Professor Gary Chartier on: ‘promoting access, affordability, and choice by ending privileges for corporations, professionals, and the otherwise politically connected’.

by Gary Chartier

[Updated from article originally posted at the Center for a Stateless Society in August]

The Golden Rule gives us good reason to value at least three goals related to the provision of medical care.

  • We typically value our own physical well being, so we’d probably like our own bodies taken care of. If we do, we have good reason to want other people to have access to health care services. Taking access seriously as a goal means maximizing the number of people with access to decent health-care.
  • We likely value choice: we don’t like other people to run our lives or constrain our options. If we do, we have good reason to want other people not to be pushed around. Taking choice seriously as a goal means minimizing interference with everyone’s freedom to make health-care choices.
  • We value affordability. We don’t want to pay a lot personally for health care, and we don’t want institutions in which we participate to have to do so. So we have good reason not to want other people or institutions to have to pay a lot for health care, either. Taking affordability seriously as a goal means minimizing the net overall cost of health-care to (at least) the national economy.

The question participants in current debates about health care have to confront is: which otherwise just institutional arrangements can enable us to achieve these goals? The degree to which health care services are accessible and affordable and to which people are able to choose health care providers and therapies is determined by structural, political factors. So we have to identify legal norms it makes sense for us to support and (in appropriate circumstances) enact and implement in light of the Golden Rule.

I want to argue here that we can and should work effectively to achieve the goals of access, choice, and affordability by working for the across-the-board elimination of legal privileges that allow privileged elites to reap monopoly profits and limit people’s access to care by making and keeping them poor.

Tensions among the Goals

At first blush, it might seem as if achieving all of these goals at once would be difficult or impossible.

One option consistent with maintaining the current model of health-care delivery would involve letting people sink or swim in a crisis-ridden economy. In this case, we could achieve affordability while preserving choice. But of course we would be ignoring the implications of the Golden Rule regarding the importance of access.

Another option would be to limit choice by rationing. It’s not clear that this would ultimately reduce net health care expenditures (both because actual rationing decisions would almost certainly lead to cartelization that would benefit privileged elites and because it would be almost impossible for rationing decisions to be made rationally), but perhaps it might do so initially. In this case, we’d have access and perhaps some limited initial degree of affordability, but at the cost of choice.

Or we could try to find a way to dramatically expand access to health care in something like the current health-care market. The problem is that we know what doctors charge. We know what hospitals charge. We know what drug manufacturers charge. We know what medical device manufacturers charge. We know what insurers charge to, we’re told, make it all possible. And we know the charges are anything but insubstantial. Delivering health care services at current prices would be very costly. A plan that offered everyone these services at current prices would help us to achieve the goals of access and choice. But affordability would suffer if access were achieved while current price levels were maintained.

Reducing Costs by Abolishing Privileges for Politically Favored Groups

So it might appear, at first glance, as if there were a real problem achieving all three goals. But I believe that’s because of an assumption that isn’t being made explicit in most of the discussions being conducted on-line, on TV, and in the print media by Beltway insiders. That’s the assumption that privileged, well-connected political actors can and should keep their privileges. The options getting the most attention in today’s health-care debate are options that largely treat monopolistic and quasi-monopolistic privileges enjoyed by the politically connected as unproblematic. If we want to achieve all three goals for health care reform simultaneously, we need to support the abolition of these privileges.

Access and affordability are limited by a range of factors.

  • Drug companies and medical device manufacturers reap monopoly profits because the law gives them patent rights. Patents don’t make good economic sense, despite what their corporate apologists might tell you. But they do ratchet up the profits of those who own them, at the expense of ordinary people.
  • Working hand-in-hand with health-care professionals’ groups, state and national laws impose licensing requirements that limit who can provide health care services. By constraining the numbers of people who practice various health professions and the kinds of services particular professionals can perform, these requirements boost the incomes of health professionals and artificially inflate the prices of their services.
  • Hospital licensing and accreditation requirements similarly limit the number of hospitals in operation, and therefore pad the pockets of existing hospitals while driving up the prices people have to pay for hospital stays and other services.
  • Legal limitations on advertising and price competition in the area of health care services also make it easy for health care professionals to maintain high incomes.
  • The FDA approval process adds to drug costs (and lengthens the times-to-markets of many products) in ways that certainly aren’t always to the benefit of health-care consumers.

These kinds of legal privileges are sold to the public, of course, as designed in various ways to help ordinary people. But their practical—and, in many cases, intended—effect is to take money away from ordinary health-care consumers and transfer it to people and organizations with more political privileges.

