How Does Healthcare Reform Impact Liberty in Chile?

For more than three decades Chile has had a dual healthcare system consisting of both state-run and private health services, which has provided more Chileans with greater choice and better access to such services. Initially funded by way of a 4 percent tax on income, by the late nineties the public Fondo Nacional de Salud (FONASA) started running deficits as one in four Chileans opted for private insurance instead. Consequently the obligatory contribution was raised to 7 percent, helping force a significant chunk of people back into the old system. Unfortunately government meddling did not stop there.

1314902_99313658In 2005 a fresh round of regulations listed 56 priority health problems that all insurers must cover. Unsurprisingly, premiums spiked across the board that year as well as the following years. Unfazed, the first Bachelet administration expanded the list to cover a total of 80 medical conditions. The result is as predictable as it is inevitable, and the unfortunate thing is it usually leads to more demonization of the market and increased calls for more heavy-handed government intervention. Considering the aforementioned developments it seems as though that process is already playing out.

Needless to say, the selfless crusaders for more equity – be it in healthcare or whatever other area of life – make no mention of inflation, currently estimated at 4.5 percent, that is stealthily yet ceaselessly robbing all Chileans of their purchasing power. Nor is there any mention of the fact that patent laws are artificially propping up drug prices, or that compulsory medical licensing is keeping competition out of the market. Experiences with “free” state-run healthcare and the resulting long waiting lines and other unintended consequences such as in Canada and the UK are equally overlooked if not purposely left out of the debate.

To point the finger to the market as the source of inequality merely reveals one’s intellectual laziness, if not dishonesty. Moreover, it is to deny the fact that free market type policies have made Chile the most prosperous Latin American nation in known history, slashing poverty from 50 to 11 percent while raising per capita income fivefold. In other words, being poor in today’s Chile generally means owning a used sedan rather than a new SUV, whereas just a few decades ago it was the difference between having three meals a day or going hungry.

Extracting wealth from the SUV driver in the name of equality is not only immoral; it has historically never lead to anything but equal misery for everyone, wherever it has been tried. Besides, the case of the United States shows that simply increasing spending on health by no means guarantees a healthy population. After all, when government policies make healthcare more expensive that inevitably leads to more spending, yet as a measure of effectiveness or efficiency that metric is of no use at all. It does, however, achieve the exact opposite of the stated goal of making healthcare more affordable. Where have we heard that before?

Bachelet’s healthcare reform falls squarely into the category of just another excuse for more government intervention to solve the problems created by previous intervention.


Brazil’s Most Controversial Government Program

A common characteristic of developing nations is the high rate of urbanization and subsequent disparate development between regions. Brazil being no exception to this rule, the effect is quite far-reaching in the healthcare industry. More than 90 percent of medical professionals are concentrated in areas that cover less than 10 percent of the country. A program launched by the federal government in 2011 to address this problem failed to attract but one third of the required number of doctors to address this problem. Consequently, it was replaced with a new program: Mais Médicos (more doctors).

Overseen by the World Health Organization, this three-year program aims to alleviate the unequal geographical distribution of healthcare professionals by bringing them in from abroad. Fifteen thousand doctors from Cuba, Portugal, Argentina, and Spain were to work in these remote areas. Yet while government initiatives with such laudable goals generally tend to garner plenty of popular support among Brazilians, Mais Médicos has been shrouded in controversy from its inception. Industry representatives, students and the Ministry of Labor have taken aim at the program, A conservative magazine even went so far as to accuse Cuban doctors of being “communist spies” infiltrating the country.

Mais_MédicosIn a mere 12 months (Mais Médicos went into effect in July 2013) the program has become arguably the most controversial one implemented by the Dilma administration. While the Cuban healthcare system has a relatively good reputation the fact that a significant chunk of Brazilian tax money directly funds the communist Cuban state makes some feel quite uncomfortable. The Brazilian Medical Association and the Federal Council of Medicine have been encouraging healthcare professionals to voice their opposition in the form of protests and strikes. They even went to the Supreme Court last August in an attempt to roll back the program, stating foreign doctors were illegally practicing medicine without a license.

