Healthcare Intervention: The Bigger Picture

By Doug French
View all 5 articles by Doug French
Published 03/24/10

The prospect and reality of Obamacare have woken up many people to
the need to stop the socialization of medical care in America. It will
produce here what it has produced everywhere: stagnation,
overutilization, rationing, and the sacrifice of individual well-being
in the name of collective justice.

This is the result not only of every experiment in socialized
medicine but of every experiment in socialism generally. The reasons
were spelled out by
Mises in 1922
. He explained that, without property and market
prices, economic rationality disappears. The result is unworkable,
chaotic, and impoverishing.

Medical socialism is but one variety of a larger problem. But it is
one that is particularly devastating to people, because it affects
their capacity for staying healthy and alive. By robbing individuals of
their rights to exchange and choose, Mises wrote, state-run medical
systems are comparable to those run by the army or by prisons, which
are not centers of health but of disease and disaster.

What was Mises responding to? The nascent systems of universal
medical care already in place in Germany. In the United States, it has
taken much longer, but consider that the first national conference
calling for universal health and social insurance came about during the
1910s. This followed the monopolization of the medical profession by
the American Medical Association ten years earlier.

In other words, it has taken more than 100 years for the push toward
total control to get this far. And consider that even now, even under
Obamacare, nothing like total socialism in medical services is really
being considered an option. What is really happening are continuing
efforts to patch up a failed system that has been cobbled together for
more than a century.

The fact is that 29 percent of all American adults already depend on
the government to provide their healthcare. And Uncle Sam provides
healthcare for more than three-quarters of those over 65, whether they
realize it or not, as the famous town-hall exchange between Republican
Congressman Bob Inglis and one of his constituents in South Carolina
illustrates. "Keep your government hands off my Medicare," demanded the
man who couldn’t be convinced that Medicare was already a government

In all the debate over this legislation, this longer-term
perspective is being lost. We need to grasp the political dynamic under
which this legislation is being passed. It seeks to address genuine
problems that were generated by the present system, which mixed private
enterprise with a ghastly regulatory apparatus of government subsidies,
licenses and controls, patents and monopolies, consumption controls,
outright welfare, and fascistic impositions on every sector.

The current system cries out for fixing. And how does the state
propose to fix it? Never through more freedom, never by rolling back
the real problem. Instead, it proposes more power. This has been the
systematic trajectory during every presidential administration for many

One of the worst problems concerns the wedge that the state drove
between the payer and the healthcare provider. Businesses became the
wedge. When? During World War II wage controls. Businesses scrambled to
find ways to pay their employees without running afoul of the law. They
turned to providing medical care. This is no different from how banks
offered toasters to depositors when interest rates were controlled in
the 1970s. It is the market desperately trying to get around a problem
created by the state. But once this happens, if the controls are not
repealed, the escape hatch becomes the norm. And this is precisely what

This is how the seeds of the current legislation were sown — not
after Obama’s election or during Clinton’s term or even during
Johnson’s presidency but all the way back 65 years ago during wartime,
with intervention that hardly anyone objected to because of the
national emergency.

"The health of American children, like their education, should be
recognized as a definite public responsibility," President Harry Truman
told Congress on November 19, 1945, just after the war and only seven
months into his presidency. "The right to adequate medical care and the
opportunity to achieve and enjoy good health," was a part of Truman’s
proposed Economic Bill of Rights. Another was the "right to adequate
protection from the economic fears of … sickness."

Truman proposed in that speech that a national health-insurance fund
be created and run by the federal government. Even the American Medical
Association (AMA) called the bill "socialized medicine" and said that
those in the Truman White House were "followers of the Moscow party

Despite support from the large labor unions, Truman was forced to
abandon his attempted government healthcare takeover. But like most bad
ideas hatched in Washington, parts of Truman’s proposal lived on to
resurface as legislation two decades later. In 1965, President Lyndon
B. Johnson signed Medicare into law at the Harry S. Truman Library and
Museum and reminded onlookers that Medicare "all started really with
the man from Independence."

There is no greater example of why it is morally incumbent on
everyone to oppose all forms of government intervention in all times.
That includes, especially, wars that socialize the economy. Even
seemingly small interventions can become huge and terrible decades
later, even after those who imposed the measure are long dead. This is
also why Mises and his best students were so intransigent in arguing
against any and all government intervention.

There is another factor that hardly anyone mentions. How is all of
this free government medical service going to be paid for? If the
government were going to tax everyone, it could never work. The
citizens wouldn’t stand for it over the long term. The national debt is
already beyond belief. Where are the resources to pay for this glorious
utopia of perfect health equality?

It seems like an inauspicious place to look, but we must look to the
marble palace on Constitution Avenue: the Federal Reserve. Here is the
institution that runs the moneymaking machines that guarantee all the
debt and that will create the phony money to pay for these insane
dreams of universal happiness. Without the Fed, I can promise you, no
one in Washington would be in a position to promise such absurdities.

If you think about it, then, the real problem is not that
politicians dream impossible dreams. They’ve been doing that for a
hundred years, a thousand years, and even back to the ancient world.
The real problem is structural and institutional: it is the central
bank that leads politicians to imagine that their visions can be
achieved. It is the central bank that unhinges them — at our expense.

In some ways, then, a worsening system of medical provision is only
the beginning of the downside of universal health insurance. The unseen
costs include inflation down the line, worsening business cycles, and,
quite possibility, the final destruction of the dollar and the wiping
out of all private wealth.

Yes, the problem is serious. But protests and partisan politics only
go so far. Ultimately the solution comes from intellectual
understanding of the broader issues, which go well beyond the details
of this particular legislation. We must understand the dynamic of
intervention and the role of fiat money and the central bank in funding
the whole process.

Another book we need to reread is by Henry Hazlitt. It is called Time Will
Run Back
. It tells the story of a despot who inherits a
decrepit, burned out, totalitarian society, and he is inspired to
rethink the logic of the system. With the aid of some reading, he and
his aides systematically unravel the interventions. The same logic that
led the state to ramp up its control led it to retreat and allowed
freedom to flower.

I believe this is in our future. But we can’t have that future
without the right intellectual resources. This is why I’m so grateful
to the Mises Institute, the source for nearly every important book on
socialism, regulation, central banking, and intervention. The Mises
Institute is the intellectual source for an enlightened future.

We can follow the headlines and despair or we can support the source
of light and have hope. Please join the Mises Institute in our work of
bringing that light to a new generation. As Mises said, ideas are more
powerful than armies and certainly more powerful than the meddling
legislative bodies and huckster politicians that manipulate them.

This mess can be rolled back, and freedom can triumph. But it is up to us to make it

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