Good Luck, California

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An interesting letter appeared in the Wall Street Journal the other day. It compared a “single payer” healthcare system to the present so-called private system.

The socialistic system proposed in California would be funded partly through a 15% payroll tax. With a $57,000 average household income and $18,000 family health insurance cost per year, a government run single payer system would cost almost $10,000 less per year.

The comparison is between the present socialism in denial, and the honest socialism of the proposed Healthy California Act. What the costs and service would be like with a system where users pay for care and insurance as individuals is totally left out of the comparison.

The road to this exclusion is an incremental one. It is rooted in nonsense also mentioned in The Journal, “democratic capitalism.” No kidding, democratic capitalism.

Democratic means majority rule. Capitalism means private ownership. The two are mutually exclusive. The incremental destruction of a chaotic, but perfectly logical, relationship between customers and providers began with Woodrow Wilson’s creation of the fed. Money backed by a promise is easy to spend. And dire needs become more dire when the cost is shifted to someone else or some other time.

When the business cycle swung toward inflation during the Nixon years, he instituted wage and price controls. Especially today, when an employer finds an employee who does his job impeccably, he desperately hangs on to him. With wages frozen, the only way to do this was to pay that employee more through benefits. This was the birth of the group plans most people use today. It was also the beginning of the end of a natural and efficient mechanism of price control. Group plans made people think the cost was not related to their choices. And there was no honest way to establish prices or rein in excessive ones.

I understand the urge to nationalize medical care. I also understand why someone who makes it a point to stay fit would resent paying for the care of people with more reckless lifestyles. The democratic way of solving this problem would leave close to half the population elated and the other half resentful.

My solution is once again rooted in federalism. If a reader of this column can show me where, in the Constitution, healthcare is authorized as a function of the federal government, do it now. The founders purposely stated what the federal government was allowed to do and even encouraged the states or individuals to take up the slack.

What is going on in California serves as a perfect example of the “laboratories of democracy,” described by Supreme Court Justice Louis Brandeis. He said a “… state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

So go ahead California. Proceed with your $400 billion experiment. If it works, other states will adopt it. If not, good luck.

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