How to Bankrupt a Nation

It's classic liberal illogic -- if current expenditures do not solve the problem, spend more, lots more.

Now, Can We Have Health-Care Reform? ObamaCare doubles down on a failing system.

A certain kind of person—we get emails from them all the time—understands exactly nothing about the health-care debate, but thinks they know who the villain is: the insurance industry.

Barack Obama is not one of them. In the desperate hours he played to public ignorance. But from the beginning, the industry was his ally because he set out to solve its biggest problem—which is not the same as America's biggest problem.

We'll let Angela Braly, CEO of insurer WellPoint, take the story from here. She was recently hauled before Congress to justify her company's proposed 39% rate hike in California. She explained the source was two-fold: rising medical costs and healthier customers dropping their coverage, forcing the sick to pick up the tab.

Now this sounds like two problems, but for WellPoint and other insurers it's really only one problem. Once everyone is required by government mandate to buy insurance, the industry's survival is no longer threatened: It can just pass its skyrocketing costs along to customers. Once customers can no longer refuse to buy the industry's product, the problem of costs won't be fixed, but it no longer is the insurance industry's problem.

There, in that one sentence, we give you the failure of ObamaCare, the failure of the congressional health-care debate, the failure of health-care politics in this country.

Health insurers, and indeed Corporate America as a whole, are like monkeys who are caught by staking a glass jar to the ground with a shiny trinket inside. They won't let go so they can't get their hands out of the jar. That trinket is the ruinous and regressive $250 billion-a-year tax benefit for employer-provided insurance.

Corporate America isn't brave enough to argue against a direct subsidy to its employment costs, no matter how perverse its impact in insulating consumers from the true cost of their health care choices. Insurers are not brave enough to say: Give us a tax code that lets us go back to being insurers rather than a tax laundromat for the middle class's health-care spending.

Almost any bill would have been worth having that fundamentally fixed this tax distortion, regardless of its other elements.

We say this because any bill, including the one signed by the president yesterday, will be revisited many times in the future. Millions of pages of rules will be written by regulators before we see how it really works. Congress itself will return in predictable ways: It will reverse the proposed Medicare cuts that created ObamaCare's illusion of fiscal probity. It will tighten the mandate that requires insurers to cover the sick at favorable prices. It will not tighten the requirement that the young and healthy buy insurance at prices that subsidize the old and unhealthy.

More and more tax money will have to be found to keep the jalopy on the road. More and more administrative controls on medicine will attempt vainly to keep the jalopy from bankrupting the nation.

Under the law just signed, employers have even more incentive than they did yesterday to lavish excessive health insurance on their high-end employees. They have less incentive to cover low-end workers, or even hire them.

For the young, healthy or anyone not stumbling into a giant tax handout, buying insurance at the inflated prices available in the marketplace would be an even crazier financial decision today than it was yesterday—because now you can wait and buy it when you're sick.

For insurers, the check is in the mail: So watered down is the individual mandate that it must accelerate the industry's death spiral if not for the massive subsidies the government now has obliged itself to provide to keep the industry afloat and allow insurers to continue scalping their 15% off the top for serving as gatekeeper to a tax loophole.

When all is said and done, with unerring accuracy, ObamaCare has ended up doubling down on the system's existing perversities. The one thing it doesn't do (though it would be perfectly consistent with the Democratic goal of universal access) is incentivize a health-care marketplace based on competition in price and quality.

A world-class hospital in India does heart surgery the equal of any heart surgery in America, but does so at one-tenth the cost (and increasingly attracts a world-wide clientele). The reason is not what you think: low-paid doctors and nurses. The reason is that competition works in medicine as it does in everything else when the patient cares about getting value for money. This is the great low-hanging fruit of health-care reform. It continues to hang.

Universal Self-Health Care

My grandfather liked to say that if you've got your health, you've got everything. Unfortunately, a heart attack nailed him when he was 60, in 1956. He might have avoided, or at least postponed his myocardial infarction if he'd followed a few simple rules. Don't smoke, and keep the drinking to a minimum. A better diet might have contributed to a longer life too, but he was lean when he died, a result of a life of labor. However, death from a heart attack suggests something was clogged internally.

Our lousy life style is the factor that kills too many of us too soon. Smoking, drinking and bad food. That's what it boils down to. That means our health is mostly in our own hands. We can drop a couple of bad habits and choose better food and live longer. These stark facts also mean that if we continue to live self-destructively, we will bankrupt ourselves while perpetuating the delusion that we can spend our way to a longer and healthier life.

It's as though people see the healthcare system as a form of air-bag that will save us from head-on health crashes that we cause. Rather than living sanely, showing some awareness that good health is as temporary as we make it, we punish our bodies in senseless ways and hope increasingly expensive technology will undo the damage we inflict on ourselves.

However, instead of wrestling with our own suicidal impulses that are killing a million people a year, we've chosen to focus on imaginary health issues that are predicted to cause harm about a century from now.

This is mass psychosis. A societal delusion as preposterous as the long held belief that the Earth was flat and that it was at the center of the planetary system.

