Health care

Wouldn't it be better for all of us if the government got out of health care and health care got out of the government? Why not let the market keep prices down by separating the two? Competition would keep the prices of insurance down, it only can't now because the the American fascist health care system.

I am appalled that you think socialized heath care is the way to go. Look at Canada, look at any European country with socialized health care. We might have to call our doctor a month or two in advance to make an appointment, but there people wait for years, YEARS before they can see a medical professional. Doctors in those countries spend something like 70% of their time, dealing with bureaucracy and fillings and the like, instead of treating patients.

Let's free health care from the government and visa versa and show the world what a healthy health care market can do.

Rob, Medicare (without competition) is more efficient than insurance companies (with competition). The experiment you propose has been attempted, and those are the results.

How is a government monopoly more efficient than the open market?

Because you are blogging here, I'll assume you are an intelligent man, but you know as well as I that monopolies how no inclination to be efficient. Why throw more money into it?

Take for example, welfare. Ten years ago, Clinton passed into law reforms that cut the amount of money going to welfare. Because of that, the number of people on it has reduced by more than 50%. A vast majority of those people are making more money working than they did on welfare, and may never have come off it if not forced.

We have seen many times now that throwing more money at a problem won't solve it, why is socialized health care any different?

Rob - I'm not going to defend straight-up socialized medicine, but healthcare _is_ different from a lot of other goods and services where free markets have worked to everyone's benefit. Healthcare, like housing, utilities, etc, etc, are so basic to human flourishing that we can't afford, ethically speaking, to allow even a few of our neighbors to go without the basics. It might be possible to do this in the healthcare arena without turning control over to the government, which I think we have good reason to think can't do any practical thing in a practical way. But to think that greed combined with competetion is going to take care of those most in need is naive.

I'd rather focus on details than labels. Talking about "socialized medicine" is a scare tactic, not an actual argument.

Data, however, consistently show that Medicare spends 2% on adminstrative costs, while private insurance can divert up to 30% into those costs. That's more efficient. Here's a nice discussion of the details.

The key difference in any insurance setting is the size of the risk pool and economies of scale. A Balkanized marketplace will leave smaller risk pools, requiring more money to be kept in reserves. That raises costs, which pushes the healthiest people to skimp on their coverage, which means that sicker people have to spend more to get any coverage at all. It's a system of adverse incentives.

Simply requiring everyone to carry health insurance (as we do for car insurance) would mean a huge step in the right direction. But we'd still have bizarre risk pools, and we'd still be noticing that Medicare is more efficient. Lower administrative costs means lower premiums, and lower premiums would attract more people, and ultimately we'd expect the market to converge on a Medicare monopoly, or a market of Medicare clones.

The advantage of a Medicare monopoly is that Medicare, as a public institution, is subject to public scrutiny. Corporations don't ultimately have my interest as a customer at heart. If they can niggle me out of money without making me healthier, they're better. Medicare is the government and the government is the people. Those adverse incentives disappear.

Theory is wonderful, but the evidence doesn't support the claim that national healthcare is less efficient than a patchwork of private insurance.

Josh - As I said, I think healthcare is "different" from run-of-the-mill goods and services in a way that makes it unsuited for free-markets. By the same token, addressing the issue in terms of efficiency is not going to solve the ethical problems. If you want efficiency, then look to the way HMOs try to use resources in a way that maximizes returns as measured by improved health status. This translates into _not_ applying resources to those most in need, since you don't get as much bang for your buck there. That might be good economics, but it sucks as healthcare ethics.

BTW,do you really believe that our only choices are a national healthcare system vs a patchwork of private insurance?

Any psychologist will tell you that humans are very good at trying to fix problems once they've happened, but very bad at trying to prevent future problems.

That's why the free market is so good at solving problems like how to get t-shirts or sandwiches to people efficiently. Individuals recognize a current problem (e.g., I am hungry) and then try to fix it (So I will buy a burger) without incurring further unnecessary problems (but not one that is overpriced.) It's also why the free market is so bad at preventing future problems, especially ones that require a collective response. For instance, we all agree (I mean, except for the crazy people who don't accept the germ theory of disease) that vaccinating against a disease is preferable, both personally and economically, than having people get a disease. And vaccination is increasingly efficient the higher the percentage of the population that is vaccinated. But vaccines are almost always money-losers for manufacturers, which is why vaccine production is subsidized by the government. (And if it wasn't, we'd have very few vaccines indeed.)

