Thursday, October 4, 2012

Free Market Healthcare Solutions Already In Place

When I first read this story of a volunteer medical/dental clinic in St. George, I was not as awestruck as others might be. A community of volunteer professional healthcare providers coming together to serve those in need is certainly praiseworthy, but is it rare?  These clinics are in every major city in America. Many smaller communities have them as well. The National Association of Free Clinics (NAFC) puts the number of these clinics at 1,200 nationwide.  There are probably many more that don’t belong to the NAFC or have a slightly different funding or deployment model but still help underserved populations, such as the local cash clinic in my community. So, what makes The Doctors’ Volunteer Clinic of St. George unique?  Perhaps Anthony Young, general counsel to the NAFC, said it best:
“It is a rare community [which] demonstrates responsibility for the improvement of their community’s health in such a manner as The Doctors’ Volunteer Clinic of St. George, without seeking government funding…

Indeed it is!  As a people we’ve become accustomed to “charity” being just another function of government, and a legitimate purpose to impose taxes upon individuals. When we see suffering, many shirk any personal responsibility by assuming that there is a government program to take care of it. Of course, government does not have a face to smile back at when care is provided pro bono. It does not have ears to hear a patient’s heartfelt appreciation for compassionate service rendered. Most importantly, government does not sacrifice any time away from family or recreational pursuits to unselfishly care for another human being. Obliterating this link between the giver and the receiver of service has been the great crime and byproduct of state intervention.
Well, someone forgot to tell the folks at this clinic and their private corporate benefactors that there’s a trough of pork barrel funded slop available if they are willing to give up the spiritual and psychological benefits of honest, charitable service.  Or maybe they simply choose to take payment in hugs and smiles over mammon.
This last point should not be overlooked.  Most employers will testify that employees work for a variety of remunerative benefits, not the least of which are psychological. When asked why the professionals at DVC volunteer, Dr. Paul Doxey, chairman of the board, offered the following reasons:
  • It’s medicine as it should be practiced
  • Patients are universally appreciative
  • Good feeling at the clinic
  • Being able to treat the patient rather than worrying about protecting yourself from liability
  • Satisfaction at the end of the day
How many health care professionals would trade a small portion of their incomes or leisure time for the satisfaction of joyfully practicing their craft without worrying about malpractice lawsuits or  insurance collection? Apparently enough of them to staff at least 1,200 clinics throughout the USA.  The DVC has a part-time, volunteer staff of dozens of professionals which further leads us to ask: if there are tens of thousands of doctors nationwide willing to give time and talent to help others, and myriad private, for-profit corporations willing to sponsor such activities at no small expense, why do we need government in the healthcare business at all? Could it be possible for a system of spontaneous organization, motivated by nothing more than a desire for “good feelings,” to replace the top heavy, wasteful, bureaucratic nightmare that is nationalized health care administration?  The DVC has certainly moved the needle in that direction by tackling the need for basic and preventative services in their community. They can and should serve as a model to replicate elsewhere.
We would not call for the immediate dissolution of health care benefits provided by the state.  Far too many (veterans, elderly, unemployed, illegal immigrants) have become acclimated to and dependent upon such an arrangement and would suffer immediately and significantly as a result.  However, we believe many more communities could benefit from a proactive, personal, and private response to local needs. An infrastructure founded upon personal responsibility, charity, choice in healthcare, and unhindered pursuit of monetary and non-monetary benefits needs to arise preemptively before a doleful electorate will accept the truth of free market superiority in health care.

An Alternative to Financing Public Works

For the last five years the U.S. economy has been in the dumps. Yields on savings and CDs have plummeted. Corresponding borrowing rates have been attractive for households, and, apparently, states and municipalities as well. However, while households have largely redirected their “savings” towards debt reduction and/or taken steps to reduce monthly debt service payments, many municipalities have defied common sense and used the current interest rate environment to take out additional debt—funding new projects and initiatives in the face of a rising debt load.
Today, Utah is at 75% of its constitutional debt limit, and if items such as unfunded pension liabilities are included, Utah is far in excess of 200% of this constitutional restriction. We believe it’s time for the state of Utah and its municipalities to follow the example of the families who comprise them and use this period to get their fiscal house in order—reduce debt, refinance to lower debt service payments, and return to a conservative fiscal situation as measured by historical standards—not the spendthrift standards of other, less responsible states.

