A Libertarian Take on Health Care The Real News Network go to original March 13, 2010
Matt Welch, editor of the libertarian magazine Reason.com, discusses health care with Paul Jay
Bio: Matt Welch is editor in chief of Reason magazine. Welch's work has appeared in The Washington Post, Columbia Journalism Review, Los Angeles Daily News, Orange County Register, LA Weekly, ESPN.com, Salon.com, Wired, Pittsburgh Post-Gazette, The Daily Star of Beirut, and dozens of other publications. • • • Transcript PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I'm Paul Jay in our studio in Washington, and joining us now is Matt Welch. Matt is the editor in chief of Reason Magazine. He used to write at The Los Angeles Times. Thanks for joining us. MATT WELCH, EDITOR IN CHIEF, REASON MAGAZINE: Thanks for having me back. JAY: So, for those who don't know, and maybe you don't know, Reason Magazine and Reason.com is libertarian in the broadest strokes, libertarian website and magazine. And, Matt, you wrote something recently on health care which wasn't normally thought of being something would come from a libertarian, and where you wrote you actually like the health system in France. So talk a bit about what's going on here and what you wrote. WELCH: My wife is French, so I experience health care a little bit differently than the average libertarian or average person in America. I every year go there for Christmas, and, yeah, I think I was there last time I went to the dentist. I think I had a filling. I don't even really know—I wasn't paying attention. And I get routine health care done there. And I've always been struck by (A) what high-quality it is, generally speaking, both for me and my wife and our small child and extended family, and how it doesn't match up with the caricatures that are given towards, in general, socialized medicine, but specifically France. You see a lot on the right, especially, over the years bemoaning, oh, it would be terrible to have socialized medicine. JAY: And not just the right—you've heard it from the leadership of the Democratic Party as well how horrendous it would be to have so—we're not so—we don't want socialized medicine, we want a public option. And now they don't even want that. WELCH: Yeah. I mean, it is entirely possible, even probable, that socialized medicine wouldn't work. However, when they do talk about this bugaboo, they describe elements that actually exist in the American system but not in the French system. They say if—. JAY: For example? WELCH: They say, you know, if we do this, you won't be able to choose your own doctor. Well, I don't know what kind of health care these people have had their whole lives, but I know at various times, through Blue Cross and other people, you have to look for an in-network doctor. It's not very easy to choose one. They talk about long waiting times. I've never experienced anything like waiting time in France. They talk about, you know, people don't pay out of their own pocket, or there's some, like, confusion between the consumer and the provider. In France you go. And, to be fair, this is totally subsidized, it's a big entitlement, and they're having a difficult time paying for it. However, you go to the doctor, you pay every time. You pay at the point of contact. The price is very small. It's very heavily subsidized. JAY: Token, really, yeah. WELCH: But they just describe this new mirror-image world that doesn't exist, whereas in America, because we have this really convoluted third-party system, I have no idea how this stuff works. Honestly. I mean, I go to the doctor, you pay $40 at the door, and then you get the first bill, but you're kind of supposed to ignore it 'cause you're waiting for the—. It just doesn't make sense. JAY: It's even more byzantine when you go to a hospital. You go to a hospital—my wife went to a hospital for an infection, and she winds up—they give her antibiotics. She gets a $2,000 bill for an antibiotics prescription, and then, several months later, there's another bill from another doctor who stuck his head in the door, for something like another $1,000. It really is [inaudible] cannot understand this. WELCH: And if [inaudible] we were, when the one time my wife had to go to an emergency room—she just was feeling very bad. It turned out to be not much, but we were stone broke at the time. This is in California. And we asked at every step of the way, "Look, we know she's dying, but how much is this going to cost?" 'cause we really couldn't afford it if it was above X-hundred dollars. And at every step of the way they said, oh, honey, don't worry about it, it's not an issue—basically, "we can't tell you". And then we got that $3,000, you know, bill at the end of the process. I'm like, we can't afford this. If we would have known this—. So in the American system, for my money and from my point of view, it is in many ways the worst of a lot of different worlds. It does produce, at the top end, great health care. You know, the best innovation happens in this country as far as, you know, the best medical procedures happen here. If—you know, I'm getting older now, so when I get the serious diseases that older men tend to get, maybe I would rather be here than there. I don't actually know. But what I do know is that the existing system is completely convoluted and there's no price sensitivity. JAY: So, I mean, I know a little bit about the Canadian system—I know more than a little bit. As viewers know, I'm a dual citizen. And the hospital I was talking about my wife went to was in California. We were on a trip. But in Canada we have somewhat similar system