When the Court ruled in favor of the government, critics started taking another angle, claiming Cuban doctors were being exploited and comparing them to feudal serfs. At a university ceremony in Fortaleza where newcomers were to take classes for three weeks prior to becoming part of the public healthcare system, the doctors were harassed by a group of unionized healthcare workers calling them “slaves” and “incompetents”.

Controversy and name calling aside, the solution is really very simple. Extraordinarily high tuition fees for Brazilian medical schools have largely restricted access to the medical profession to the upper class. Though annual fees ranging from approximately $18,000 to $54,000 may not seem exorbitant to a Western mind, a GDP per capita of only $12,100 makes going to medical school a pipedream for the average Brazilian. Without a university degree, however, one is not licensed to practice medicine. It should be no surprise, then, that graduates start their careers in the major cities where demand for their services – and consequently the monetary incentive – is the highest.

Given the Brazilian government’s close ties with the pharmaceutical industry one might not be surprised to find out that the playing field is heavily tilted in favor of those doctors taught to adopt the “pill for every ill” mentality. But it’s curious to see how the Brazilian government – just like many or all other governments – restricts competition on the one hand through a system of licensure, while artificially introducing competition from abroad through the Mais Médicos program. After all, if people did not have to ask permission to be compensated for helping others heal there might not be any need for foreign doctors. Besides, the fact that wages are relatively meager would be less of a concern if Brazilians did not have to spend a fortune on a medical degree.

As usual, freedom is the answer. The only problem is there is no special interest group lobbying politicians for more freedom, because who but the ordinary man or woman benefits from that? As liberty-loving folk it is our job to inject this line of thinking into the public debate.


Constitutionally Protected Corporatism

The seventh and current Brazilian Constitution dates back to 1988, when it was written from scratch by a Constitutional Congress elected two years earlier. It contains a whopping 250 articles making it about as thick as the Bible. As its length might indicate it was not exactly written in the traditional sense, for the purpose of outlining what government can and cannot do to ensure the rights of the people.

Drafted after a period of military dictatorship with a constitution that severely restricted the rights of the people while expanding government power, the current one is also known as the Citizen Constitution. Did the Constitutional Congress in the late eighties feel the need to allay people’s fear of having their rights stripped away anew? Perhaps, but entrusting the very same institution that trampled all over the rights of the people with a litany of new powers does not seem to make logical sense. Couple this flawed logic with collectivist egalitarian rhetoric and what results is not exactly a recipe for freedom.

OLYMPUS DIGITAL CAMERAMany classical liberals and libertarians understand the inherent contradiction in constitutionally protecting positive rights; that protecting someone’s “right” to force a doctor to provide healthcare services inevitably ends up violating the doctor’s rights. Yet much less thought seems to be given to the practical implications, not to mention how it warps the general perceptions of capitalism. Whether one calls it corporatism, crony capitalism, or state capitalism, it certainly is anything but capitalism. Yet it is written right into the “law of the land” and few seem to take notice.

The constitutionally guaranteed “right to healthcare” apparently includes – among other things – free drugs for those suffering from hypertension, diabetes and asthma, as can be seen advertised in and around pharmacies here. While perhaps seemingly laudable at first glance, the true beneficiary of this constitutional provision is the pharmaceutical industry. After all, only their drugs are provided for free. This gives them not only a government-granted competitive advantage, but also an infinite revenue stream complete with heavily inflated prices. In that light it is no surprise that there are other reasons to believe the Brazilian government has a very cozy relationship with the pharmaceutical lobby.

Contrary to popular belief the average Brazilian, who might be thought of as the main beneficiary of a constitutionally guaranteed “right to healthcare”, is not at all helped by the situation. After all, since government has no money of its own to finance this system of cronyism, funding has to come from taxation, borrowing, or the printing press. While the former is not generally the preferred method for obvious reasons, the other two options are at least as detrimental to the people’s civil liberties and financial well-being. Brazilian inflation figures since the adoption of the current constitution serve as an indication of how the government likes to keep the scheme going.

