Hayek on healthcare: Don’t be serfs, Americans!



I’ve only mentioned Friedrich von Hayek tangentially on The Hannibal Blog so far, although he probably deserves his own post in my great-thinker series quite soon. Hayek was one of the great liberals, properly defined. He was close intellectually and personally to my great-uncle Ludwig Erhard. His book The Road to Serfdom should be required reading.

So I was glad to see Andrew Sullivan revisit The Road to Serfdom to see whether Hayek addressed the topic of health care that so captivates America these days. Hayek did, it turns out, and I had forgotten.

(Recall that I, also with classical liberal instincts, concluded, in my amateurish way, that health care is different enough from other industries to warrant one of two clean and equally acceptable solutions: universal private insurance or universal government–ie, “single-payer” insurance. Anything, in short, but America’s current, fragmented, employer-government-individual hodgepodge.)

Here is Hayek, from Chapter 9 of The Road to Serfdom, via Andrew:

Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision….¬†Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance – where, in short, we deal with genuinely insurable risks – the case for the state’s helping to organize a comprehensive system of social insurance is very strong… Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make the provision for the consequences, such communal action should undoubtedly be taken.

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The “rabbit” in a marathon (and healthcare)


I was talking yesterday to Eron Ferreira, a former marathon runner. Eron is Brazilian, grew up poor and could not afford shoes, so he ran barefoot, as many Kenyans do. Later, when he was able to afford shoes he realized that they were soft, mushy and pointless, so he kept running barefoot. But he still had to make a living, and in the 1990s he did that by being a “rabbit“.

Now bear with me: As Eron was telling me about his time as a rabbit, I suddenly understood why Obama’s health care plan, which includes a controversial public-sector insurance option alongside private plans, is correct.

In the context of marathons, Eron explained to me, a rabbit is somebody whom the event organizer pays to run quite fast for the first half of the race. It is understood that the rabbit wears himself out this way, and he can stop running in the second half.

Now, why would the event organizer do such a silly thing–ie, pay somebody … to run fast in a running race? (!)

Apparently, because without such a pace setter, the other runners would hang back tactically and not run fast. It would be boring for the spectators. It would be bad sport. In any other industry, including health care, we would call this a market failure. In theory, it should not happen, but in practice, it does.

1) Success for Eron

In Eron’s case, this once led to his big break in life. One day, during a marathon in France, he was being a rabbit and running quite fast for the first half. He felt great that day, and it occurred to him that he did not technically need to stop, or even to slow down, at all. All the other runners knew he was “just the rabbit”, so they had allowed him to get ahead a bit. Eron looked back, saw that they were far behind him, and just kept going till … he won!

2) Success for health care

And what does this have to do with Obama’s health care proposals? Well, you may have heard that the health care industry and Republicans are preparing to gun down his plan because it will have a new, public insurance option alongside private health insurers. How un-American! How unfair for the private insurers! How socialist!

(For my general thoughts about health care, look here.)

Need I say more? In theory, all the private health insurers should be running fast to win the marathon and make spectators happy. In practice, they are all hanging back tactically. What this sport needs …. is a rabbit!
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