to France—government insurance, private delivery, we choose our own doctors. The American debate about this has been so filled with misinformation about other countries' system, so imbued with ideology, and the critique is all about big-government takeover of health care. That's why I'm particularly interested in your point of view. Your politics and your magazine is all about libertarianism, is all about smaller government. So what do you make of the ideology of this American debate? WELCH: Well, I mean, I think it's a combination of things. It's the ideology that's always going to be with us. And there's also the very American complete lack of understanding of what happens outside its own borders and the use of other countries as sort of bludgeons with which to hit people. I think that there is an understandable American fear, across all sectors, of large government. There's a very American tradition which, you know, puzzles foreigners to no end, but we are inherently suspicious of a government that gets bigger and bigger and bigger every year. The health-care debate is part of that suspicion that's happening right now, and it's an understandable one. And there's an understandable [inaudible] We're talking about one-sixth of the economy. To have the state assume a much bigger role in that makes people nervous. And it's a very intimate, kind of personalized health-care thing. From my point of view as someone who believes in competition, in market competition wherever possible, I think that we would get a lot more—we would be able to maintain a lot of this innovation that we enjoy here, legitimately, but we would also get to where we want to be in terms of driving driving prices down and increasing the amount of insurance available to people if there was more competition, if people, individuals, had control of their own health-care destiny, instead of having it tied to their employment or through COBRA [Consolidated Omnibus Budget Reconciliation Act] or something like that. If I could just pay for my—you know, X hundred dollars for my plan and it goes with me next time I get fired, I would feel much more sanguine—I don't really know what that means—about our health-care policy here, because I wouldn't have that fear of what happens when I go in between jobs. Also, I'd be able to shop around if the system was set up that I could really shop, if there wasn't just, as is in California, like, three insurance companies, because when you add a thousand regulations, it's just going to weed out anyone who's small. JAY: I mean, that's the thing, from putting on my Canadian hat, that's so bizarre to try to understand is that people become practically like bonded laborers to their employer 'cause they're terrified if they leave they won't get another job with health care, so they stay in jobs they hate, which is the very definition of lack of choice. WELCH: The original sin in health care in this country is what happened after World War II. It is when they said—actually, I think it was Harry Truman imposed wage controls—basically, can't give you any more money for this year 'cause we're all tightening our belts. And so what did people do? They said, ah-ha, if we can't increase salary to try to get, attract our best talent, we will give them a big, fancy health-care package, because that's not wages. From that moment on, in the tax code and other areas of life, employers have been incentivized to do health care, and the government policy has been, basically, let's tie it, let's extend that relationship. That was back in the company man era. That's back—that's, like, pre Mad Men, when we all stay at the same job for 25 years. That era is gone. And most honest health-care economists from all sides of the debate, including our crazy little side over here, will say that was the original problem. However, you'll notice that Barack Obama isn't touching that with a 10-foot pole. No one wants to upset that status quo, the status quo of third-party delivery, the status quo of it's all employer-related. If there is equal treatment for individuals and employers, our health-care system here would look a lot different and a lot better. JAY: Well, if they'd actually done the public option and defended it in a robust way that people had that choice, and weren't so defensive about what was going on in France and Canada, to say, here, what can we learn from it—. But the message coming from the leadership of the Democratic Party is so confused, I don't think people actually know what they're pitching. WELCH: No. I mean, Nancy Pelosi said, I think just yesterday, like, look, let's pass this; only by passing this bill will we know what's in it. And, I mean, you want to think that's a joke or a misquote, and it's neither. It's actual: "It's a 2,400 page bill, no one really understands it, and if we just pass it, we'll, like, work out the details later." That's just insane. That is terrible governance on every level. I mean, what you have also is, I think, a democratic conflation with insurance and health care. So you have Obama not just saying I want to insure everybody, which is an understandable goal, but, like, I want to also make sure that everybody's insurance contains this, this, this, this, and this; we will pay for these things; this will be free. This is creating more of a top-down system, and also making people buy into a more expensive system. And, you know, insurance, from my point of view, especially as I was young and healthy—and I'm someone who couldn't get insurance for three years in this country, and I'm very bitter about it to this day. You know, the insurance that