These are hardly the only legal privileges politicians confer on the well-connected that help to keep health-care costs high.

  • Rules that provide tax incentives for employers to purchase health insurance for employees tend to make it easier for insurance companies to charge higher prices than they likely would be able to charge to individual consumers.
  • State rules that preclude the purchase of insurance across state lines also make it easier for insurance companies to charge high premiums and reap handsome profits.
  • Rules that limit who can be an insurer in the first place can have a similar effect. A physician who wanted to offer patients care on a flat-fee-per-year basis was recently prevented from doing so because this arrangement looked too much like insurance, and the physician wasn’t a licensed insurer. Who benefited? Not the patients, clearly—but the insurance industry.
  • Agricultural subsidies also contribute to health-care costs by encouraging the purchase of lots of low-nutrition foods. Purchasing these items simultaneously redirects resources that could be used to buy foods that made positive contributions to people’s health away from the purchase of such foods and encourages the purchase of items that may actually decrease health and thus boost health care costs.

Another dubious legal privilege that also drives up costs: the opportunity for plaintiffs in tort cases to obtain punitive damages. A punitive damage award can turn an individual person into a scapegoat, someone to be “taught a lesson” on behalf of the entire class of victims of conduct like his or her own. Punitive damage awards drive up costs unnecessarily while forcing health-care professionals and hospitals to focus on practicing defensive medicine.

Increasing Access by Challenging Policies that Make and Keep People Poor

Political factors drive up the costs of health care dramatically. They also limit access to care by driving down the incomes of people who might want access to care but can’t afford it.

Sales and similar taxes impact even the poorest people. And state and federal income taxes certainly reduce the resources available to the working poor and blue-collar Americans.

These taxes indirectly confer special privileges on the various beneficiaries of the spending they make possible. And special privileges exert other negative consequences on economically vulnerable people.

Some kinds of jobs require business licenses, or other kinds of permissions from local authorities to start up. Maybe the licenses require costly and dispensable equipment or unnecessary certification, or maybe they just involve prohibitive up-front costs. (Think about how much it costs to obtain a New York taxicab medallion.) Sometimes, they preclude people using the low-cost facilities that are their own homes for business purposes, imposing the heavy burden of working elsewhere. And sometimes—as when Tulare, California, officials recently shut down a little girl’s lemonade stand because it didn’t have a license—licensing requirements are just exercises in petty tyranny. Whatever their form or their motivation, the burdens created by licensing requirements fall hardest on poor people.

Those same requirements impact where poor people can find housing: housing that doesn’t meet someone else’s standards of middle-class acceptability is denied to poor people who could pay for it, but who might be unable to pay for anything else. And the burden on the poor is only increased when certain kinds of jobs are denied to people at all—like selling medications in locations other than legally approved pharmacies supervised by licensed pharmacists.

Tariffs also hurt poor people by significantly increasing the costs they need to pay for imported goods (including, often enough, food needed for good health that would be less expensive than domestic alternatives absent import duties). Though often touted as propping up poor workers’ incomes, they serve primarily to boost the profits of poorly performing domestic producers at the expense of both domestic consumers (especially poor ones) and foreign producers.

Politically guaranteed privileges are responsible in multiple ways for many corporate profits. In an environment in which this is so, unionization can help to improve workers’ economic positions. Legally imposed limitations on union activity can tend to reduce unions’ influence, and so to reduce the incomes of workers who might make more were they free to engage in more radical bargaining tactics.

And of course the executives and major shareholders of the largest corporations control an enormous amount of wealth because of subsidies, cost-plus contracts, and the insulation from competitive pressure created by patents and tariffs. Absent the illegitimate privileges these members of the elite receive, the wealth concentrated in these large firms would doubtless be more widely dispersed.

An Initial Agenda

So: if we want to support structural, political changes that will make health care more affordable and accessible while increasing choice, we should support legal changes that would:

  • Eliminate legal protection for patents;
  • End the FDA approval process, along with all other attempts to use the force of law to limit the commercial accessibility of remedies desired by health-care consumers;
  • Eliminate hospital accreditation and professional licensing rules;
  • Limit malpractice awards to actual damages plus reasonable costs of recovery (including reasonable legal fees);
  • Repeal legal constraints on the sale of insurance across state lines;
  • Eliminate legal rules preventing the operation of what amount to insurance schemes by health professionals;
  • Alter the federal and state tax codes to de-link employment and insurance; and
  • Eliminate agricultural subsidies.