We have seen in recent months a spate of municipal bankruptcies across the country. In fact, two records were recently set for largest municipal bankruptcies in U.S. history: one by Jefferson County, Alabama ($4 billion total debt) and one by Stockton, California (population 300,000). In both cases, revenues from taxes and fees did not keep up with the merciless call of creditors, and current leadership had to bite the bullet to preserve a semblance of public services. The illusion that property values would forever increase and cover these future obligations was the perpetual siren song of city and county managers—a prediction that ultimately and predictably fell flat.
By contrast, Utah’s entire General Obligation (GO) debt in 2011 stood at $3.3 billion, a far cry from the free-wheeling levels of some municipalities, but nevertheless representing a large increase from our historical debt levels. Just three years prior, Utah’s GO debt as a percentage of the constitutional debt limit was 28.30%. By 2011, this figure had increased to 77.28%. In other words, Utah was not immune to the recession’s impact on real estate values. While GO debt is not usually funded directly by property taxes, this is still a troubling development.
Utah also has a statutory debt limit which states “GO debt must not exceed 45% of total appropriations” (a fancy word for taxation by legislative fiat). On the surface it looks like Utah runs a conservative percentage, even leaving a surplus of debt capacity. However, the largest line item, Highway Construction Bonds, which in 2011 comprised 83% of all bond debt, is exempted from this so-called limit and has been since the early 90’s. Predictably, this exempted portion of GO debt has more than tripled in the last 3 years, outpacing population growth 118:1.
Either Utah officials are hoping for a triple-digit percentage population boom in the next two decades, or a lot of money is being funneled into jobs programs building our own “bridges to nowhere.” Now I’m no forensic accountant and interpreting this data is not my forte, but it’s quite clear that we have room for improvement. We should not rest on our “best managed state in the nation” laurels and ignore the ominous warning signs presented by high levels of debt. Agents of the state government, as fiduciaries of public funds, must be held to account.
How can we improve the financial picture? Consider this: how many times have you driven by road construction projects without a single working employee to be seen for miles? Each standing barrel on a construction site represents a $.40/day charge to the state. When was the last time you received excellent service at the DMV? How many private sector employees get free health insurance and amazing pension benefits?
The answers are clear. It’s beyond time to privatize more of the functions assumed by the state government. Market forces encourage restraint and fiscal discipline; government exempts itself from these forces to our collective detriment. Last year, state per capita expenditures totaled nearly $4,000. You and I already being forced to write the check—it’s time to demand more bang for our buck (while working to keep more of our bucks!).

Believing In Liberty

There is a long tradition of liberty in this country.  It was a desire for greater liberty that moved early revolutionaries to challenge the greatest empire in the world.  Liberty was the central focus of our nation’s founding documents.  Liberty has, in times past, inspired brave men and women to take up arms in defense of family, faith, and freedom.  Many have willingly sacrificed their God-given right to life, in order to protect liberty for future generations.  History has repeatedly proven that no army can defeat a people motivated by this desire to secure or defend liberty at all costs.  Recall the inspirational words of the patriot, Patrick Henry, “give me liberty or give me death!”  This sentiment is not bound by the American tradition.  Classical antiquity had the famous, republican stoic, Cato, who, in the famed revolutionary-era play by Joseph Addison cries out:

It is not now time to talk of aught
But chains or conquest, liberty or death [i]
The black flags carried by the defenders of Barcelona during the year-long Siege of Barcelona in 1713, read “Live Free or Die” (a motto adopted by the state of New Hampshire in 1945).  The national motto of Greece is “Liberty or Death”.  Honduras’s motto reads, “Free, sovereign and independent”.  San Marino’s motto is most succinct, “Liberty”.  Liberty is a universally desired right, if not always an inheritance.
Because of the exalted status of this natural right you would think it quite an easy task to convince people to fully embrace liberty; yet too often it is treated as a nebulous idea.  We define liberty by its synonym, freedom, but ignore the practical implications of what it means to live in a free society.
So what does it really mean to be free?
I contend that liberty and freedom are best understood in terms of how humans act and interact with each other.  This mechanism of human action is best exemplified in the market process.  By nature, all beings are self-interested creatures.  Even when we give charitably of our substance, we must admit to the gratification we feel when lifting others up.  Adam Smith remarked on what he saw as the nexus between self-interest and charity,
How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others and render their happiness necessary to him though he derives nothing from it except the pleasure of seeing it. [ii]
We are motivated to take actions that we perceive will have profitable outcomes for us personally; and, as a result, society at large benefits.  Sometimes this is measured in dollars and cents; other times there is an emotional or spiritual dividend.  Furthermore, when two parties meet to discuss how they might fill each other’s needs, they do so with the understanding that either of the two can walk away from the bargaining table at any time.  This process is absolutely essential to liberty.  When we speak of restrictions or infringements upon our liberties, we’re often referring, in a practical sense, to our inability to transact business, freely associate, keep and direct our resources, or live in peace enjoying the fruits of our labors.  These are essential cogs in the wheel of free enterprise.  Free enterprise, as a system, is founded on three basic elements:
1)     Private Property Rights
  • The right to own property is a derivative of our right to life because our lives are spent making decisions about how to direct our faculties, which are our primary possession. 
  • Our labor, mixed with resources, creates a homestead right to physical property.  This concept moved humanity beyond the hunter/gatherer age through to the agricultural, industrial, and technological revolutions.
2)     Freedom of Choice
  • In acknowledging that each person has their own value scale and that value itself is subjective, we must admit also that the choices individuals make in directing their labor and resources, i.e. voluntary exchanges, should be left to them. 
  • Appropriating private property for the “greater good” is an illegitimate violation of personal liberty.
3)     Self-Regulating Markets
  • Adam Smith used the phrase “invisible hand” to describe the process of self-interested buyers and sellers seeking to optimize their outcomes by analyzing factors such as supply & demand.  Fully functioning markets have the least degree of coercive external interference.
  • Government interference in markets creates malinvestments which send the wrong signals to producers and consumers, usually in the form of a distorted price mechanism.  Inevitably, this leads to a boom/bust cycle, unduly harming the most vulnerable members of society.
Many programs, supported by conservatives and liberals alike, fly in the face of the tenets of free enterprise.  Consider the strong support for public roads, regulation of food safety, social security, licensure laws, and public utilities.  While obviously very convenient, these programs are bought and paid for with at least a measure of liberty.
Is it worth it?  Many believe some minimal trade-off of individual liberty for collective security or convenience is justified.  While it is true that viable solutions to today’s problems may be proposed by civil servants, it takes a lot more discipline, and an inclination towards greater personal responsibility, to allow the system of free enterprise to reveal the best solutions.
Prison inmates are provided three square meals a day, a job, a roof over their heads, leisure time, protection, and education… all free of charge; but most would trade all of these conveniences for their freedom.  How ironic that those who benefit the most from a multitude of free government services would be willing to give them up in exchange for their freedom.  The more government provides for us, the less we are responsible for ourselves, and our addiction to convenience and safety moves us ever closer to a state of bondage.
So, the question I pose is this:  Do you really believe in liberty?  Do you believe that free enterprise is the best system for bringing prosperity to the greatest number of people?  Do you believe entrepreneurship, innovation, and ingenuity can solve society’s problems?  If so, you’re ready to see liberty move from theory to practice.  Welcome to the movement.
Author’s Note:  In our next few installments we will discuss why free enterprise is the solution to society’s problems, and what practical steps we can take in Utah to advance a system of free enterprise. 
[i] Addison, Cato – A Tragedy, Act II, Scene 4
[ii] Smith, The Theory of Moral Sentiments, 1759, pt.I, sec.I, ch.I, par.I