I wanted back then was: what happens if I get hit by a car tomorrow? I don't want to be bankrupt; I don't want my children to be bankrupt. What can I do there? That's basically all I wanted. I didn't want to get, you know, free testing for this disease and that disease. I was in my 20s. You know, just give me the catastrophic stuff. And if Democrats would have gone into this debate saying, okay, here's a way to open up competition in the general sector, and then we're going to have this option over here for people who have pre-existing conditions or whatever that is [inaudible] JAY: But the argument there is, if the pool doesn't include the young people who only really want the car accident insurance, then the cost gets way too much, and you're going to need when you get old. So the only way over the course of everybody's lifetime to make it fair is there has to be one great big pool. That makes sense, doesn't it? WELCH: It makes sense until you get to the point where you're talking about making something compulsory for Americans to do. And I think—I mean, there's an open constitutional question whether that is—would actually pass constitutional muster if it passes. It won't pass. You know, we are talking policy, but the reality of politics right now is I think this thing has zero chance of passing. JAY: The current bill. WELCH: The current bill has zero chance of passing. I would bet, you know, what little money is in my bank account that it won't pass, and I would have made that bet as soon as Scott Brown won election in Teddy Kennedy's old seat. From that moment on, Democrats didn't have a filibuster-proof majority. And this thing is just unpopular. It's hugely unpopular right now. JAY: But you like the French system. So do you think Obama should have come out pitching something like the French system? WELCH: I don't, and here's why. The French do things better than other people do when it comes to their public sector. As good as the French health-care system is, it is so much better than the British health-care system, which is also a similar type of system. The Brits are not very good when it comes to their productivity of their public sector. The French are famously very good at both productivity of public sector and sort of the general sense of solidarity among their citizens, which reads into they feel okay about the fact that people don't make a lot of money but we all have this generous welfare state. None of that is true in America and none of it is going to be true in America. If you were to transplant that system onto the American host, the body would—. JAY: But there are certain states that are talking about it. Legislature in California has passed the single-payer system. The governor won't sign it. Pennsylvania seems to be heading there. Governor says he will sign it. So there are states that are talking about essentially public health-care insurance systems. WELCH: And it would be great if there was some element of state experimentation. You know. I mean, Massachusetts famously did—what they found is that it's super expensive, and it's getting more expensive every year for the state, and also for the individuals who are in the system. And that's the system that Obama's been trying to sort of copy, or taking it at least as part of his inspiration. And it's the problem with France, too, frankly. There is a very negative side effect to their health-care system and their generalized sense of welfare system. It's putting incredible stress on their public finances. Demographics are all set against it. And there's a generalized, I would say, malaise in French society, where people rarely create stuff on their own. They look to the state for everything. There's not much dynamism among young people in terms of creating things and just doing stuff, music aside and a few other things and jumping on buildings in a weird way. JAY: I'll have to get someone from France here to talk to you about that. But you like the idea of the movement to the states, the idea that states would experiment with different kinds of public insurance systems. WELCH: You know, traditionally that has been a great laboratory in America. At the same time, I think that there's a strong argument to be had—basically, if you would just open up the competition between the states, if I was in California and I could buy a Nevada insurance policy, why the hell not? You know. I want to be able to choose from as many as possible. JAY: Well, you know the counterargument: you get states that have so little regulation—. WELCH: The race-to-the-bottom argument. JAY: Yeah, and it certainly has happened in many areas of life. WELCH: Yeah, I have a difficult time understanding what that race to the bottom looks like. If I'm in Mississippi, to throw out a bugaboo kind of state, and they have very little regulations on their insurance companies, and then presumably let's say I as a citizen there can shop from a California provider which does have regulations, why wouldn't I just shop from one of those places? JAY: Well, 'cause it will be more expensive. So you're going to wind up—have a pressure going to the cheapest state, and then, just in terms of price competition, people are going to be—who especially can't afford it, are going to go more and more to the more deregulated option. And, again, without the big, big pool, you can't give a good system to everybody, so you wind up, again, with cheap companies undercutting anybody that wants to be regulated. WELCH: I think that the answer lies in a more limited idea. If you're going to entertain notions of the public option and the government