In short, the constitutional provisions on healthcare and subsequent laws amount to nothing less than a giant handout to the pharmaceutical industry. Imagine running a business whose only customer consists of uninterested bureaucrats who don’t care how much you overcharge and whose end users have no clue how badly they are getting ripped off by the system. How easy it is to make a killing when the government is holding your hand!

It would serve Brazilian liberals well to emphasize this point when debating their detractors who claim to oppose corporate power.

How Affordable is “Affordable Healthcare”?

After the Obama administration announced new delays in the implementation of the Affordable Care Act (ACA), causing small business and Spanish-language health insurance enrollment services to not begin on October 1, the administration was quick to add that the new healthcare “benefits” will still kick in on January 1. But exactly how beneficial are these so-called benefits?

It turns out these benefits may not be viewed as such even – or especially – by those who were affordable_healthcaresupposed to be helped most by Obamacare. One family of four in Kentucky, for instance, received a letter from their insurer saying that the cost of their low-premium, high-deductible insurance plan will almost triple next year. Many more families across the United States will run into the same issue as premiums will rise by double digit percentages in 45 states. For many the healthcare overhaul will force them to get a new healthcare plan even if they like their current plan, despite President Obama’s promise to the contrary. In the words of Mary Taylor, Lieutenant Governor of the Ohio Department of Insurance, “consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014”. As mentioned above, this phenomenon is not limited to the state of Ohio.

Let’s take the state of Washington as an example. In 1993 it adopted the most extensive healthcare reforms ever enacted by a state, promising near-universal coverage at affordable rates. Sound familiar? The only difference with the ACA is that there was no mandate, causing healthy (younger) people to drop their health insurance and those in need for medical care paying significantly higher premiums. Needless to say, no rise in premiums could possibly keep up with the increased claims and insurers were eventually forced to pull out of the individual insurance market. This turn of events became known as the ’94 “death spiral”.

At first glance one might not expect a repeat of this death spiral scenario on a national scale with the Affordable Care Act. After all, the Supreme Court upheld the individual mandate. But what does its decision on the constitutionality of the mandate as a tax really mean? First of all it means the Internal Revenue Service – besides having access to Americans’ medical records – will effectively be in charge of enforcing Obamacare, administering 47 tax provisions including the mandate. Non-compliers will have to pay the fine, or to use IRS terminology “the shared responsibility” payment when filing a federal income tax return. However, the fine is waived for some, “if coverage is unaffordable, if they spend less than three consecutive months without coverage, or if they qualify for an exemption for several other reasons, including hardship and religious beliefs”. As such, the IRS expects fewer than 2 percent of Americans will have to pay the fine, which would seem like a very optimistic prediction to anyone who has been keeping up with the news.

Over time, as the rate hikes start to hit and coverage becomes unaffordable for many, Americans will basically have two options: apply for an exemption or pay the fine. It remains to be seen how exactly the IRS will define “unaffordable” but what’s even more doubtful (given the puny fines of $95 per adult or 1 percent of taxable family income) is if anyone will even bother to apply for an exemption. True, the penalty is set to go up marginally over the years yet not nearly to the same extent as premiums. And since insurers are legally barred from discriminating against people with pre-existing conditions anyway, why get insured before you need medical care?

This is exactly what happened in Washington state two decades ago as demonstrated by a pregnant woman who bought an individual policy a few months before giving birth, only to drop it right after the insurance company had paid her hospital bill. When she became pregnant again the same scenario unfolded, resulting in a total cost of over $7,000 to the insurer versus $1,807 in premiums. As things stand now, the ACA incentivizes people to use the same or a similar strategy to keep health insurance affordable.

And what if you don’t file a tax return? If your gross income is below a certain threshold you don’t have to, and so many people don’t. What means does the IRS have to enforce the healthcare law on those people? Besides, keeping in mind the 2014 Senate and 2016 presidential elections, who is to say Obamacare will even be around long enough for people to see the fines go up? Given the projected massive rate hikes widespread non-compliance and protests are to be expected.

