In the giddy days after the passage of ACA, I was chatting to a PhD student in health economics. He was in love with the ACA. He kept repeating that it would reduce costs, increase quality and increase access. Nothing original. You know the sort of stuff you heard at keynotes of medical meetings; ‘Healthcare post Obamacare’ or ‘Radiology in the new era.’ Talks warning us that we were exiting the Cretaceous period.
He spoke about variation in healthcare, six sigma, fee-for-value and ‘paying doctors to do the right thing.’
‘How?’ I asked.
‘I just told you, we need to pay doctors for value and outcomes.’ He smugly replied.
‘How?’ I asked again.
He did not answer. Instead he gave me the look that one gives an utter imbecile who doesn’t know the difference between a polygon and a triangle.
My thoughts drifted to the great polar explorer William Shackleton, stranded in Elephant Island, Antarctica, with his crew looking at the night sky in negative sixty Fahrenheit.
‘Sir, what are we going to do so not to freeze next to the penguins?’ One of his crew asks.
‘We need to get out of here.’ Shackleton replies, thoughtfully.
‘Well thanks Captain! That’s what I call strategy. Why hadn’t I thought of that?’
Yes, why hadn’t I thought of that? Let’s just pay doctors to do the right thing. So damn obvious, eh! Except Shackleton probably would have said what I had hoped that economist would have acknowledged: ‘I don’t know, you imbecile.’
‘We need this’ is not a strategy. Just because we articulate a problem doesn’t mean the first thing that strikes us is the solution. Neither hope nor desire is either strategy or solution.
Was this economist, a wonk working with complex equation and models, one of the voters Jonathan Gruber was alluding to? Or was he in the ‘know’?
Actually, neither of the above. He was an aspiring technocrat; an emerging type of quantitative scholar who has over intellectualized the social sciences. He thinks he can rationally engineer society, just as an engineer builds a structurally sound bridge. For him the line between data-driven opinion and opinion-driven cherry- picked data is blurred.
He is smart. Very smart. He is not disingenuous or intellectually dishonest. Nor is he brainwashed. He has been commended all his life for post hoc rationalization of his opinions by an audience that listens to the same music. It’s not that the ends justify his means, it’s that the ends define his intellectual means.
Such people do not like arguing. If you question the solution too much they will quote something like ‘people who say it cannot be done should not interrupt those who are doing it.’
They are rarely ever challenged epistemologically. Occasionally, they’ll say ‘now let me play the Devil’s advocate and ask, how our new system can have problems.’ This ends up being a comical affectation of objectivity.
They are rationalists but treat numbers with the same reverence as Galileo’s captors treated god. The gods are different. The certitude in their omniscience is the same.
Technocrats are well meaning, as are people who have boundless faith in them. But being well meaning counts for rabbit droppings when it comes to the objective truth. Reality doesn’t care about our sincerity. Reality is what it is.
What’s the provenance of such optimism in technocracy?
I believe this is a phenotype of rational ignorance. It’s a heuristic. When we want to have our cake and eat it, we say ‘SOS, Technocrat. Get working!’
Few have the time to find out whether the technocrat’s solutions are really solutions or an introduction to another set of problems. More importantly, even fewer have the inclination to do so, particularly if the technocrat is building our perfect world.
There are prescriptions for technocrats. Classes in epistemology, philosophy of science and introduction to Karl Popper. Perhaps an elective with the 30-hour-week French technocrats.
But I doubt much will work. We want them to be fixers, Pulp Fiction’s ‘Wolf’ character. If they honestly told us ‘on the one hand this and on the other hand that,’ if they prefixed every plausible with a wide range of plausibles, if they spoke not about solutions but problems in solutions, they’d be branded as defeatists, as unprincipled waverers and be out of a job.
If our technocrats are falsely certain it is because we cannot bear the burden of uncertainty. It’s because we want solutions, not hear about trade-offs. Even as you are reading this you may be wondering ‘so that’s the solution?’
Every certainty, every point estimate stated without a confidence interval, every solution proposed without projecting its unintended consequences, is misleading. In the swagger of certainty lies not a lie but a truth: we cannot handle the nebulous and the messy. It is nihilistic. We want simple solutions to complex problems.
This is not a right-left issue. This is an issue of democracy, where people with different preferences, want different things, but do not wish to lose anything in the process of getting more. Politicians happily oblige our Disneyland fantasy. And the technocrats start working on the science that pretends to deliver it.
So ladies and gentlemen, the fault lies neither in Gruber nor in our academic stars but in our unresolvable contradictory desires. We want both security and freedom.
Categories: Uncategorized
No, ACA is not working well anywhere. Please note MA has the highest medical costs per person as well as the highest premiums per person in the country. Let’s take it nationwide…
“That is likely a large contributor to why US healthcare expenditures are higher than those in Europe. ”
Paul, less utilization is argued as not the driving force in European lower costs, I’ll let you do your own Goggling. What does drive prices here is are “the prices stupid”, a quote from an article you can also find.