It's very difficult to get people to pay good money to keep from developing a problem they don't currently have. It's very hard for the human mind to come to grips with the fact that the reason *why* a problem doesn't exist at present is because it has been successfully prevented, and is not evidence that the problem no longer exists.

But efficient healthcare is about prevention of problems, not fixing problems post facto. Fixing problems is great, too, but not nearly as cost-effective. For instance, it costs just a few bucks to insure that a pregnant woman gets enough folate in her diet, but tens of thousands of dollars to correct spina bifida in her child (assuming it's a mild enough case that it can be corrected with surgery.) Vaccinating against polio costs a few cents, but contracting polio can disable for life. And ask anyone on chemotherapy about the relative costs of preventing cancer versus treating cancer.

This is how it can be that both Josh is right, when he says national healthcare is more efficient than is a laissez-faire system, *and* Rob is right when he says that a laissez-faire system deals with current, individual health problems more quickly than does a more socialized system. This is how it can be that we Americans can have the most free-market healthcare system in the industrialized world, spend more per capita on our healthcare than any other nation, and still have such disappointing results (e.g., shorter life expectancy and higher infant mortality than any other Western nation). If Rob were correct about the salutory power of free markets on the efficiency of health care, Americans should be healthier (live longer, be disabled less, have more surviving babies) than we are. The fact that we are much better than other Western countries at treating problems quickly *once they have already become problems* does nothing to change this.

Josh,

"Simply requiring everyone to carry health insurance (as we do for car insurance) would mean a huge step in the right direction."

Compulsory insurance? That's a great idea. Let's require everyone to carry health care, and while we are at it, let's make sure that the only place they can get it is from the government. Regardless of what you want to call it, when you can only get a good or service from one source, that source has absolutely no reason to give it to you cheaply. That's a monopoly. I am REALLY looking forward to those 2 year long waiting lists for children to get their immunizations.

There is no good reason for the government to tell me, an able-bodied 23 year old person, that I am both required to get insurance, and that I have to buy it from them, at whatever price they deem fit.

The reason insurance is so expensive now compared to government subsidized system is because everyone, including the insurance companies pay out the ass for it. I don't want insurance, nor do I need it. If the government wasn't taking it's 12.5% out of every one of my pay checks, not only could I afford private insurance for a family of four, but I could also invest in a retirement account. Many people in the US don't need insurance and would be better served by taking the money that would go you Medicare, Medicaid, and your dreamy compulsory insurance and invest that in a savings account. If they don't? That is their fault. It is not the government's job to legislate against shortsightedness.

Given that the US is the only country that doesn't have universal health care in the industrialized world AND pays more per capita (on a percentage basis) on health care, I'm not sure that free market advocates have much of a leg to stand on.

The whole POINT of insurance is to spread risk and cost. Trying to opt out guts the concept of health insurance because you may not need it now, but you will in the future.

You are ignoring why insurance is expensive in the US. The US has a much higher incidence of malpractice lawsuits, which in turn means doctors must buy more and more expensive malpractice insurance, which raises the cost of medical attention, raising the price of insurance for us all. Many doctors pay in excess of $30,000 annually in malpractice premiums, some establishments pay upwards of $100,000.

You all talk about the US health care system like it is a free market. True, there are several companies offering services, but the market is far from free. Every state and the Federal government have mandates as to what insurance must cover. Silly things like baldness treatments and acupuncture, thank you lobbyists. Instead of blaming a regulated market, calling it free, and asking for a government monopoly, why don't you fight for it to be really free, where we have choice both in provider and in what they provide. Let families who want maternity insurance, pay for it, instead of making all females. Let me buy bare bones insurance, for emergencies, instead of making me pay for prescriptions of Viagra, that at 23, I don't need.

There is nothing wrong with the free market, you all have yet to let the free market work. But handing over the health care market to the State is the worst idea I have ever heard. What industry has the state provided better than the private market? How many Socialist governments have crumbled under the weight of their bureaucracy and central planning. You all seem to think that a government health care industry would be better than a free market one, but no one has yet to address the many year long waiting lists that people who live in countries with socialized health care have to wait in. You have yet to address the fact that the doctors in those same countries spend more time appeasing the government than they do treating patients.