The technical glitches preventing people from signing up for Obamacare online have still not been resolved (as this CNN reporter found) and might very well cause further delays. Nonetheless, what the IT people working for the administration apparently have been able to do, is quietly delete any reference to “free health care” from the website. Probably a smart move..

True Healthcare Requires a Free Market

Last week’s blog post dealt with the health crisis we are witnessing in the developed world and the role the State-granted pharmaceutical monopoly plays in this crisis. Rather than dwell on how or why healthcare (or what passes for it these days) has gotten progressively worse over time however, let’s instead focus on how we might solve the crisis. How would a free market do better?

Free Market HealthcareReally all one has to do to find the answer to that question is a little research. An abundance of information on preventative measures and cures for all of the most serious diseases of affluence (e.g. cancer, heart disease, diabetes) we are seeing today is available online, hidden in plain sight. Unfortunately, most practicing physicians will not tell you about alternative forms of treatments or nutritional approaches, as they are not exposed to any – or very little – of that information themselves in medical school. Consequently, they tend to opt either for drugs or scalpels. “Sir, I’m afraid your cholesterol is a little high. But don’t worry, just take this statin drug and you’ll be fine! Once you come down with cognitive problems, diabetes or muscle pain we’ll get you another prescription for that!”  If your doctor tells you that, there is a good chance he or she has no clue that there are many natural ways to lower your cholesterol if you even wanted to do so. Yet he will be more than happy to write you a prescription for a statin drug, especially if he needs to make a little extra money in bribes to take his family on that long-awaited vacation to Honolulu this summer!

The sad truth of the matter is that many so-called “terminally ill” people are needlessly suffering and dying and ignorant people (probably well-meaning but ignorant nonetheless) are still filling the coffers of Big Pharma, “running for the cure” or “raising awareness”. Funneling more money into a system that is broken beyond repair does not help anyone. What good is “early detection” if the subsequent treatment involves poisoning your body, thereby making cancer worse and triggering tumor growth?

Luckily there are much safer, holistic alternatives out there with little or no side effects. Dr. Max Gerson developed the now famous Gerson Therapy ninety years ago to help treat and cure a variety of degenerative diseases such as lupus, heart disease, diabetes, rheumatoid arthritis and even cancer. Rather than introducing toxic chemicals into the body, this therapy is all about removing those toxins through an organic, vegetarian diet, raw juices, coffee enemas and natural supplements. The treatment does not rely on removing tumors or lopping off perfectly healthy body parts (are you listening, Angelina Jolie?!) or radiation that creates cancer cells 30 times more potent than regular cancer cells.

Thanks to the internet, other success stories of nutritional approaches to combat supposed chronic diseases such as diabetes are only a few clicks away, much to the chagrin of the medical “authorities”. But the genie is out of the bottle, as evidenced by the growing health food movement currently sweeping the globe, as well as increased awareness of the crimes of Monsanto and the like.

Needless to say, the free market in and of itself does not solve any problems in a literal, physical sense. Rather it acts as a conduit, providing the platform for the innovative thinking and imagination of the human mind to solve problems and make our lives better. Still, this fact alone already sets it apart from the crony capitalist/corporatist system we live under today.

Benito Mussolini, in his “Doctrine of Fascism”, described fascism as the merger of the State and corporations – the “Corporate State” -, an apt description of the system as it has been set up in most of the world. To (attempt to) socialize such a system would be to jump out of the frying pan into the fire. When left to their own devices, human beings will naturally start looking for real cures and change their lifestyles to prevent and treat disease rather than entrusting their well-being with pharmaceutically conflicted “healthcare professionals” ordered around from the top down by bought-and-paid-for politicians.

When that day comes we will know what true health freedom is. The choices you make today will determine whether you will be on the winning team.

Gary Johnson for President 2012

With the U.S. election season nearing its climax, the media are reporting that Romney and Obama are in a neck-and-neck race for the White House. To those who are willing to look beyond mere campaign rhetoric, though, it is clear that there is really not that much difference between the two, as an increasing number of Americans are starting to realize. A nationwide USA Today/Gallup Poll found that the electorate has a much more negative view of both candidates than in 2008; only 12 percent of respondents thought both candidates would make good presidents, compared to 25 percent four years ago.

