By John D. Turner
31 Jul 2009

I read a lot, and have since I was very young. During my youth, one of my favorite authors was Robert A. Heinlein, often referred to as the “dean of science fiction.” While not as prolific as Isaac Asimov (who could be?), he nevertheless wrote quite a few novels and short stories that I scarfed up avidly as soon as I could find them on a bookshelf somewhere.

One recurring theme in his writing was the word tanstaafl. Tanstaafl is an acronym. It stands for “there ain’t no such thing as a free lunch.” That phrase used to be a truism in this country back in the 50’s when Heinlein was in his golden years. These days, it seems to be forgotten by many of us who somehow seem to think we are going to get something for nothing. Nevertheless, it remains as true today as it was back then, and like the laws of thermodynamics, will continue to remain true in the future, barring some fundamental shift in the laws of physics.

The latest “free lunch” we as a nation seem hell-bent on procuring is something called “universal health care.” What does that mean, really?

For most folks, it means that any time they have any sort of medical ailment, whether it is a congenital heart defect or the common cold, they should be able to walk into a doctor’s office and have it take care of at little or no cost to themselves. Health care should be “cheap”, available, and on-demand. Like the definition of “rich” the definition of “cheap” is highly subjective, but for many, “free” would be an appropriate substitute.

After all, that’s what they have in Canada, England, France, (and don’t forget Cuba!) and all other civilized nations, isn’t it?

The ultimate goal here is a government-run, single-payer health care system. That isn’t what the Obama administration claims, because that idea would be anathema to most Americans. It failed miserably when tried during the Clinton administration. So the claim is made that the government plan is just another plan among many, designed to “foster competition” in the marketplace and, this is key, to drive down “costs”.

But how is this to work, exactly? Let’s take the first claim, that the government plan is necessary in order to foster competition in the marketplace.

In order for this to be true, it would have to follow that there is now no competition in the health care marketplace. Run that by me one more time? In order to believe that one, I would have to believe that there is only one private health insurance company in existence; a monopoly.

One only has to run a Google search to put that idea to rest. According to Wikipedia, there are at least 25 major health insurers headquartered in the United States. This list is not exhaustive. I personally have had insurance with two others that are not listed. Say what you may about Wikipedia, it is at least a starting place. And 25 is definitely more than one; obviously there is competition in the marketplace without the Government needing to get involved to “create” competition. Another list I found, quite easily I might add, posted 38.

But that’s nothing. Manta.com lists a whopping 3,178 company profiles for “Accident and Health Insurance Companies” in the US. I think competition for health insurance is alive and well in the United States, despite what Mr. Obama may say.

How about the “drive down costs” part? How will government “competition” effect that change?

There really is only one way they can; they will simply charge less in premiums for their plan, and their plan will pay less to doctors and hospitals for the procedures they perform. The other companies will be forced to follow suit if they want to stay in business. After all, that’s the way competition works in the marketplace. Ask any capitalist.

Well, yes, competition does drive costs down. If company A can undersell company B, then company B will have to lower its prices to compete or provide some other service to make its product appeal to buyers. If it can’t, it will go out of business. There is just one flaw in the government plan. It isn’t enough just to be able to undersell your competition; you need to be able to undersell the competition and generate a profit. If you don’t, you may sell more and go out of business yourself.

The government on the other hand, does not have to generate a profit. The government relies on taxes for its revenue. (And borrowing, and, if all else fails, printing the money it needs – but that’s another issue.) So the government can arbitrarily undercut its “competition” beyond where private health care, which must generate a profit to stay in business, can go.

You will notice that there is no nationwide train passenger service other than AMTRACK. And there is no nationwide postage service other than the U.S. Postal Service. That is not because both of these are the epitome of service. It’s because no private company can compete; both of these are heavily subsidized by you and I; the taxpayers. They don’t have to make a profit to survive, and they don’t. In fact, there was money in the recent stimulus bill for AMTRACK.

You might say, but wait; there is competition with the Postal Service. There are UPS, Federal Express, and others. That’s true. Competition can spring up around the fringes. However, none of those companies deliver letters, or “junk mail” for that matter. They make their bread and butter on fast delivery of small parcels (which may contain a letter that absolutely positively has to be there overnight) and bulk packages that you don’t want lost or crushed. It’s not likely that you would use this service to send a greeting to your great aunt Sadie who lives in LeftArmPit Wyoming, or that your local grocery store would use it to send you their daily marketing circular. It would cost too much. That sort of mail goes through the unprofitable, government subsidized postal service.

When the government gets into the game, there is no such thing as a level playing field. And it isn’t just limited to subsidies. The government can also play the game by passing laws that favor its “businesses”. It can also pass laws that require you to “buy” from them. If this were to happen outside of government, we would call it a “protection racket.” When government does it however, it is simply called “protecting you”, the citizen, from greedy health insurers.