I know that wealthy corporations (like insurance companies) can embellish their employee benefits such as 401k matching and health care, but that does not include most employers. I bet you also have one of those “cadillac plans” and probably a big bonus at the end of the year – like BCBS executives.
As to so called evil “rationing”, well that is why there is push for HDHPs, to get people to ration who have no choice, while others, like you, can have all the services they can carry.
Peter1,
Overspending in US healthcare is estimated by Rand at 30%….others like Nortin Hadler think it may be as much as 50%. That is likely a large contributor to why US healthcare expenditures are higher than those in Europe. Another reason is that Europeans are accepting of the delays and rationing that help control costs there…..not so for Americans….we like to take responsibility for things ourselves….and that is why most of us highly value our 401ks and our high deductible plans linked to HSA’s. Our employees would try to lynch me if I told them we were replacing our 401k plan with a traditional pension. That is not to say that high fees charged by some 401ks drain returns.
Paul
More on 401ks as I can’t link two sites on same post without being delayed.
401k raiding due to financial problems. Certainly very prevalent after the 2008 bank/Wall Street sub-prime fraud.
http://www.washingtonpost.com/business/economy/401k-breaches-undermining-retirement-security-for-millions/2013/01/14/f54a0e90-5e70-11e2-8acb-ab5cb77e95c8_story.html
“very similar to the 1970′s when many went from traditional pensions to 401ks.”
“Why 401ks have Failed”, Forbes.
http://www.forbes.com/sites/johnwasik/2013/04/24/why-401ks-have-failed/
Yes, just more risk transfer hokus pokus. But we’re not talking about pensions, we’re talking about health care.
Paul, I would like to add that what Peter1 uses as an argument is invalid. Our costs for television sets and refrigerators is higher as well. What does that mean. It means our market economy made us wealthier so that individuals could spend more.
But what Peter1 is comparing is not a single-pay vs a market place rather a multiple of different systems compared to a system that is fundamentally controlled by government in a partial marketplace. [Canada is single-payer. Maybe there is another one or several single-payer nations, but I don’t think there are many if any others truly exist. Single-payer means one payer only and we have tiered systems all throughout Europe.]
What country provides the best healthcare? The US if based upon outcomes. If it is a popularity contest the US will lose. What western nation has the highest per capita income? The US. Compare amenities provided to our poor and those among the non poor middle class of our western friends and one will find that our poor are likely to have more. Can we do better? Of course. Who can’t?
Peter1
Yes, good points……very similar to the 1970’s when many went from traditional pensions to 401ks. How are factory workers going to buy stocks and buy bonds and annuities….they must have this provided for them by people much smarter……and the sceptics were right, as it was hard to do back then…..but the financial services industry developed products aimed at that factory worker….including low cost Vanguard index funds….that allow the factory worker to beat the so-called smart guys. The same will happen in health care….it is happening since now as high deductible plans have grown to 30% of the private market…..and people LIKE owning their health care dollars and saving from prudent consumption.
Re European single payer lower cost…..one phrase for now: “crooked teeth” vs. American teeth. More at a later date.
“Free markets places have been shown over centuries to be the best approach to efficiently allocating resources and being a catalyst for innovation’
Paul, can you give me an example of health care in a free market industrialized country that beats single-pay on costs and access, surely if it’s so attractive someone would be doing it?
If the U.S. is mostly “free” market health care why then are it’s costs about double of single-pay countries?
Health care risk is the risk, the only way insurance limits their own risk is to pass it on with a reduction in benefits when they can’t squeeze patients any more on premiums. HDHPs are a shell game designed to hoodwink the patient into thinking they’re getting a deal. Great when your healthy (and with resources), not so good when your sick, like so much in health care. Purchasing across state lines only means you may be able to buy less coverage – less coverage for you will mean higher coverage costs (smaller pools) for the fractured health care others need.
I don’t know how giving individuals the ability to “bargain” prices gives them “power”. Not sure if you’ve ever tried to negotiate separately with the hospital and the surgeon, and the anesthesiologist, and the radiologist and the drug company etc. etc. when trying to get prices on surgery – it would be quite a feat, especially if you’re admitted through the ER . Yes you can pick outside clinics for certain things (like imaging, if you’re conscience) IF the hospital has not already bought them, but that’s not what drives health care costs – it’s inpatient hospitalization.
Try also picking the doctor you like from one hospital, the anesthesiologist from another hospital and maybe the radiologist from another in trying to assemble your best cost/performance team.
“Contract law has existed for ages. I don’t know of a good substitute for contracts. Do you?”
