Central Planners Are The Problem

There are many people who stoutly defend establishing single payer “health care coverage” in the United States mainly through a “Medicare For All” proposal already presented to Congress by Senator Bernie Sanders, I-VT.

These people think that having this kind of “health care” system will expand access for the poor. There are many flaws in this perspective that I have already pointed out in previous posts that I do not want to belabor in this one. Anyone who would like to read about those other drawbacks can find a number of those posts in the category “Single Payer Fallacies.”

One drawback to single payer “health care” in the United States that I have not written about in detail yet is that of central planning by a group of individuals that decide what kind of care the single payer system can pay for, and how it will be doled out.

Before I go any further in this diatribe about “central planning,” I think it would be helpful to provide a useful definition for the term. After looking around the internet to find a good definition, I found one on the Investopedia website, which I have used before to define economic terms. This definition describes an economy, and let’s face it, we often describe health care as being a certain percentage of our economy.

So here goes:

“A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the interaction between consumers and businesses. Unlike a market economy in which private citizens and business owners make production decisions, a centrally planned economy controls what is produced and the distribution and use of resources. State-owned enterprises undertake the production of goods and services.”


Wow, I could not have said it better myself, and although I do not think we are completely there yet with the United States “health care” system, we keep inching closer and closer with constantly more strangling regulation of health care through such laws as the Patient Protection and Affordable Care Act of 2010 as well as the Medicare Access and CHIP Reauthorization Act (MACRA) that was passed on a bipartisan vote in Congress in 2015.

One provision of the ACA (otherwise known as Obamacare) was to use the new federal law (the central form of government in the U.S.) to control prices, even though this was done indirectly. For example, according to an article by A. Barton Hinkle in Reason Magazine Obamacare law set a “medical loss ratio” (MLR) for insurance companies. This meant that insurance companies have been required to spend at least 80-85 percent (depending on the size of the company) of their revenues on claim payment.

As a result, profits, sales commissions, and administrative costs are prohibited from exceeding 15-20 percent of the companies’ revenues.

I have a couple of questions about the implications of this part of the ACA:

  • How did the federal government decide how much the profit, etc. insurance companies were allowed to make?
  • What gave them such great wisdom regarding how much the companies’ operational budget should be?

Additionally, the ACA prohibits insurance companies from raising premiums by more than 10 percent without government permission. Hinkle says that even though the states review rate increase requests, “HHS looks over their shoulder and takes control if the feds think the states aren’t doing the job well.”

I am no fan of the health insurance companies and the way they currently operate. However, when the centralized level of government issues such edicts, there are bound to be massively negative results. We have those in effect now, and Obamacare appears to be imploding because of that.

Many insurance companies are either hiking their rates by double digits for the 2018 coverage year for Obamacare or leaving the federal/state exchanges because their administrators believe they cannot profit from their presence on the exchanges. Although it seems like the insurance companies are still making massive profits, any losses they may record are clearly coming from their participation in the Obamacare exchanges because of all the demands on them to cover chronically ill people, but that’s a subject for another day.  What we have to remember is that, for all their feigned criticism of Obamacare at the outset, they were loving the idea that the majority of Americans would be required by law to be covered by insurance. Clearly that form of central planning has not been working out very well.

However, our less-than-revered Congress (Democrat and Republican), cannot refrain from merely adjusting or cosmetically fixing some aspects of the ACA when many of them promised to REPEAL it.  It does not matter which of the two major political parties one belongs to these days, almost everyone in both houses of Congress (with the exception of a few limited-government devotees such as Senators Rand Paul and Mike Lee, for example) seems to have a desperate need to command and control the personal lives of U.S. citizens with no understanding of some core problems in terms of health care affordability, such as the game of hospital charges and insurer payments enabled by hospital system monopolies that include “not-for-profit” hospitals receiving government largesse by being tax-exempt.

The problems I have described are just the “tip of the iceberg” where government central planning already in effect is concerned; if I were to describe all the central planning that goes on in our current health care system, I would be writing a book the size of “War and Peace.”

With that consideration, those of us who stand firmly for a free market in medical and surgical care, would certainly find single payer “health care” to be central planning on steroids because our federal government would administer all “health care,” per Sanders’ proposal.

Leave a Reply

Your email address will not be published. Required fields are marked *