When the President says you can keep your existing health insurance policy, he is being both technically correct and disingenuous at the same time. Yes, you will be able to keep it at this time. Nevertheless, my bet would be that within 5 years or so at the outside, and probably sooner, you will end up on a single-payer government plan.

How? Well, if anything changes, you are no longer grandfathered. That means if you change anything or your employer changes anything or your insurer changes anything. At that point, you come under the government plan. So you are good to go – as long as you don’t change employers, your employer doesn’t drop the coverage, or your insurer doesn’t go out of business. Don’t expect any government bailout if the latter happens, except to make a place for you in the government health plan.

It will be slow to start with. But as more and more people end up on the government plan, the demise of the private insurance industry will accelerate. People will move off the private system in a number of ways; many will opt to switch themselves. Why would you stay with a plan that costs more, other than for philosophical reasons, when you can get one that costs less, and on the face of it, offers the same benefits? Businesses will look at their balance sheets, and wonder why they should keep providing health care benefits at ever increasing cost, when the government is willing to do the job at “no cost.” This will be particularly true if the government makes good on its threat to tax existing health care benefits to help pay for their program.

Eventually everyone will be in the government program by attrition. And like social security, there will be no option to opt out. And once that occurs, you will have no options left when it comes to health care. You will get the health care the government decides you should get, when they decide you should get it, and if that’s not good enough oh well, too bad, so sad. At least it will be “free.”

Canada has such a plan. And it works great – as long as you don’t become seriously ill. If that happens, and you have sufficient money, you go to the United States for treatment. So what happens when we join Canada in single-payer government health utopia? Where will the needy Canadians go then for life saving health care? More importantly, where will we go? It’s nice that our colds and sniffles will be taken care of, but what if we need kidney dialysis for the rest of our lives? Or a heart transplant?

Two weeks ago, on a Monday, I went in to my doctor for lower abdominal pain. I had been having problems since around March, and finally decided that it wasn’t a pulled muscle and needed a doctor to look at it and see what the problem was. He decided that it might be a hernia, and I needed to see a general surgeon to make the determination. We made an appointment to see the surgeon on the following Monday. He also set me up for a CT scan. I could have had one the same day, but due to my schedule, we postponed it until Thursday.

The next Monday, we saw the general surgeon. He looked at the scans, and said that it didn’t look like a hernia, but something was there, and definitely causing me pain, so we decided to treat it like a hernia and do exploratory surgery. I could have done it that Friday, but due once again to my schedule, we postponed it to the following Thursday. That was yesterday. Today I am at home recovering from the removal of a large fatty mass, sore, but expecting to up and around in a week or so. Total elapsed time from my GP to CT scan to seeing the specialist to the operation – 2.5 weeks, with most of the delay based on my schedule, not the doctors’. Cost? Around $2000 total out of pocket. I have a consumer-driven high-deductible plan.

How would this work in Canada, with their “free” single payer plan? According to recent studies of the Canadian system, Canadians wait an average 8.4 weeks between seeing a GP and consultation with a specialist. The average wait time for a CT scan is 5.2 weeks. And finally, the average wait time between seeing a specialist and receiving treatment is 9.5 weeks. So, were I in Canada, receiving free medical care, I would still be waiting to see the specialist, and could expect that I might be taken care of sometime in January.

Fortunately for me, my problem was not serious. It just involved pain. But what if it turned out to be cancer instead? Too bad, so sad. At least, if I died, I would make room for someone else to get treatment.

A single payer, universal plan where timely, quality medical care is available to everyone for free is a nice idea, and it would be great if it worked, but it won’t. There are no free lunches; someone always pays the bill. It may be hidden somewhere, but the bill never goes away.

It may change its form. Your “free lunch” may end up being a peanut butter and jelly sandwich instead of a hamburger and fries. “We ran out of hamburger, but we got this great deal on peanut butter – it will still assuage your hunger, and it’s still “free”. And every so often, sort of like a lottery, you may hear of someone getting a filet minion, but it won’t be you or anyone else you actually know.

Or it may change its availability. You don’t get a free lunch every day, on demand. There are lots of folks who want that free lunch, so we will give you one per month. You can ask for it at the beginning of the month, but it’s subject to availability, so you may have to wait. And if you ask late in the month, well, you might get nothing. But don’t worry you can try again next month!

But one thing is certain; it won’t be what most folks think it is; free, high quality health care on demand for whatever ails you. That will never happen in this lifetime. It is simply not affordable.

Studies on Canadian Health Care system. Lest anyone think I am “cherry picking, do your own search (Google : average wait time for CAT scan in Canada)