The Ludwig von Mises Institute

The Mises Institute monthly, free with membership

February 1999
Volume 17, Number 2

The policy agenda of the Clinton administration is usually described as halting, pragmatic, and poll driven. But in its approach to the issue of medical insurance and the drive to socialize medical care, it has been systematic, principled, and highly strategic. The Clinton government is using the failures and internal contradictions of the welfare state to pursue a program of universal entitlements.

Here is how it works. Under the current system, people receiving large medical benefits from the government must pass certain qualifications. A disability, for example, must be bad enough to prevent them from engaging in "substantial gainful activity." Welfare fraud occurs when a person both draws private income and receives benefits from the government.

The paradox is that this creates a disincentive to return to work. Work is not only disallowed as a matter of law, but the benefits make it possible to remain unemployed. This is why welfare creates dependency. It also tends to reinforce (and subsidize) the terms of eligibility. If being poor and disabled are the tickets to the free ride, poor and disabled is what a person will remain until the benefits are cut off.

This is an unstable mixture, since it violates common sense that a person on welfare cannot be allowed to improve his lot in life without experiencing the punishment of a benefits cutoff. But this sad situation is made necessary by the logic of every half-way program. It inevitably perpetuates the conditions it is said to alleviate. The only way to rectify the problem would be to cut everyone off immediately (the right solution) or, by eliminating all means testing, give everyone equal welfare rights.

The Clinton administration has chosen the second route. This was obvious soon after the failure of its 1994 medical nationalization bill. Using complaints about discrimination, Clinton demanded and got a mandate that businesses expand health insurance coverage to people with mental disabilities. Soon after that fiasco, he got the GOP to agree to an expansion of Medicaid to lower-income children.

Then, in January last year, he raised the specter of Medicare discrimination against people age 55 to 65, a group he called the "near elderly" to add to the eternal litany of other victim groups. To make the idea financially viable, he suggested that people pay below-market prices and have unlimited access. Can't afford not to do it, you know.

Most recently, he proposed rectifying the disincentive-to-work by permitting disability patients to return to work while retaining their medical benefits. In a style pioneered by Jack Kemp, he used conservative language about the virtues of productivity to argue for a vast expansion of Medicare. Yesterday's welfare fraud could become tomorrow's public policy.

Why? The eligibility criterion must be radically changed. No longer would people demonstrate their disability by not working. The benefits would suddenly become available for people presently working. This point was never mentioned in the press reports, but it would mean a huge bloating of a program already wildly out of control.

In the first stages of these proposals, the loyal opposition always swears to defeat the plan. But as time goes on, the Republicans find themselves unable to make a principled case against the program itself and, fearing voter and media reprisal, argue that it is a wonderful program that must be saved. Eventually, of course, the phony opposition accedes to Clinton's demands.

The only way to stop the fiscal and political hemorrhaging of Medicare and Medicaid is to tell the truth. These programs cost vastly more than the same amount of care offered privately. They work as a vast subsidy, not only to individuals, but to a medical industry increasingly de-pendent on government. They vastly drive up medical costs. They lessen the will toward health. They make the public dependent on government and as such are un-American.

It is a grave error for people who generally believe in free markets to exempt special goods and services from the analysis. The market is just as capable of providing education, health care, and security services as it is at providing computers, vegetables, and sporting events. Admitting a market failure in one place means, eventually, admitting that one could conceivably appear anywhere.

The only way to avoid the hell on earth of fully socialized medicine with the government acting as Dr. Kevorkian as well as Big Nurse is to do an about-face now. Every intervention in the medical sector must be scrapped, especially Lyndon B. Johnson's monstrosities of Medicare and Medicaid. They are based on socialistic principles that will eventually bankrupt us, and wreck what's left of quality medical care.

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Llewellyn H. Rockwell, Jr., is president of the Ludwig von Mises Institute.

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