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The Poisoned Tip of Prussian Helmets

What do Swiss socialists have in common with Arnold Schwarzenegger?

Some would say : their push to dope government’s muscle through regulated health insurance. Not that there is much to object to such potions. The faster regulated medical care hits the floor, the sooner will we fully turn to the market for a cure to present woes. In 2007 the Swiss had to vote on a socialist proposal to replace their pluralistic health insurance system by a single national insurance model. This institutional dinosaur would have been fed by premiums (pegged to income) and tax hikes. Although the Swiss are not immune to socialist rhetoric, they know how to count: the socialist single provider initiative was firmly rejected by citizen vote. On June 1st 2008, the Swiss will vote on yet another constitutional article that would empower government and health insurance bodies with wide rationing powers both in hospital funding as in patient choice of doctors. Californians are not quite there yet. The more naive were ready to welcome their Governors’ complicated access route to care. Arnold Schwarzenegger did not propose a single insurance provider. Neither does candidate Hillary Clinton for that matter. Their recipes for health care reform would however, increase government’s predatory grip on employers and healthcare providers.


The Austrian Connection


Interestingly, some features of both Arnold Schwarzenegger’s health plan and the Swiss socialists’ health insurance models seem cut and pasted from Austria’s social security system. It is true that both the Swiss and the former Hollywood muscle man bowed to Austrian authority in past history. Wilhelm Tell boldly rejected Austrian subjection many centuries ago and his scions have all but ignored their eastern neighbor ever since. Conversely there may be a touch of nostalgia in Arnold Schwarzenegger’s moves to make California’s health care look a little more like Austria’s.

Austrians are partly indebted to Hitler for their sickness insurance model. The ruthless Prussian war machine hauled into Austria by the Nazis after the fall of the Habsburgian Empire went hands in hands with a redemptive social insurance model designed by Bismarck. Pointed helmets rust in the graves of History. Bismarck's blueprint for authoritarian social security has outlived both World Wars. It still scaffolds Austria’s welfare state and others. Austrian health insurance is controlled by a powerful bureaucratic institution: the Haubtverband der Socialversicherungstrager. Insurance premiums are pegged to income and claim approximately 7.4% of salaries. Patient choice is restricted to providers approved by the Hauptverband. Approximately one third of doctors are excluded by this body. Austria’s health reform processes favor an interventionist, state-governed approach. At the dawn of the 20th century, Austrian medicine was one of the most reputed in Europe. It now lags in the ranks of the has-been and looks up to Switzerland or the USA for innovation.

Intrusive health care reforms ultimately limit individual choices in a field as important as health… at a prohibitive cost! In this, Arnold Schwarzenegger, Hillary Clinton and Swiss policy makers ride against the tide. Their projects for regulated insurance stem from authoritarian models designed in the wake of the 19th Century, that failed in the 20th Century and that are largely obsolete in the 21st. Enlightened economists severely question Bismarckian and Beveridgian principles of health care funding and delivery. They acknowledge the potential of instruments such as patient choice, deregulated contracts, true risk-based insurance, health banking and private philanthropic ventures. Market incentives are now being called to the rescue in traditional strongholds of socialized care such as Scandinavia or even in Canada after the Chaoulli ruling of the Supreme court that lifted an iniquitous ban on private healthcare.


Insurance is no Deus Ex-Machina


Insurance is no more than a tool amongst many others designed to cope with unpredictable risks and unpleasant certainties that afflict the course of human existence. Insurance does not make people healthier, it does not make doctors more efficient, it does not multiply hospital facilities and will not stop individuals from passing away when their time has come.

By crediting regulated health insurance with magical powers that it does not have and at great expense, politicians blur the path to other innovative means of financing our health care needs. In that respect, President Bush past proposals of tax discounts for health insurance offer a modest though possibly more efficient way of improving insurance coverage without inhibiting other forces that can deal with healthcare more efficiently and humanely than big government and its bureaucracies.

Human progress stems from an incremental trial and error learning process that spans over generations. Some lessons are learned the hard way. It took more than half a century of gulags before eastern Europeans discarded totalitarian utopias spawned by hardcore socialism. It may take us longer to discover that even in democratic societies, political wishful thinking and worn out social security models deliver neither health nor security and cost dearly in terms of liberties.


Vox-Medici Commentary

N° 0 - March 2008

Alphonse Crespo MD

March 19, 2008