General Welfare

More great thoughts from Walter Williams, Exploiting Public Ignorance.

He points out that the Constitution does not empower Congress to manage the economy.

Most attempts to persuade otherwise rests on the misinterpretation of what is commonly referred to as the general welfare clause in Article I, Section 8 which states, “The Congress shall have Power To lay and collect Taxes, Duties, Impost, Excises to pay the Debts and provide for the common Defense and general Welfare of the United States.”

Not understood by those who misinterpret this section is that the Constitution specifically lists the powers in the rest of Section 8, which is entitled, appropriately enough, Powers of Congress.

Rather than letting those who misinterpret this section frame the debate in their terms, I recommend keeping a copy of Article I, Section 8 handy and referencing it when discussing whether Government should do this or that and asking them to specify and explain which of the listed powers of Congress enables Congress to take that action.

Here is Article I, Section 8 in it’s entirety (thanks to usconstitution.net):

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

To establish Post Offices and Post Roads;

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

To constitute Tribunals inferior to the supreme Court;

To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;

To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

To provide and maintain a Navy;

To make Rules for the Government and Regulation of the land and naval Forces;

To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

Good Thoughts on Health Care

Thomas Sowell wrote an excellent column on medical care, Medical Care Confusion.   I encourage you to read the entire column.  Here are some good paragraphs:

None of the people who are trying to rush government-run medical care through Congress before we have time to think about it are pointing to Medicare, Medicaid or veterans’ hospitals as shining examples of how wonderful we can expect government medical care to be when it becomes “universal.”

Nothing is easier than for governments to impose price controls. They have been doing this, off an on, for thousands of years– repeatedly resulting in (1) shortages, (2) quality deterioration and (3) black markets. Why would anyone want any of those things when it comes to medical care?

Refusing to pay the costs is not the same as bringing down the cost. That is why price controls create these problems. When developing a new pharmaceutical drug costs roughly a billion dollars, you are either going to pay the billion dollars or cause people to stop spending a billion dollars to develop new drugs.

The confusion of “health care” with medical care is the crucial confusion. Years ago, a study showed that Mormons live a decade longer than other Americans. Are doctors who treat Mormons so much better than the doctors who treat the rest of us? Or do Mormons avoid doing a lot of things that shorten people’s lives?

Steve Forbes also writes on health care in the latest issue of Forbes.  The timing was excellent.  He echoed some thoughts I shared in my previous posts.

Today there is a disconnect between providers and consumers. Almost all health insurance is covered by third parties–either insurance companies or governments–so patients rarely know what most health care services cost. If you go to a hospital and ask about prices, the staff’s immediate reaction is that you must be uninsured. Why else would you want to know what something costs? Yet in just about every other aspect of our commercial lives the price of things is known.

Now that I’m writing the checks for my health care, I do want to know the price of the options I have and what I get for that price – difference in effectiveness, recovery time, side effects, risks and so forth.  Having the conversation with price is something my medical care providers aren’t prepared to do.

More good stuff from Forbes:

We could attain similar and ongoing miracles in health care. We are already seeing some in a few areas. Conventional Lasik eye surgery costs a third of what it did ten years ago. And there has been virtually no inflation in the prices of cosmetic surgery, even though there have been enormous technological advances, and the demand for these procedures has increased sixfold since the early 1990s.

He offers some great recommendations (for all the critics who say conservatives offer no solutions):

–Equalize the tax treatment of individuals and businesses. If the company you work for doesn’t provide insurance or you don’t like the plan offered, you are forced to try to buy a policy with aftertax dollars. If an individual wishes or needs to buy health insurance on his own, why shouldn’t he get a refund tax credit of, say, $4,000–and a family, $8,000?

–Allow consumers to shop for health insurance across state lines. Today it’s illegal for someone in Chicago to buy a health insurance policy that someone living in New York City can buy.

–Encourage the use of Health Savings Accounts. That way consumers–not government bureaucrats or employers–would control the purse strings, or at least a portion of them.

–Permit small businesses to form pools so they can increase their pricing leverage with insurers.

–Remove state-imposed obstacles to allowing routine medical care to be offered in, say, Wal-Mart ( WMT – news – people ) stores.

–Remove the obstacles that prevent entrepreneurs from setting up new clinics or hospitals. A number of states make this extremely difficult by demanding that such entrepreneurs obtain a certificate of need. In fact, in some jurisdictions hospitals must get permission to make major capital purchases.

Genuine free-market reforms in health care will slash the number of the uninsured and lead to the same kinds of innovations and efficiencies that are experienced in most of the rest of the economy.

Why I Still Need My Health Insurance Company

This year I switched from traditional health insurance to a health savings account with insurance to cover the big stuff.   I write the check on the first $5,000 of health care costs, my insurance kicks in after that.

So far I’m pleased.  But, I still need my insurance company because I get services at the same cost its costs, which is a significant discount to list price and probably closer to the true price of the service.

I need this benefit to pay the insurance company rate because I’m bidding for health care services against a majority of people whose health care is paid by a third party, so they have no incentive to get the best deal for the money.

The funny thing I’ve learned about the health care industry since I’ve started writing the checks is that most service providers don’t know their price.  They can’t tell you how much that extra bag of IV fluid will cost.  They haven’t had to.  Nobody cared.  Someone else was paying.

Supply and Demand

A family member believes supply and demand hasn’t worked in the U.S. because price has risen on many things.  I think she believes that supply and demand means things always get cheaper.

She hasn’t yet recognized that supply and demand is a framework for understanding changes in price.  Supply and demand can help her see why real prices on some things have risen. 

Rather than seeing a rising price and assuming that supply and demand doesn’t work, she should ask herself what changed in the supply or demand of the item to cause the change in the price?

Health Care Decisions

Received an e-mail today from Raoul with two troubling links:

1. NICE – National Institute for Clinical Excellence

Patients cannot rely on the NHS to save their lives if the cost of doing so is too great, the Government’s medicines watchdog has ruled for the first time.

2. NICE Part II – Federal Coordinating Council for Comparative Effectiveness Research

PURPOSE— The Council shall foster optimum coordination of comparative effectiveness and related health services research conducted or supported by relevant Federal departments and agencies, with the goal of reducing duplicative efforts and encouraging coordinated and complementary use of resources.

I’m not sure when we get out of this groupthink funk where we believe the answer to our problems lies in giving government more responsibility.

I think some wake up when when they find themselves in a position where the decision to save their life or that of a love one lies in the hands of a disinterested, removed bureaucrat charged with evaluating the cost and benefit of treatment.  That’s when it will become apparent that individual evaluation of value may differ greatly from those of the overseers.

Anyone who has struggled with a disagreement with their homeowner’s association board may have an inkling of how that plays out.

Costs and Benefits

A major source of discourse in society occurs when a group of people focus heavily on the costs while another trumps the benefits, and neither considers the trade-off of both.

Who’s Going to Pay For That?

The recent health care discussion reminds me of a thought I had long ago.

Much of the discourse in society is over who’s going to pay for stuff.  I would now add that the rest of discourse is about who makes decisions.