Massachusetts Gets Medically Socialized
As of April 12, 2006, the state enacted a law requiring every resident to have medical insurance by July 1, 2007
July 1, 2006
Fred Foldvary, Ph.D.
Economist

With hubris and conceit towards history and economics, the Chiefs of the Commonwealth of Massachusetts have enacted socialized medicine. As of April 12, 2006, the state enacted a law requiring every resident to have medical insurance by July 1, 2007. Those who refuse will be forced to pay a penalty of half of a standard insurance policy. The state will subsidize medical care for low-income folks.

Most people prefer to walk around with shoes, as there are hazards in walking barefoot, but most folks would consider it a tyrannical intrusion if government coerced everyone to wear shoes. Likewise, if the law required everyone to eat healthy meals every day, that would be considered fascistically paternalist. Is it any less tyrannical for Massachusetts to force everybody to buy medical insurance?

The preamble to the Constitution of the Commonwealth of Massachusetts states that the purpose of the government is to enable people to enjoy their "natural rights." The declaration of rights in the Constitution says that "All men are born free and equal" with "unalienable rights" to "liberties." My question then is, do the people and chiefs of Massachusetts take these words seriously, or is this merely for show?

Much of the burden will fall on employers, who will be forced to provide medical insurance or else be inflicted with a stiff penalty per employee. The economic burden will also fall on employees, who will get less take-home pay than they would if the employer were not paying for medical care. Although the medical providers will continue to be mostly private, the government will control prices and services, so there will no longer be a real market for medical care.

One reason some folks are pushing for socialized medical provision is that there are allegedly many uninsured persons. But in actuality, nobody is uninsured. In Massachusetts (MA), a hospital is legally required to provide medical care to any person. In almost all places in the USA, any person with a medical emergency may go to a county hospital and be treated. In effect, the government already provides universal medical insurance.

Moreover, the reason why some people prefer to not buy medical insurance is that it has been made artificially costly by the state. According to a Cato Briefing Paper ( No. 97, June 6, 2006) by Michael Tanner, MA requires that insurance policies cover about 40 benefits. Healthy people who would otherwise prefer low-cost insurance with only catastrophic coverage, are forced either to buy an expensive full package or else do without. When they are not covered by an employer and do not insure themselves, healthy folks put themselves outside of the insurance pool, which makes insurance more costly for everybody else.

For some reason, some people have a difficult time understanding the historical lesson of the fall of the old Soviet Union, that the attempt to centrally plan goods and services ultimately fails. Economics tells us that markets are productive, while governments are wasteful. This is so because government is vulnerable to bad incentives, because the knowledge needed for central planning is unavailable, and because errors get magnified and institutionalized.

Socialized medicine in MA will inevitably be costly, ineffective, and subject to massive fraud. The enforcement of mandatory coverage will be as effective as the prohibition of drugs, prostitution, and gambling. The effective alternative is a free market in medical care, just in food and shoes. Let every person choose his or her own medical coverage, with no restrictions or imposed costs. Private medical care and insurance should be tax neutral, neither penalized nor subsidized. If poor are to be offered subsidized medical care, then provide it just for them; there is no need to socialize the entire system for the sake of the poor.

This is a good example of the state treating effects and symptoms rather than eliminating the cause of social problems. The root cause of the lack of medical coverage and its high cost is that the state has pushed down wages and jacked up costs. Taxes on wages create poverty and deprivation, while subsidies push up the cost of housing and mandates make everything, especially medicine, more costly.

The people of Massachusetts are confused about the meaning of "commonwealth." The state's land should be the commonwealth, from which their public revenues arise. Their individual lives and personal property should be a commonwealth of liberty, not of serfdom. If the Commonwealth moves in the direction of making human beings common property, the state song will be:

"MA, MA, where's my pay? Gone to the poor house, ha, ha, ha!"

Find Out More.
Inside information on economics, society, nature, and technology.
Fred Foldvary, Ph.D.
Economist

FRED E. FOLDVARY, Ph.D., is an economist and has been writing weekly editorials for Progress.org since 1997. Foldvary's commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He has taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and currently teaches at San Jose State University.

Foldvary is the author of The Soul of LibertyPublic Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary's areas of research include public finance, governance, ethical philosophy, and land economics.

Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.