getting involved in the provision of health care, then—which it already is, frankly. I mean, 50 percent of health-care spending—. JAY: I mean, what's wrong with Medicare-for-all? WELCH: You know, we'd be in a situation where medical decisions are inherently politicized. I mean, there was a case, I think two or three months ago, where they talked about, I think even under existing Medicare (and I could be getting some of this wrong), there was a discussion of at what point do we start cutting off, you know, annual mammogram tests—is it age 40 or is it age 50? JAY: But insurance companies are doing it now. I mean, the insurance companies don't pay for everything. They decide. WELCH: Of course not. Of course not. But—. JAY: Everyone does their amortization and—. WELCH: But if it's just Medicare-for-all and that's all that there is, then there is no exit. You know. What I'm looking for is the maximum number of exits or entry points, so that if I want X system, I can do that, I can choose that as an individual. If I'm happy with this system, then I can choose that, too. Everywhere else in American society, for the most part, with the exception of the provision of government services, consumers, because they have this hysterical amount of choice, have been able to drive down prices and drive up quality. But in the provision of everything from health care to education, all these things where it's more difficult to leave a system, when you don't have that kind of a competition, then you have much more sort of limitation on the quality of things and stuff gets more expensive. That's the problem. Medicare-for-all would be more and more expensive every year. It already [inaudible] stretching out, you know, look at the trend lines on Medicare and Social Security. JAY: But the private system's worse. WELCH: I don't know that the private system is worse. JAY: I mean, it is; currently the private system's worse. WELCH: Well, worse on what—? JAY: Well, cost increases have been worse on the private side. WELCH: Well, sure. But—. JAY: I mean, one of the things people don't talk about is the cost of pharma, which is—essentially, the prices are unregulated. In fact, if anything, there's been a protection of PhRMA in terms of Canadian cheaper goods. But there you have a public system, cheaper drugs, much cheaper costs per individual care. Same is true in the other countries that have public insurance systems. So if you're talking about cost, it's the public systems that have been reducing costs, not the private systems. WELCH: But then, you know, who's paying for the cost? I mean, the—. JAY: Well, the whole society equally pay. WELCH: Yeah, but, I mean, we're talking about a taxpayer, you know, trillions of dollars that go like this, stretching on into infinity, and you just can't keep going in that direction unless the society, you know, doubles and triples its own production. JAY: No, but the thing is that you have—but you have cost-containment in the public systems, and in Canada and France. Like, you know this. You've seen the numbers. All the public systems per capita pay—I think it's a third of what the US pays on health care. WELCH: Well, I mean, when we try—. JAY: There's real cost controls in the public systems. WELCH: But if you look at the experience of Massachusetts, that is absolutely not the case. It's not cost-contained. But those costs are literally going out of control right now. JAY: Again, I'm talking national systems with great big pools. I mean, the Canadian health-care system can say to pharmaceutical companies, you know, we're not going to a pay you (A), we're going to pay you (B), and you really don't have a choice. Massachusetts never had that kind of [inaudible] WELCH: Right. I mean, I think that gets to—. JAY: And PhRMA's an enormous piece of this cost puzzle, which the Democrats are talking about very much because Obama made a deal with PhRMA, so they don't want to talk about it. WELCH: Right, and which went against his own campaign promises, if I'm not mistaken. JAY: Yeah. WELCH: I mean, that gets into an area of, you know, at what price and under what terms innovation. I mean, there's a reason why we develop pharmaceuticals here in this country pretty well. Part of that is the protection of monopoly pricing for some amount of time, the seven-year period or whatever. And so I think we are understandably nervous about saying, okay, let's just cut that off at the knees and somebody's going to produce those marvelous drugs that everybody else gets to have for very cheap. I'm not sure that we're at a place where it's a great idea to kneecap that kind of innovation. I don't know what the right balance is there at all. I'm hardly an expert on that. But—. JAY: 'Cause there's a very interesting study the Brits did on the number of new patents that have come from Europe and from within the EU countries, and it rivals the American patents. WELCH: Yeah, that—and France—. JAY: So it's very interesting. So not all the innovation's coming from US pharmaceutical companies. WELCH: No, certainly not. I mean, Hungary, where I used to live, is a great innovator of pharmaceuticals, and even was under communism, just to completely screw everybody's mind here that's watching. JAY: Especially from a libertarian. Alright. We're going to do this regularly, and this is not a problem we're going to solve right now, but thanks for joining us. WELCH: Thank you very much. JAY: And thank you for joining us on The Real News Network. We're going to do a regular gig with Matt Welch every week or so, and please join us for it.
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