Yes, you'll say that people in those countries live long, or are healthier, or whatnot. But is that a function of their health care system, or is it because they exercise more and eat better and less? Instead of going to McDonald's a few times a day, they walk to the local market every day and buy products from local markets, from local farmers. That instead of spending hours in from of TVs and video games, they actually get out? Americans are less healthy, because we do not live a healthy lifestyle, not because they health care system sucks.

Rob,
I am sorry to say that I find your argument long on faith and short on facts. The syllogism: [(A)Free markets are the most efficient providers of health care; (B)The United States has the most free market health care system; therefore...] does not work because the real, factual conclusion is that the United States has poorer health outcomes, in the aggregate, than do many countries with more socialized health care systems. Saying that this is just a result of us Americans being fat and lazy is hand-waving, and implies that you will accept no factual result that contradicts your faith in the market. (Certainly, you don't blame America's high infant mortality rate on bad American habits, do you? That the dead babies' future of fat-filled diets and lack of exercise is what killed them before their second birthdays? Btw, maternal high blood sugar and high blood pressure are *good* for developing babies, as is gestating in a mom who's a little on the chunky side, so don't blame the dead babies on Mom's bad habits, either.) Similarly, the contention that all would be well with American health care if that nasty government would just get its nose out of our business is an awfully weak rationalization, given your implied syllogism (listed above). If it were true that the current American system would function much better if it were much more free, then the American system (being the freest in the world) ought to be functioning at least a little bit more efficiently than any other system now in practice. It is not. Again, this is a matter of fact, not philosophy.

It is certainly the case that paperwork eats up an inordinate amount of medical resources, either through malpractice insurance (in the USA) or government/insurance paperwork (in the USA and elsewhere.) But you seem to be under the impression that having a *single* bureaucratic customer (as is the case with healthcare in Canada) somehow involves more paperwork than having *many different* bureaucratic customers, all with their own sets of regulations. (This indicates to me that you have never worked in the office of a large company, or owned your own business for any appreciable amount of time, although please correct me if I'm wrong.) Large hospitals have entire departments of at least a dozen full-time employees, whose sole job is to correctly file insurance paperwork. This job takes an incredible amount of training, because each company has their own forms, their own rules, and their own idiosyncracies. (For instance, some insurers insist that routine lab tests be done in-house, while others insist that lab tests be run by an outside company.) This is not as much of a problem in countries with more socialized healthcare, because there is only one customer, with only one set of rules (no matter how complex those rules may be), and one set of idiosyncracies to be learned. Malpractice suits are also less common in other countries than they are in the USA, further reducing unnecessary costs.

Finally, you write, "What industry has the state provided better than the private market?" Well, roads, for one, and national defense for another. Do you really think that the interstate highway system would be more efficient if it were brokered by many individual transactions between drivers and private owners of short swatches of road? Do you think we'd be safer, with less investment, if we each hired private mercenaries to protect us individually from al Qaeda rather than paying taxes to send soldiers to protect the whole nation? What armies and interstates have in common with healthcare is that all three, fundamentally, are about preventing future problems. And prevention, as I've previously discussed, is something that the free market is really bad at, because people are really bad at it. In a future post, I hope you will address this point.

And speaking of prevention, I would sure like to see a source for your assertion that there are "2-year waiting periods" for immunizations in other countries, but not here. Because it's here in the States that we only have about 1/3 of the flu vaccine that we need manufactured every year, and we ration it as a result. It's here that pharmaceutical companies are subsidized to produce the MMR vaccine, which they still don't make enough of and still lose money on. Are you sure you are not thinking of a two-year wait for certain disease *treatments* in some countries with socialized medicine? Because that is a very different issue than disease *prevention.*

Looking forward to your response. Best wishes.

Rob, the malpractice dodge has been extensively debunked, to the extent that even the insurance industry is backing away from it.

And others have rightly pointed out that you opting out of health insurance is exactly the problem. If only sick people have health insurance, the risk pool dries up. Heck, I'm a safe driver, why should I be forced to carry auto insurance?