More broadly, concern for the poor should prompt us to boost people’s incomes, and so their access to health care, by supporting legal changes that would:

  • Eliminate licensing, zoning, and related restrictions that help to keep people from starting small, low-capital businesses;
  • Eliminate rules that prevent poor people from entering businesses the law currently treats as off-limits;
  • End rules that force poor people to choose between the kind of housing middle-class planners and neighborhood busybodies prefer—and no housing at all;
  • Eliminate import duties;
  • Reduce or eliminate tax burdens that fall primarily on poor people—sharply increasing the standard income tax deduction and the Earned Income Tax Credit;
  • Repeal state limitations on collective bargaining, including compulsory arbitration requirements, prohibitions on secondary boycotts, back-to-work orders, and “right-to-work” laws;
  • Treat as unowned any firms dependent enough on special benefits conferred by the state (subsidies, tariffs, patents, and other monopolistic favors) to count as creatures of illegitimate privilege, and spread their wealth to ordinary people—mutualizing them by allowing their workers to homestead them just as they might other unowned property.

The approach I’ve outlined here would ensure that poor people had more money. By eliminating monopolies (and quasi-monopolistic market distortions like tax subsidies for particular insurance choices), it would also ensure that less money was spent overall on health-care services and that the costs of such services for individuals were much lower, and that these services were thus much more accessible. At the same time, it would preserve choice, avoiding top-down rationing. It would help us make significant progress toward reaching all three of the health-care reform goals we have good reason to want.

Most options currently on the table call, effectively, for tinkering with the existing, deeply flawed, American health-care system. They leave many elite privileges and monopoly profits intact. By contrast, the approach I’ve suggested here would be anything but a continuation of the status quo. Indeed, it would be a dramatic attack on the status quo, one that redistributed wealth from privileged monopolists to ordinary people, and dramatically increased the likelihood of access to inexpensive, high-quality medical care for all Americans.

Gary Chartier is an associate professor of law and business ethics and associate dean of the School of Business at La Sierra University, author of Economic Justice and Natural Law and the forthcoming The Conscience of an Anarchist as well as articles in journals including the Oxford Journal of Legal Studies, Legal Theory, Religious Studies, and the Journal of Social Philosophy, and a contributor to the Center for a Stateless Society. He holds a Ph.D. from the University of Cambridge and a J.D. from the UCLA.

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Comments
  1. As a anarchist myself I like his suggestions but on a practical level he may as well of just said, end the the Iraq and Afghanistan wars, and then abolish the federal government. I think articles like this are interesting but are not motivating because they are rooted in pragmatic strategy. Keep trying though…

  2. oops I meant not rooted in pragmatic strategy funny typo

  3. 4854derrida says:

    Hello

    I’ve recently uploaded two rare interviews with the Wobblie, anarchist, and activist Dorothy Day.

    Day had begun her service to the poor in New York City during the Depression with Peter Maurin, and it continued until her death in 1980. Their dedication to administering to the homeless, elderly, and disenfranchised continues in many parts of the world.

    Please post or announce the availability of these videos for those who may be interested in hearing this remarkable humanist.

    They may be located here:

    http://www.youtube.com/user/4854derrida

    Thank you

    Dean Taylor

  4. […] talk by Gary Chartier for the Center for a Stateless Society on his article of the same name posted here; how to cut the cost of care by abolishing monopoly […]

  5. […] in our own lives. Professor Gary Chartier recently videotaped a presentation of his article, “Radical Healthcare Reform: An Anarchist Approach“. Kevin Carson recently finished a flawless study at the Center for a Stateless Society on […]

  6. […] provide ongoing economic security in the state’s absence. The same sort of approach could ensure the widespread availability of health care services and make them dramatically more affordable than those on offer […]

  7. […] provide ongoing economic security in the state’s absence. The same sort of approach could ensure the widespread availability of health care services and make them dramatically more affordable than those on offer […]

  8. […] The radical libertarian position is not the status quo ante, but a radical freeing of society. Freeing the medical and insurance markets means abolishing all privileges provided by the regulatory cartel, which protects politically connected incumbent providers. It means no licensing. It means no FDA or patents. (Entrepreneurs can provide independent certification, like Underwriters Laboratories.) It means no restrictions on mutual-aid societies, which long ago figured out how to provide affordable basic medical care to their working-class members through “lodge practice,” a voluntary institution that state-sponsored organized medicine denigrated and destroyed. It means a blossoming of philanthropy, which in the past provided medical care to the destitute. (Of course, a freed market would have few who are truly destitute. Government makes and keeps people poor.) […]

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