In light of the supposed differences between the Democratic and Republican platforms this might seem odd. At second glance, though, it is not hard to see why neither candidate has succeeded in galvanizing into action the kind of crowd Ron Paul did, for instance. Obama’s support and charisma have suffered under broken campaign promises and the continuation of essentially the same policies that made George W. Bush one of the most unpopular presidents in recent history. Mitt Romney, on the other hand, never had much charisma to begin with and fails to offer a real alternative to the aforementioned policies.

The presidential debate on foreign policy was just one of many occasions where this became glaringly obvious even to the most uninformed spectator. The candidates agreed on the intervention in Libya and regime change in Syria, they agreed on crippling economic sanctions on Iran, they agreed on the use of drones, they agreed on supporting Israel, they agreed on keeping U.S. troops in Afghanistan for at least another two years; they even went as far as to use almost the exact same words during the “debate”.

Healthcare is another issue where one would be hard pressed to find any real difference between the two major candidates. Rather than simply repealing ObamaCare, as Romney said he would do last July, Romney wants to replace it with his own version of socialized healthcare as implemented during his tenure as governor of Massachusetts, dubbed RomneyCare. This would include the controversial individual mandate, subsidies for those with low incomes, an expansion of Medicaid and penalties for employers who do not offer coverage to their employees. Both ObamaCare and RomneyCare result in soaring premiums, expansion of the powers of government to intervene in the doctor-patient relationship and higher unemployment due to rising costs for employers. Here, too, the proposed policies are virtually identical.

So how about the economy? A recent FOX News poll revealed that 41 percent of Americans named rising prices as being the biggest economic problem they face. Moreover, the Federal Reserve’s announcement of more money printing in the form of QE3 – the purchase of $40 billion worth of bonds every single month for an indefinite period of time – will contribute to an even bigger spike in prices. With Democrats applauding QE3 and Republicans saying it displayed the failure of the economic policies of the Obama administration, not a word was said about its impact on already soaring prices. In addition, given Romney’s reputation as a flip-flopper, it can be quite a challenge to figure out exactly what Mitt Romney stands for when it comes to monetary policy and bailouts. At any rate, both candidates are simply ignoring the $16 trillion debt, arguably the most serious threat now facing the largest debtor nation in the history of the planet.

Fortunately for those who see through the lies and deceit of the two main contenders, there is a candidate who wants to bring the troops home. A candidate who does not want government controlled healthcare. A candidate who would balance the budget in 2013 by cutting the size of government and supporting free markets. A candidate with more executive governmental experience than Romney and Obama combined. His name? Gary Johnson, former two-term governor of New Mexico and the Libertarian candidate for president.

Gary Johnson wants to stop making enemies faster than the military can kill them by starting another war. The former governor wants to audit and reform the Federal Reserve – whose stock is owned by private stockholders and has control over the nation’s money and credit resources[1] – to regain control over economic policy. He would abolish the income tax, corporate taxes, withholding and other levies that penalize productivity in favor of the Fair Tax which is a consumption tax. He is against the overreaching federal involvement in the economy in the form of bailouts, corporate welfare, cap-and-trade, education spending and protectionism. He wants to legalize, tax and regulate marijuana and simplify legal immigration to combat illegal immigration. He believes in civil liberties and opposes the Patriot Act and National Defense Authorization Act, which enables the government to indefinitely detain American citizens without charge or due process. He would end subsidies and incentives for “green” energy that promote unfair competition and inefficiency in the energy sector.

So if you are one of many Americans out there who is sick and tired of the status quo, if you want a real alternative, vote your conscience: vote Gary Johnson!


[1] Mullins, E. (1991). Secrets of the Federal Reserve, The London Connection. Carson City: Bridger House Publishers, Inc.

Socialized vs. Privatized Medicine

In the midst of election season, ObamaCare remains a hotly debated issue. It has become clear, though, that both Romney and Obama want at least some form of socialized medicine.Neither of them appears to believe that the free market could offer a solution to the country’s health crisis. That begs the question: would America really be better off with a European-style socialized healthcare system?

