The Long View 2008-03-10: Tax Farming & Health Insurance; Obamalypse; Islam an Empty Vessel?


John J. Reilly was a long-time advocate of a single-payer healthcare system in the United States. His view was predicated upon healthcare being a public good, not a public right, and frankly acknowledging that it is a system of transfer payments from the young and healthy to the unwell. However, as John noted, eventually, all of us become unwell, but the system is so complicated and time-consuming to create that you need to pay to setup the system thirty years before you need it.

It is hugely distorting to call the system “insurance” at all. The analogy does make some sense, but John correctly notes here that the rules upon which insurance costs are calculated make sense in the context of relatively rare events. Term life insurance, for example, is calculated based upon the risk of early death, something that we have learned to calculate with some skill, and is fairly cheap, especially compared to health insurance. Car insurance is similar, but since car accidents are more common than early death, it usually costs more for the same person, even though fixing a car is less costly than the typical life insurance payout.

One entirely understandable reason for skepticism about single payer healthcare in the United States is that state level attempts to do so have not worked, like in Massachusetts under Governor Mitt Romney. John argued that the risk pool was too small, which never quite made sense to me until I understood more about why exactly healthcare is more expensive in the United States. I think John was simply wrong about why healthcare in the United States is so expensive, as you can look and see that the amount taken as profits and administrative costs isn’t even close to the difference between the US and other places. It costs more here in part because of relative price differences, but also just because more healthcare is delivered here. Whether we get what we pay for is another question entirely.

Tax Farming & Health Insurance; Obamalypse; Islam an Empty Vessel?

Charlie Martin notes correctly that "health insurance" isn't really insurance: the actuarial rules of accident insurance, say, have no relevance when an accident is pretty certain to occur, which is the situation of most people with respect to needing the services of the medical industry. Then he notes with wonder that, under the health insurance proposals which would make health insurance as compulsory as car insurance, the well would be paying for the ill:

The idea of the mandate, though, is that if you include these low-risk people in the whole insurance pool, the premiums they pay can be added back to the pot for older people and people with serious illnesses, which makes the insurance more “affordable” — for them.

Actually, the premiums paid by the well are what make medical care available for anybody. The treatment of an acute condition, or a chronic disease, can cost as much as buying a house. Hardly anyone can afford an unplanned expense like that; for that matter, not that many people could afford a planned expense that involved leaving the workforce for a period of time or permanently. Health "insurance" is actually a transfer system whereby healthy people pay the bills of sick people. That is as true of health insurance today as it would be of insurance under a mandate system.

Calling this mechanism "insurance" muddies the issue. Charlie Martin points out that mandated insurance premium payments would actually be a tax. That is true enough, but the premiums payed for private insurance are in effect a privatized tax.

Readers will recall that the most hated people in the New Testament are "tax collectors," by which is meant "tax farmers." Under a tax-farming system, private entrepreneurs advance money to the state in return for the right to collect those sums, plus a premium, from the state's subjects. Governments all over the world have used tax-farming systems in order to save themselves the trouble of organizing their own fiscal bureaucracy. Everywhere the tax-farming system has been used, however, it proved corrupt and vampiritic, draining vitality from local economies and sometimes putting the money economy itself in danger.

There are distinctions between the American health-insurance system and the tax regime of which Voltaire complained in the 18th century. Nonetheless, both are examples of necessary social functions that have been privatized and have similarly bloated beyond need or reason. In either case, a large fraction of the transfers is being absorbed by middlemen; that is the chief reason health care in the US is so weirdly expensive.

Again, the problem is not the medical-service providers themselves: they actually do function better as private entrepreneurs. The problem is a transfer system on automatic pilot. That really does need to become a public function. The alternative is a system under which the answer to the question, "How much does it cost?" will always be, "As much as you have."

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Here's a question that I have seen more and more of online: Ed Morrissey asks Will an Obama collapse bring political apocalypse?

Call it the Obamalypse, if you will. Andrew Sullivan makes an interesting argument that a Hillary Clinton victory over Barack Obama could create “mass flight from the process” as disillusioned voters embrace apathy and reject electoral politics altogether.

I am not sure that shaking off Obama's more vociferous supporters might not be just the thing Hillary would need, if she gets the nomination. Much of the energy in his campaign comes from the American Raskol. They are the sort of "base" a candidate in a general election should avoid as energetically as a fly should avoid a pitcher plant.

As for the Youth Vote, it is often as not the kiss of death. Just ask George McGovern.

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Sometimes Spengler's dreads are incompossible. I say this with regard to the latest column from Asia Times Spengler, in which he considers why barbarous customs survive in Islamic societies:

Islam offers a universal religion not of inner transformation but of obedience. Precisely this form of surface universalism ensures that Muslims carry the baggage of traditional life into the new religion, for it offers no point of departure from traditional society.

For this reason it is meaningless to ask whether Islam opposes or promotes the practices of traditional society, for its method of expansion is to absorb whole the societies within its power. As a universal religion, it can only universalize the aspirations of the tribes it assimilates, rather than transform them.

If Islam were like the exorcist service in Ghostbusters [Amazon link] ("We'll believe anything you tell us!" as Dan Aykroyd so memorably put it), then it's hard to see why it should be a problem. It could as easily fill up with libertarianism or social democracy as with Iron Age social customs, if it were just an empty vessel.

Another issue is how ancient are these ancient customs. By some accounts, Islamic culture has been coarsening as Sufism retreats before Wahhabism and Salafism, but that has been happening just in the last two centuries.

Copyright © 2008 by John J. Reilly

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