Free Markets And Socialism

17 May 2004

Many times I’ve linked to the seven deadly diseases for business that were originally written by W. Edwards Deming. In the last decade I’ve come to think of these same seven diseases as afflicting our nation. Each of the seven correlates with a national trend. Number six is ”excessive medical costs.”

This morning Craig Cantoni addresses the bizarre thinking that some are doing concerning health care in this country. The May 4 op-ed he cites truly was excellent. Craig adds to the excellence with this:

The Third Reich Plan
Nationalizing American Health Care

by Craig J. Cantoni
May 17, 2004

I despair. When the retired head of underwriting for New Jersey Blue Cross and Blue Shield writes a letter to the editor of The Wall Street Journal calling for nationalized health care, there is little hope of stopping the incremental socializing of American medicine.

The letter was published in the May 14 edition in response to a brilliant May 4 op-ed that correctly said that a consumer market is the cure for what ails U.S. health care.

The op-ed explained, as one of mine did in the Journal in 1997, that a consumer market was mortally wounded 60 years ago when misguided government policy resulted in most Americans getting their health insurance from their employers instead of buying it directly, as they do in the case of such other necessities of life as food, shelter and clothing. The coup de grace was delivered 39 years ago with the enactment of Medicare.

Even a freshman economics students understands that a consumer market does not exist when the consumer sits on the sidelines as third parties make buying decisions for him. But for some reason, a business executive who worked for one of the third parties does not understand this economic fact. Or perhaps he understands it but is rationalizing his lifetime of working in an industry that cozied up to the government and treated consumers like second-class citizens. Maybe that is why he was silent in his letter about the Blues being accused of restraint of trade.

In one of the worst cases of cognitive dissonance ever seen, the letter writer wrote this gem: ”Yet the crisis in health care finance and access has been brought on in large part by market forces—an employer-based delivery system that has left 40 million low-wage and laid-off workers uninsured.”

He has it exactly backwards. It was not market forces that tied one’s health insurance to one’s employment. The real culprits were wage and price controls in 1942 that gave employers an incentive to begin offering health insurance in lieu of wages, subsequent National Labor Relations Board rulings that made health insurance a union bargaining right, tax rules that gave employees a tax advantage over the unemployed and self-employed, and the Employee Retirement Income Security Act that gave employees of large corporations protections from expensive state mandates not afforded the average working stiff.

That doesn’t sound like a free market to me.

The letter writer saved his most startling and erroneous conclusion for last. He said that Medicare is a good model for nationalizing American health care because it is ”99% private.” Gasp! That’s enough to take your breath away.

Medicare is as private as industry was under the Third Reich. When Hitler was asked why he hadn’t nationalized German industry, he replied that he didn’t have to because he controlled the industrialists. Similarly, over 100,000 pages of Medicare regulations and price controls dictate what health care providers can charge and offer patients. And it is a little-known fact that Americans cannot opt out of Medicare once they begin to accept Social Security payments.

Fortunately, the Third Reich was defeated. Unfortunately, there is little hope of defeating the nationalization of American health care, not when former insurance executives fail to understand the difference between markets and socialism, and between freedom and coercion.

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Mr. Cantoni is an author, columnist and consultant. He can be reached at

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