Contracts enforced by the judiciary or mutually acceptable substitutes like arbitration are essential to free markets….where supplier and customer freely enter an agreement without coercion. Otherwise we end up with no one trusting anyone except family and friends…..a huge impediment to economic development and prosperity….as we see in many countries like Afghanistan and South America.
Peter1
Medicare and Medicaid fixed prices represent 35-40 percent of all US healthcare payments (source cms.gov for 2012). And most insurers agree to medicare + a fixed percent. Furthermore, the set up severely hinders creative bundling of services (only fixed procedure codes)….another anti free marketplace option of almost all other services and product providers.
I agree with you that many regions have anti competitive features, such as a single hospital system giving the provider huge power to impose higher prices. State regulations have the effect of limiting cross state competition so many many regions have only a few insurers….often with a dominant player who essentially tells providers what they will pay….squeezing docs and hospitals. The company I was on the Board of had 65% market share….the next closest insurer has only 20%….our operating managers just set the prices….and the docs/hospitals hated us……and often responded by consolidating to fight back (the 2 cardiology groups hated each other……but they hate us more so they merged so they could set their own prices).
Yes high deductible plans shift risk…..and power….to the patient. Many employers use them and offset the financial impact by making often big contributions to the employee….with the nice feature that the contribution is suddenly the employees own money that carries over….so they become motivated seekers of value (optimizing cost and quality) as they are in every other domain. I think the ACA is a very bad law…..but the use of high deductible plans with subsidies is a good feature….though I like Ben Carson’s idea that the gov. should make contributions to HSA’s rather than make subisidy payments to insurers.
Free markets places have been shown over centuries to be the best approach to efficiently allocating resources and being a catalyst for innovation…..and they will work fine in health care once patients and doctors take back decision making power and authority.
Looking foward to your reply.
Paul
Yes, Peter1 fixing things frequently can be a good way to go, but this piece of legislation has so many problems that I fear it can never be fixed. Additionally the fixes to the many problems that exist create new problems.
The law was very poorly written with holes throughout. Considering that it was pushed though without bilateral agreement and deeply involves the entire population this bill should be replaced.
“Because of the ACA a lot of companies have dropped coverage that was good for their employees.”
How good could it have been if they can’t afford to continue to insure their employees. Why would they drop what they were providing, unless they’re gaming like this:
http://reason.com/blog/2014/10/22/how-obamacare-helps-employers-game-the-s
This appears to be a problem:
“Because the ACA is built on the assumption that individuals with employee benefits have coverage, it prevents individuals who accept employer coverage — however barebones and inadequate — from qualifying for premium tax credits and cost-sharing reduction payments. Even an offer of “adequate” and “affordable” coverage can disqualify individuals from tax credits, whether or not it is accepted. Indeed, the offer of affordable individual employer-sponsored coverage to an employee disqualifies the employee’s entire family from subsidized exchange coverage, even if family coverage is clearly unaffordable.”
Needs to be fixed not repealed.
Many states did not expand Medicaid, how is that helpful to uninsured.
Because of the ACA a lot of companies have dropped coverage that was good for their employees. Those employees earning less than 138% end up on Medicaid.
That is known as an unintended consequence even though the administration was notified of these types of problems in advance.
Above “if not Medicare” should read, “if not Medicaid”.
“Peter1, the ACA has caused people to lose their employer sponsored healthcare and they have ended up on Medicaid. My goal would be to provide the opportunity for care that is better than what the ACA has left these people with.”
Allan, I’d have to understand the circumstances why some people lost employer coverage to Medicaid. Obviously their employer income was so low they qualified for Medicaid (the poorest of the poor). I’d also have to know what type of coverage they were getting from their employer. Under the ACA these people would probably have qualified for a 100% subsidized private policy. Do you have details or is this just internet rumor?
We seem to be in agreement about getting rid of Medicaid, but if not Medicare then what would you replace it with? Certainly a totally subsidized private policy seems better than Medicaid – would it not?
“Medicare?”
Peter1, the ACA has caused people to lose their employer sponsored healthcare and they have ended up on Medicaid. My goal would be to provide the opportunity for care that is better than what the ACA has left these people with.
“I would like to see all patients have the opportunity of care that is a step above Medicaid.”
Medicare?
Saurabh, for me to understand what the problem is you would have to go into greater detail. For now I can only guess. I assume you are considering contracts between insurers and patients. There are always the bad apple problems seen in everything we do, but outside of those bad apples I don’t see the problem.
We had severe problems with HMO’s, but those problems were mostly created by government. As you well understand a contract is an agreement between parties where each party is legally bound to provide something to the other party. The contract is then generally recorded and litigated if there is a contract dispute. Contract law has existed for ages. I don’t know of a good substitute for contracts. Do you?
I can only surmise that your difficulty with the contract is that it could be too lengthy and difficult to understand. That is indeed a problem and that is why I suggest a standard contract that offers what is necessary and provided by almost all insurers today. It would only be used as a template and be totally voluntary.
