The Build Back Better behemoth of a spending package has reignited the debate about more government spending on health care. Some of the things that are in the BBB “social-spending plan”:
A proposal to allow Medicare to negotiate drug prices for certain higher-cost drugs that lack competition
Subsidies through the Affordable Care Act to make coverage more affordable through 2025 and the expansion of Medicaid coverage for those living in states that opted against expansion
Developing new state Medicaid requirements to guarantee coverage for more vulnerable patients, including 12 months of continuous Medicaid and CHIP eligibility to postpartum women
Transparency measures for pharmacy benefit managers
Chris Holt from American Action Forum adds more details:
The BBBA expands who is eligible for Affordable Care Act premium tax credits (PTCs) and makes those PTCs more generous for everyone. According to the American Action Forum’s (AAF) Center for Health and Economy, these policies would increase the number of insured individuals by 2.2 million in 2022, increasing to 3.9 million in 2025 relative to current law, and would cost $272 billion over those four years. The coverage gains would, however, evaporate in 2026 without further congressional action. In a series of last-minute negotiations, Democrats added a number of policies aimed at reducing prescription drug spending to the BBBA legislation. Significantly, the BBBA would allow the Secretary of Health and Human Services to directly negotiate what Medicare pays for drugs for the first time. The details of the proposal make it abundantly clear, however, that this negotiation will amount to little more than government price-fixing.The BBBA includes long-sought reforms to the Medicare prescription drug benefit—originally put forward by AAF in 2018—aimed at realigning insurer and drugmaker incentives to hold down Part D costs, and capping Part D beneficiaries’ out-of-pocket spending on drugs.
The cost figures that Holt mentions are on the low end, for a number of reasons that I will return to in a separate article. Before we analyze just how costly these measures will be, there is an overarching issue that deserves our attention first: should, or should not, government be a provider of health care in the first place?
This is an ideological question, and as such it seems to suffer from an ill-deserved pariah status in the current public discourse. Yet behind every debate over new government spending lurks a grain of generic opposition to that growth in the burden being placed on taxpayers’ shoulders. It is about time that we bring that debate out in the open and outline the ideological positions on the role of government.
If we start from the right, so to speak, the first ideological position is the libertarian one. Perhaps better known as “classical liberalism”, this ideology traces its roots back to John Locke and the thoughts on the tension between the state and the individual that emerged from the Renaissance and the Enlightenment eras. More recent thinkers – J S Mill and Robert Nozick to mention only two – have added a significant body of thought, inspiring especially the American strain of classical liberalism.
At the heart of libertarian political theory is the postulate that the individual is absolutely inviolable. This inviolability includes the individual’s property – morally defined as extensions of his labor – which leads to the conclusion that there are no moral reasons why anyone can take any property by force. This includes government.
By absolutely excluding taxes, libertarian political theory a priori nullifies any attempt at creating a government-run health care system. But there is also another side to the libertarian argument, namely the restrictions that a government-run system places on the choices that the individual can make. When government provides health care, it also decides when health care is provided, what care patients can receive, and – an often forgotten flip-side of that coin – what care patients can not receive.
This power over a person’s needs is as much a violation of his individual freedom as the power to tax him. Therefore, libertarian political theory absolutely rejects the notion of government-run health care.
Next up is the conservative ideological argument. Resting on different scholarly grounds, conservatism nevertheless shares the libertarian affinity for individual and economic freedom. While there is a wide range of conservative thought to take into account, their common denominator is one that places the individual in a social and cultural context. Where classical liberals (in telegraphic short-form) see the individual as an absolutely independent entity, conservatives emphasize that there is a context without which an individual will not be fostered into a virtuous, responsible citizen.
In common parlance, the conservative strain that places the most emphasis on the context is that which often places a “social” prefix on the ideology. In policy practice, social conservatism has a heritage to draw on that stretches back to the Elizabethan poor laws, but its more recent iterations were shown in the British Beveridge Report on how to build a conservative welfare state, and the expansion of government entitlement programs under President Franklin Roosevelt.
Neither example included a socialized health care system, for one good reason: entitlements are designed as last-resort solutions to financial hardship, not a means to economic redistribution. For the exact meaning of the difference, see my book Democracy or Socialism (Palgrave McMillan 2021). This last-resort approach is motivated by the idea that the individual belongs in a context where it is the state’s responsibility to provide for a virtuous social and cultural society. That role squarely excludes a government-run health-care system, as such a system would monopolize an entire industry, thereby annihilating the ability of the individual to exercise responsible citizenship over his own health care needs.
Furthermore, when government monopolizes health care, it does so based on a specific idea of how health-care resources ought to be distributed. There is no point in having government monopolize health care and then just let health care be provided according to the same pattern as would have been the case, had government not monopolized the industry. In short: socialized health care serves the purpose of economic redistribution, which is the core purpose of socialism.
Which brings us to the third ideology. A socialist logically argues for a government monopoly on health care because he believes that medical services ought to be provided according to different criteria than those under which the free market operates. The socialist has a general desire to focus government resources on the provision for needs, not wants, a focus that originates in its Marxist economic theory and can be traced back to the labor theory of value. (Again, see my book per link above.) This theory explicates a diametrically opposite view of the distribution of goods and services than does free-market capitalism: all resources in society must be focused on providing the very same basic goods and services to everyone, regardless of their individual characteristics – or efforts to add value to the economy.
This superficially appealing principle means, in reality, that government not only should, but must seize control over and responsibility for the provision of every citizen’s needs. From a central plan, necessitated by Marxist economic theory, emerges the production and distribution of the same basic goods and services for everyone; in terms of health care, government takes absolute control over every aspect of it. A patient in need of dental surgery cannot choose when, where or by whom the procedure should be provided; a patient whose hip is damaged to the point of needing replacement, cannot choose what prosthetic hip to get, nor the surgeon, nor the hospital.
In deciding how to provide health-care resources, government also has to prioritize how to allocate its scarce resources. It applies criteria that quantify the outcomes of, e.g., elective surgery, weighing who will get each procedure based on if the patient will be productive enough after recovery. Under a more prosaic socialist health-care system, such as the ones currently in use in many European countries, the “productive” criteria zero in on expected tax revenue from the person’s remaining years in the workforce. Under a more rigid system, such as those that were in operation in Eastern Europe under the Soviet Empire, the patient’s productivity is directly related to the labor value he will add after returning to work.
Either way, the government’s decision on how to allocate health-care resources will always be independent of the patient’s preferences. A patient may claim that he will benefit a great deal from a specific elective-surgery procedure; if government does not value his regained health as much as he does, and if government decides that another patient will generate more value, the other patient is given the procedure instead.
Where government controls health care, it controls all the criteria based on which health care is provided. The patient is excluded from the decision process.
This is, for sure, a very short account of the ideological approaches to the question about government and health care. However, it is not meant to provide an exhaustive analysis of exactly how government can participate – if at all – in the funding, production and allocation of medical services. It is means, rather, to point to the need for a principled conversation about what role government really should play on our society.
Tomorrow we will dig into health-care statistics and see whether or not it is the case that socialized systems really are better than the kind of hybrid model we have in America.