Even healthy people break legs, get the flu or West Nile, and get old. Insurance won't prevent that, but it will guarantee that, no matter what, you can get treatment.

As for whether the government ought to legislate against shortsightedness, I think you're missing a key point. If we had no societal commitment to helping people who are down on their luck, it would be one thing. If we were content to let old people starve, or to let them be forced into choosing between medicine, food and housing, you'd be right. Let people make bad choices and suffer the consequences. But we do have that commitment, and rightly so. And an ounce of prevention being worth a pound of cure, ensuring that everyone is insured would save us money over the long run.

Arguments about the quality of care in different systems is inherently dependent on the details of the system. To assume that American health care would replicate faults in other systems assumes a stupidity that'd rather not assume a priori. We currently spend 14% of GDP on healthcare, Canada spends 10%. They have lower rates of infant mortality, longer lifespan, and are generally quite satisfied with the system. I expect that if they spent more on the system, closer to 14% of GDP, they'd be even happier with it.

Again, if we just spent the same amount of money we now spend on healthcare, we could have a much better system. It would cost no more than it does now, and could readily cost less. Other nations with national health care spend half to three quarters of what we spend per capita. That extra spending could easily shorten waiting lists.

"And prevention, as I've previously discussed, is something that the free market is really bad at, because people are really bad at it. In a future post, I hope you will address this point"

People are bad at prevention, yet isn't a government run by people? Every System is flawed, it is finding the least imperfect system that is the goal.

In socialized healthcare systems, there no incentive to be a doctor. The state pays doctors a flat rate, so there's no possible way to actually turn a profit. The pay a doctor recieves is one of the main incentives to becoming a doctor.

Also, when doctors recieve less pay, it harder for them to pay off student loans that they recieve for 8+ years of college. Such a system would eventually lead to the government paying for doctorate degrees. This burdens the tax payer even more.

Also, why shoud I, a tax paying citizen, be responsible for paying for the ailments of the unhealthy, when I myself am healthy? Is it my responsibility? No. Those who are healthy individuals are instead rewarded with the burdon of paying for the poor health choices of those who are unhealthy. The leading cause of death in america is due to Cardio-vascular problems, most of which can be traced back to poor diet and tobacco use.

Insurance rates are higher for those who use tobacco products for a reason, they are more prone to health problems. In a socialized healthcare system, there is no meathod of monetary dissuasion to make people quit tobacco.

Socialism goes against the long standing values of America. With socialized healthcare, we would lose one more precious freedom.

"[Josh] has just demonstrated onece again that he lives in the unreal world of academia"

Oh yeah, the life of a grad student is *so* luxurious. The princely wages of $10K - $12K per year if you're lucky, the privilege of seeking living quarters in university towns with notoriously high living expenses, the thrilling challenge of being verbally abused by chickenshit anonymous trolls . . .

[/sarcasm]

Zach writes: "Also, why shoud I, a tax paying citizen, be responsible for paying for the ailments of the unhealthy, when I myself am healthy? Is it my responsibility?"

Perhaps not, but it should be your concern, especially in the case of infectious diseases. It's true that if some chap dies of a heart attack because he didn't have health insurance (and drank too heavily, and didn't work out, and had all the other moral failings you'll ascribe to the ill until you get sick yourself) it doesn't concern you much except in terms of your pocketbook. But if some guy gets tuberculosis, which is undiagnosed and untreated because he lacks health insurance, it may concern you very, very much when you start carrying a handkerchief so you can catch the bloody bits of your lungs as you cough them up. The fact that many easily communicable diseases are only preventable, or only curable in early stages, changes the healthcare equation entirely. For purely selfish reasons, you should support government funded vaccines, TB screenings, etc.

Zach, you also ask, "People are bad at prevention, yet isn't a government run by people?" Yes, and there's the rub, eh? But surely you'd agree that decisions about future threats to the nation generally are best made by elected officials whoe sole job is to work out the details of such things, rather than by each citizen individually. Or do you think that it's an unconscionable violation of my freedom that I didn't get to veto my share of the Iraq war, since I personally don't agree with how it's being waged?

The Almighty asked Cain where his brother Abel was. "Am I my brother's keeper?" Cain replied.

Again, the per capita cost of national health care would be less than the current system. Why is there so much objection to saving money?