Losing Control

With all the talk of swine flu, universal health insurance and computerizing medical records, you'd think epidemics and inadequate medical care were the major threats to public health in this country. But an important new study on preventable deaths will quickly disabuse you of that notion. Read the report and you'll likely conclude that the biggest premature killer of Americans is . . . Americans.

Too many of us appear to be bent on slow-motion suicide. Consider smoking; if we could get every American to stop, we'd save 467,000 lives annually. Solving high blood pressure (much of it arising from unhealthy lifestyles) would save 395,000. And if we could get everyone to slim down to an appropriate body weight, we'd save 216,000 lives.

You can't aggregate all the lives that would be saved from the 12 lifestyle factors covered by the study because of some serious overlap; obesity, for instance, causes a lot of hypertension. But Dr. Majid Ezzati, a Harvard School of Public Health professor who co-authored the report, estimates that if you net out the double-counting, somewhat more than a million people die annually from the 12 behavioral risk factors, which include the obvious (immoderate alcohol consumption) and the less so (eating too little fish, which provides omega-3 fatty acids).

Put more starkly: Of the 2.5 million deaths that occur annually in America, something approaching half could be prevented if people simply led healthier lives.

The study, "The Preventable Causes of Death in the United States: Comparative Risk Assessment of Dietary, Lifestyle, and Metabolic Risk Factors," has some serious policy implications. Take universal health insurance -- which Dr. Ezzati fully advocates. It would surely save lives, but as the authors acknowledge, "the results of our analysis of dietary, lifestyle, and metabolic risk factors show that targeting a handful of risk factors has large potential to reduce mortality in the US, substantially more than the current estimated 18,000 deaths" that advocates say universal coverage might avert.

Indeed, while health care makes a difference, that difference is relatively small, especially in light of how much we spend on it. "Although inadequate health care accounts for only 10% of premature deaths . . . health care receives by far the greatest share of resources and attention," writes Steven A. Schroeder, a professor at the University of California, San Francisco medical school who researches such matters but wasn't involved in the study.

What the new study implies is that our big problem is self-control. No one puts a gun to our heads and commands that we overeat, smoke cigarettes and lead the life of a couch potato. Yet we do these things anyway as a result of circumstances, ignorance and, perhaps most of all, what the Greeks called akrasia, or weakness of will.

Clearly a lot of Americans are dying prematurely as the result of their own behavior. The question is whether they are happy with their current trade-off between the risks and rewards -- or whether they understand the risks well enough to make an informed decision. A closer look at smoking suggests that they know the risks and would like to act differently. The American Lung Association reports that, in one survey, 70% said they'd like to quit. Another survey found that 44% had actually tried quitting in the previous 12 months. Many eventually succeed; the prevalence of smoking in the U.S. today is roughly half what it was in the 1950s, thanks at least partly to cessation efforts.

Unfortunately, obesity may be the new tobacco; two-thirds of Americans weigh more than they should, and too much weight kills. But here, too, the prevalence of dieters -- and diets -- suggests that people aren't happy with their own behavior.

So why does it continue? Humans evolved to be highly susceptible to short-term rewards, yet smart enough to know what's best for us in the long run. The result is that our short-run behavior often moves counter to our longer-term preferences, which for the most part are the ones we'd dearly love to uphold. The economist David George has argued that when these greater preferences are subverted, people suffer quite a large welfare loss.

What is to be done? Dr. Ezzati says it will take more study to figure out the costs and benefits of possible actions -- such as risk education, regulation, taxes, medical testing and treatments. Some issues, like inadequate exercise, may be especially tough in a nation built around the automobile.

But some things seem obvious. One is that banning what people want doesn't work, as we should have learned from Prohibition and the disastrous "war on drugs." Higher sumptuary taxes on unhealthy items might help but would run into practical problems (is candy unhealthier than cheese?) and would penalize those who eat and imbibe in moderation. Dr. Ezzati's study, for example, notes that a little alcohol is good for you.

One answer is more and better public education on the ways Americans get into trouble, including lifestyle choices and personal finance. It's noteworthy that less-educated Americans are significantly more likely to succumb to behavioral risks, either because they have inadequate information or tend to be worse at deferring or foregoing gratification. And a vigorous media campaign, along with higher cigarette taxes and social approbation, has worked wonders against tobacco.

Beyond this, people need binding ways to commit themselves to their enduring preferences. For instance: Several states offer self-exclusion programs through which problem gamblers can have themselves barred from casinos for a fixed period of time -- or even forever. The programs seem to help; an evaluation of 161 participants published in 2007 in the Journal of Gambling Studies found a reduction in gambling problems as well as in the urge to bet. One can imagine all kinds of equally voluntary analogues; people could agree to be taxed for excessive weight or blood pressure, for example (as they already are by life insurers, which charge higher premiums for such reasons).

In the modern world of freedom and affluence that we've made for ourselves, self-regulation may well be our biggest challenge. What we need is more aggressive promotion of healthy choices by governments and schools, and better tools to help us manage ourselves.