Robin Hood is famous for “taking from the rich and giving to the poor,” but the rich from whom he took were the Sheriff of Nottingham and his buddy, the usurper Prince John, and their cronies. The poor who benefited from Robin Hood’s supposed brigandage were common folk subjected to the oppressive yoke of high taxes that the evil Sheriff and corrupt Prince distributed to their rich cronies in order to stay in power. Little is more evil than using government’s monopoly of force to take from those of modest means to create and serve a wealthy privileged class.
Robin Hood was a freedom fighter, not a revolutionary. He didn’t grant largesse to the poverty-stricken masses toiling in an exploitive economic system after he robbed rich capitalists. He gave the common people their own hard-earned money first stolen from them by a corrupt government.
Health Care: Crony Industry
Over one-sixth of the nation’s economy is devoted to health care. Of the top-20 average-salaried occupations in the nation, 15 are in some form of medicine; lawyers rank 23rd. Federal spending alone on Medicaid, Medicare, and Obamacare exchange subsidies amounted to 5.4 percent of GDP in 2017; in 1995 the percentage was closer to three percent. That doesn’t count the states’ share of Medicaid spending or a host of other health-related programs. Hospitals are often locally subsidized. Many states provide scholarships to medical students. Nonprofit hospitals, especially in urban areas, and none of which pay income tax, are extremely wealthy, and multi-million-dollar salaries for their CEOs are common.
The crony privileges that the extraordinarily wealthy health industry enjoys extend beyond governments handing over the money of taxpayers with relatively modest incomes. It extends to incentives in the law, especially tax laws. In most states, medical services are not sales taxed, an advantage that accrues to medical providers as much as consumers. Federal income tax law explicitly exempts employer-paid benefits from taxation, including health insurance (actually pre-paid health care and not true insurance at all). The incentive is to “pay” employees by handing piles of cash to third parties we call health insurance companies as part of a now-gigantic tax avoidance scheme.
The problem with having third parties like health insurance companies, Medicare/Medicaid, the VA, and others pay 90 percent of what’s spent on health care is that prices have ceased to discipline the system. In my own experience, I have been charged $700 for a boot that, I discovered later, could be bought for $70, brand-new, on the internet (for more examples, see Overcharged: Why Americans Pay Too Much for Health Care). It’s nearly impossible to get even an estimate, much less a commitment, to a price for the simplest of medical procedures. Doctors and hospitals contract with insurance companies, not patients. Insurance companies contract with employers, not patients. Employers pay the premiums directly. The patient/employee barely even gets to see the bills, and co-pays and balances that patients pay are usually so high, that you’d think they were the final bills, but patients actually pay only a percentage, and the actual total paid by insurance is often unknown to patients.
If you think the previous paragraph doesn’t describe a crony scheme designed to bilk trillions out of regular Americans who can’t really afford it, then there is a wonderful Ponzi scheme someone is putting together that you would be interested in, as well as some ocean-front property in Arizona you might like to buy. Other than some growing pockets of free enterprise like The Surgery Center of Oklahoma, which provides upfront pricing, there is little in the way of free markets operating in health care. When people point to health care as some sort of proof that markets don’t work, they are either displaying their utter ignorance of what markets actually look like or they know the truth and are lying.
The problem with Obamacare from its very inception was that it could not possibly solve the problem of exorbitantly expensive health care in this country when all Obamacare did was double down on the very third-party-payer system that caused the problem in the first place. The emphasis on “expanding coverage,” regardless of which political party or think tank advocated it, has always been destructive. If most of us relied on others to pay our car repair bills, with those others getting the money from our employers, who paid premiums that were tax deductible, the cost of car repair would be sky-high. Expanding such a ridiculous scheme would only make the problem worse, not better. But the car repair industry would love it, and would do all it could to expand it.
And that’s what the health care industry has done. Overwhelmingly, it supported Obamacare. According to the health care industry, the only solution to any problem it represents is to spend more money on it, expanding its already huge take of the nation’s GDP. And the health care industry spares no expense in making its case, spending $594 million on lobbying in 2019 alone. Health-related industries constituted five of the 20 biggest lobbying-spending industries in 2018 (I include insurance) with pharmaceuticals, by far, the biggest-spending industry of all. It takes a lot of money to convince policy makers across the nation that a fabulously wealthy industry suffers from poverty caused by unpaid bills and copious charity, both of which are actually minor expenses.
Medicaid Expansion: Benefiting Industry, Not People
So nobody should buy the hype that “we” get $9 for every $1 the state of Oklahoma, or any other state, spends on Medicaid expansion. Wealthy health care industry cronies get $9 for every $1 a state spends on Medicaid expansion. How many more citizens are going to get needed health care that they were not getting before? Hardly any. Sure, more will be “covered,” and odds are they’ll show up at emergency rooms more often. Equally likely, hospitals will just raise their prices in order to claim the extra money, just like they did in Colorado. And Oklahoma physicians, already the best paid in the country, will be paid even better.
It can be said without reservation that health care is, by far, the biggest crony industry in the USA, with nearly a third of its money coming directly from the federal government and no telling how much more from state and local governments, in addition to favorable tax treatment. And, our elected representatives at all levels of government practically fall all over themselves to shovel even more of their regular citizens’ hard-earned cash into the hands of that same enormously wealthy crony industry.
So while the rhetoric of Medicaid expansion often casts the big-spending crony politicians in favor of it as kindly Robin Hoods throwing money to the hard-pressed masses, the reality is that the masses don’t see one dime of that money. The health care industry sees it all. The rest of us only see it if we get to sell the real recipients another luxury car, contract to add another room to their house, or maybe get a job to add another wing onto a hospital for another technology whose services we really don’t need but adds yet another convenient billing opportunity.
The Sheriff of Nottingham was a knot head. No telling how long he and Prince John could have kept up their crony schemes and stayed in power if they’d been clever enough to come up with something as insidious and convoluted as “coverage” and federal cost-sharing with Medicaid expansion. Robin Hood could have been cast as a greedy, uncaring, mean-spirited, and penny-wise/pound-foolish stooge. Odds are, he would have been betrayed by the very people the Sheriff and Prince were ripping off. And if Medicaid expansion happens, whether by initiative, gubernatorial fiat, or legislative action, the biggest beneficiaries, by far, are people who really don’t need, and certainly do not deserve, one more dime of taxpayers’ money.
The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.