by Lew Rockwell, Lew Rockwell:
The recent murder of Brian Thompson, the CEO of United Health Care, has led many people to claim that private health insurance is an example of what is wrong with the free market, and that we ought in consequence of its manifest failures to institute a government run single-payer system. Some ghoulish leftists went so far as to post messages on Twitter expressing joy that Thompson had been killed. The Daily Mail reports: “The assassination of UnitedHealthcare executive Brian Thompson has triggered tasteless celebrations and bad taste support for the gunman who killed him.
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Mr. Thompson was shot outside the Hilton Hotel in Manhattan on Wednesday morning by a masked assassin, who remains on the run and whose motive has not been disclosed.
As news of the cold-blooded killing spread, thousands declared they were happy at news of the horrific killing of the 50-year-old father of two and even cooed over the murderer’s apparent good looks.” [It should be noted that after this story was published in the Daily Mail, the assassin has been identified and his motive appears to have been anger at United Health Care’s policies.]
In fact, precisely the opposite is the case. Health insurance is a disaster because of a conspiracy between the health insurance industry, Big Pharma, and the government. In a genuine free market, health care would be a matter between the patient and his physician, with insurance, if bought at all, reserved for catastrophic illness.
The government has been involved in health care for a long time. At the behest of the American Medical Association, the government instituted regulations that forced non-AMA medical schools to close. This benefited doctors who graduated from the approved programs because it limited the number of doctors. We know from basic economics that if supply goes down and demand remains constant, prices will go up. The background for this was a report by Albert Flexner that the AMA commissioned: According to Wikipedia, “During the nineteenth century, American medicine was neither economically supported nor regulated by the government. Few state licensing laws existed, and when they did exist, they were weakly enforced. There were numerous medical schools, all varying in the type and quality of the education they provided.
In 1904, the American Medical Association (AMA) created the Council on Medical Education (CME), whose objective was to restructure American medical education. At its first annual meeting, the CME adopted two standards: one laid down the minimum prior education required for admission to a medical school; the other defined a medical education as consisting of two years training in human anatomy and physiology followed by two years of clinical work in a teaching hospital. . . Flexner sought to reduce the number of medical schools in the United States. A majority of American institutions granting MD or DO degrees as of the date of the Report (1910) closed within two to three decades. . .In 1904, before the Report, there were 160 MD-granting institutions with more than 28,000 students. By 1920, after the Report, there were only 85 MD-granting institutions, educating only 13,800 students. By 1935, there were only 66 medical schools operating in the United States.
Between 1910 and 1935, more than half of all American medical schools merged or closed. The dramatic decline was in some part due to the implementation of the Report’s recommendation that all ‘proprietary schools’ be closed and that medical schools should henceforth all be connected to universities. Of the 66 surviving MD-granting institutions in 1935, 57 were part of a university. An important factor driving the mergers and closures of medical schools was the national regulation and enforcement of medical school criteria: All state medical boards gradually adopted and enforced the Report ‘s recommendations. In response to the Flexner Report, some schools fired senior faculty members as part of a process of reform and renewal.
The situation got worse after World War II, when government tax policies encouraged employers to offer medical insurance to their employees. This ties people to their jobs, thus making it harder for workers to leave their jobs in order to satisfy consumer demand more efficiently, but it allows doctors to charge higher prices, since the insurance policies will cover all or most of the cost. Connor O’Keeffe reports: “After WWII, as healthcare grew more expensive, the government used the tax code to warp how Americans paid for healthcare. Under President Truman, the IRS made employer-provided health insurance tax deductible while continuing to tax other means of payment. It didn’t take long for employer plans to become the dominant arrangement and for health insurance to morph away from actual insurance into a general third-party payment system.
These government interventions restricting the supply of medical care and privileging insurance over other payment methods created a real affordability problem for many Americans.”