Trio and Friends

Everyone is fit and healthy in Atlas Shrugged. There are no physically or mentally disabled people, no chronically sick, nobody whose state makes them incapable of supporting themselves. More importantly, there is nobody who is physically disabled such that they cannot support themselves, and whose family and friends also lack the resources to support them. This makes it much easier to promote her philosophy. In addition, the problem of hospitals and medicine is not raised.

Which is more fair? (1) for the government to pay for everyone’s healthcare, or (2) for each individual to pay for his or her own healthcare? Granted some illnesses are self-inflicted, like lung cancer from smoking, still the vast majority of sickness is haphazard chance. If we want to remove bad luck in order to allow those worthy of success to succeed, then we should pay all their medical bills, provided they were not incurred by self-infliction.

It is noteworthy that the weakest argument for capitalism was made by the surgeon, Dr. Hendricks. He wrote:

"I quit when medicine was placed under State control, some years ago. Do you know what it takes to perform a brain operation? Do you know the kind of skill it demands, and the years of passionate, merciless, excruciating devotion that go to acquire that skill? That was what I would not place at the disposal of men whose sole qualification to rule me was their capacity to spout the fraudulent generalities that got them elected to the privilege of enforcing their wishes at the point of a gun. I would not let them dictate the purpose for which my years of study had been spent, or the conditions of my work, or my choice of patients, or the amount of my reward. I observed that in all the discussions that preceded the enslavement of medicine, men discussed everything—except the desires of the doctors. Men considered only the 'welfare' of the patients, with no thought for those who were to provide it. That a doctor should have any right, desire or choice in the matter, was regarded as irrelevant selfishness; his is not to choose, they said, only 'to serve.' That a man who's willing to work under compulsion is too dangerous a brute to entrust with a job in the stockyards—never occurred to those who proposed to help the sick by making life impossible for the healthy. I have often wondered at the smugness with which people assert their right to enslave me, to control my work, to force my will, to violate my conscience, to stifle my mind—yet what is it that they expect to depend on, when they lie on an operating table under my hands? Their moral code has taught them to believe that it is safe to rely on the virtue of their victims. Well, that is the virtue I have withdrawn. Let them discover the kind of doctors that their system will now produce. Let them discover, in their operating rooms and hospital wards, that it is not safe to place their lives in the hands of a man whose life they have throttled. It is not safe, if he is the sort of man who resents it—and still less safe, if he is the sort who doesn't." (p. 683)

Of course this is a caricature based on Rand's own fictional universe. Normally people do take into account the desires of the doctors, if they want to have good doctors! But this whole argument is a bit silly really. Choice of patients? If someone is dying of a heart attack, and you are a heart surgeon, you don't choose to give heart surgery to someone else who isn't dying of a heart attack. You don't choose your patients because you don't choose who needs your help. This question can be settled quite apart from the question of who pays for it.

We should begin by specifying that the government does not pay for anything because the government does not generate wealth. The government takes wealth by force from those who have made it. So saying the government pays for healthcare is deceptive. Who is really paying and why are they paying? Is it more fair for you to pay for your own healthcare or to force someone at the point of a gun to pay for you?

But the problem still remains, what about some bad luck, how will you plan for that. It turns out that many other people have bad luck too and they are just as concerned. It looks an awful lot like a business opportunity. Everyone has the desire for security and there is uncertainty. We know how to do this, we’ve been doing it forever. Whoever wants to can pool their money together, the organizer will take a cut for managing everything, and if one of us gets sick, it will be paid for out of the pot. If you were foolish enough to opt out and something befalls you that is exactly the risk we are all wise enough to see. Yes, this is just insurance. And is very much like the government paying, except we can voluntarily contribute or decide not to, and the budget has to work out in the end for the business so it must remain grounded in the truth of the situation, and competitors can take their shot as well to ensure that the costs are as low as possible. Having the government do it gives you no choice in the matter, nobody knows how much it costs, and there will never be a competitor.

As for doctors and costs, I think the quote is trying to get at a bunch of different things and probably could have been more clearly put. One obvious element Rand is getting at is that if you artificially lower the pay of doctors you get worse/fewer doctors. The profession becomes less lucrative and fewer high quality people will put in the effort to achieve it and lower tier people will fill the spots. This is artificially lowering the signal from the demand side. What the government is doing by lowering doctor pay is signaling that fewer or lower quality doctors are required. If you do have a high quality doctor willing to work for that lower price you are basically taking his wages too as part of the health provision for everyone. How do we figure out what doctors should be paid? Well, we let the market make is millions of decisions to figure out what it’s worth to people relative to everything else. I’m not sure anyone has done that for a long time.

Indeed, it looks as if the problem can be solved by health insurance. But there's a troublesome thing about health insurance. When you buy it, you have to fill out a form with the details of your medical history. If it turns out that your family has a history of X, or that you have received medication in the past for Y illness, suddenly your insurance becomes more expensive. On the other hand, if you and your parents have had a clean bill of health for your whole life, your insurance is very cheap.

Why is this? It's because the insurance company wants to minimise the luck, so they can maximise the profits. This means that if you are unhealthy through no fault of your own, you are forced to pay more than someone who is healthy through no virtue of their own.

Tough luck, you might say, but that doesn't justify forcing anyone at the point of a gun to pay for your healthcare.

Well, here we must transfer to my thread on Does the Government force people to do things?

When you buy it, you have to fill out a form with the details of your medical history. If it turns out that your family has a history of X, or that you have received medication in the past for Y illness, suddenly your insurance becomes more expensive. On the other hand, if you and your parents have had a clean bill of health for your whole life, your insurance is very cheap.

Yes, this is requiring you to be honest about the transaction (what we decided was unethical for a lender to fail to do). Surely we both recognize the constraints of the real world. Your preconditions will cost more. If the business loses money it will go under. Another option is to charge everyone the same rate. The problem with this idea is that those people with very low risk realize it's really not worth it for them and they drop out of the deal. They are just subsidizing all the unhealthy people and usually they are young (and healthy) and don't have much money to begin with so they will opt out. So you have to try and keep them. They are where you're really going to make money because they are the healthy ones. And on the other end are the very unhealthy ones, they are going to cost a lot. If we charge accordingly we will be able to keep those who stay healthy and paying in, and can still accommodate the high risk people.

I got distracted... I think I'm just going to post. There are probably more edits and clarifications warranted.