all economic freedom. 

Of course, after whatever small amounts of freedom we still enjoy are eliminated, the left would then discard these folks, since they no longer would be useful.  As George Santyana wrote, "Those who fail to learn from the past are condemned to repeat it."  Such will be the case with this bogus "Patients' Bill of Rights."


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William Anderson, adjunct scholar of the Mises Institute, teaches economics at Frostburg State University. anderwl@prodigy.net. See Anderson's outstanding Daily Article Archive.