Rather than “pass the bill so that you can find out what is in it”, as Nancy Pelosi suggested in 2010, the American people would have been far better off if legislators had critically reviewed it and weighed the pros and cons of socialized versus privatized healthcare. In that case the Patient Protection and Affordable Care Act probably never would have passed in the first place.

Proponents of socialized medicine like to point out that the U.S. spends more per capita on healthcare than any other country yet it consistently ranks below other developed countries. However it would be too short-sighted to blame the free market for this fact by assuming that the U.S. system is somehow too free market oriented. Indeed, to do so would be to disregard the fact that American rates of obesity and diabetes are the highest in the world. Or that the National Institutes of Health receives tens of billions of taxpayer dollars annually to support scientific research across the United States and even abroad. To make matters worse, research by PricewaterhouseCoopers presented in April of 2008 found that up to $1.2 trillion of health spending – more than half of the $2.2 trillion federal budget – was being wasted on things like unnecessary tests and procedures and inefficient healthcare administration. Not to mention the hundreds of millions of taxpayer dollars spent through NIH grants on unapproved pharmaceuticals, a failed anti-smoking vaccine or penis pumps for elderly men.

Both in the U.K. and the U.S., the economic downturn has caused a shift from expensive pharmaceutical drugs and interventions to natural remedies. In fact, as shown by poll data collected as part of the 2007 National Health Interview Study, U.S. health-care workers are more likely than the general public to use alternative medicine options. Poll data collected as part of the 2007 National Health Interview Study found that 76 percent of health-care workers used “complementary and alternative medicine” in that year, compared to 63 percent of people working in other occupations. In other words, those people who have arguably the most extensive first-hand experience with conventional health care would rather spend their money on alternative forms of healthcare. Could this be because they witness every day how conventional health care fails to cure any of the major diseases we are dealing with in developed countries? Isn’t this a much more reliable kind of anecdotal evidence than the postulation that the so-called “free market” U.S. healthcare system is to blame for the ill-health of Americans?

Deloitte’s 2011 Survey of Health Care Consumers Global Report surveyed people in ten different countries in North-America and Europe on what they believed most health care money was wasted on. Lack of responsibility by individuals for their own health and redundant paperwork were the most common sources of waste cited by the respondents, exactly those factors that would be affected most positively by a free market healthcare system. After all, in a free market system a smoking binge-drinking junk-food addict with a sedentary lifestyle would pay a much higher premium than his or her fit and health-conscious counterpart. Besides, if the government stayed out of healthcare there would be no need for much paperwork at all

In addition, a free market system can be expected to further reduce costs by encouraging people to shift from expensive pharmaceutical drugs to cheaper alternative medicine that are often shown to be at least as effective, if not more so. Also, a free market healthcare system is fairer as it is based on personal risk and needs and does not force people to pay into a system that facilitates such practices as abortion and euthanasia, practices some people may not agree with for religious or other reasons. Competition would increase, costs and waiting times would decrease and the quality and efficiency of care would go up as consumers would become more critical of their healthcare providers. As a result of people taking charge of their own health, fewer people would need health insurance and premiums would go down. This downward pressure on premiums would partly offset the higher premiums for those still in need of health insurance.

A number of Latin-American countries have adopted health sector reforms facilitating a public as well as a private system, with Chile being the most famous example. In 2009 these countries spent eight to nine percent of their GDP on health while the United States spent over sixteen percent. Furthermore, their dynamic healthcare systems are attracting foreign investment, increasing competition and thereby reducing prices. The U.S. healthcare industry, on the other hand, attracts very little foreign investment, if any. A Department of Commerce publication on Foreign Direct Investment (FDI) in the United States makes no mention of healthcare at all.

The Supreme Court’s recent ruling on the constitutionality of ObamaCare is unlikely to change that for the better. Though word has already come out that the Affordable Care Act will make health care less affordable, to most people it will only become fully clear when it is already in place. By which time the socialists will be tripping over each other to tell you how unfair it would be to get rid of the system now that people have come to rely on it.