The insurer would then in clear language have to provide additions or subtractions to the contract where the insurer would hold the burden of proof. That would mean that if the wording was poor or unclear the patient would prevail.
I cannot say who the best doctor is for everyone nor can anyone else. Invariably in the minds of some there is always a need to fight when things are divided up even if the division is done at random. All sorts of unjustified complaints and solutions are created to satisfy the mob mentality.
Tiers in this case have to do with finances. To some extent tiered healthcare exists everywhere. The ACA tiers patients. Take note the number of people placed on Medicaid, a substandard program. Others are tiered based upon age, Medicare where wasted funds are the norm.
“What medical care in your market “doctor/patient” relationship would you deny”
I would like to see all patients have the opportunity of care that is a step above Medicaid.
Saurabh, I would not consider India to be a modern industrial nation – would you? It has tremendous potential but severe problems to overcome.
I’ve been to India, large disparity between rich and poor – maybe if middle class here keeps getting hammered we’ll be able to say we mirror India. What a success story that would be. But paying cash does limit what can be charged. Would you advocate paying cash for house purchases to lower the cost of housing?
You might look at Japan with highly controlled medical prices. Japan cut the reimbursement for MRI drastically – the “market” then developed MRIs that cost a fraction of what we pay here in U.S. to be able to meet “market” conditions.
Allan: “I don’t understand enforcing something that comes naturally”
Contracts. It would be a legal nightmare enforcing these.
Peter: “Would you triage based on finances?”
The segmentation would result on ability to pay.. India is instructive in this regard. I’ll write more about it sometime.
http://blogs.bmj.com/bmj/2014/09/04/saurabh-jha-the-sunnier-side-of-indias-free-market-for-medical-imaging/
“We cannot all see the best doctor or have the luxury of a ten O’clock MRI.”
First how would you “tier” best doctor, worst doctor? Isn’t competent doctor what we all want and should have access to? What medical care in your market “doctor/patient” relationship would you deny to people who need medical care? Would you triage based on finances?
Yes, Friedman, the best of the best.
“Asymmetry of information is bridged by trust.” A wise statement Saurabh, that points in the direction of the doctor/patient relationship.
The market has to be tiered. We cannot all see the best doctor or have the luxury of a ten O’clock MRI. We cannot even agree upon what healthcare is. Fortunately we are a rich country so we have the ability to offer high quality medical care to the entire population, but I am sure that if I avail myself of a bit of extra luxury paid for at my own expense that will generate a mob that will say healthcare isn’t equal enough and that is a violation of rights even though such care universally would diminish the socio economic status of those that we need to protect.
I see that we have significant agreement, but I am at a loss by your final statement “I do see a problem in enforcing a market in the US.” I don’t understand enforcing something that comes naturally
Allan, I would not infer from Arrow’s thesis that markets are worse than government intervention. As Friedman warned, the government comes with its own set of incentives.
Asymmetry of information is bridged by trust.
But the kicker in the thesis is the predictability of need and quantity of medical services. Left to the market this will lead to tiered segmentation, as in India.
Thing is, it works in India, but it won’t work here.
My skepticism of markets is not philosophical: I see no ‘right’ to healthcare, as in ‘right to freedom of worship.’
I do see a problem in enforcing a market in the US.
Saurabh, Your statement about Kenneth Arrow is enlightening. I think it may explain some of the philosophical incongruities I find with your approach to healthcare. If I am correct you might be weighting Arrow’s statements on information asymmetry more highly than I believe warranted (Of course you could be considering other distortions.). Some believe that information asymmetry requires government intervention. Is that true? To answer that question only requires one to ask, doesn’t government face the same problem of information asymmetry? Does government have an answer? Obviously I don’t think so and believe government could improve the asymmetry problem better from the sidelines than by being an active participant.
Paul,
Seeing the comments later, Hayek’s sentiments on healthcare have been correctly identified.
That is Hayek considered healthcare no different to public education. Admittedly, there were no PET scanners in that time.
Why healthcare is different? I’ve been quite influenced by Arrow’s work (Uncertainty and Welfare Economics of healthcare).
http://en.wikipedia.org/wiki/Kenneth_Arrow
I’ll certainly explain in a future submission, but the Austrian School are big in to information problem, which one would incur with multiple payers.
Peter1 writes: “Sounds like he would have no problem with single-pay system of health care.”
Yes, that would be the left’s soundbite interpretation. Do you really want to live your life on soundbites? I guess it is a hard habit to change when the alternative requires thinking and understanding. What you did was extract an outlandish out of context portion of Hayek’s ideas so you could feel exonerated even though he tells a completely different story.
In this chapter Hayek is trying to relate security and freedom. You seem to like the nanny government of collectivists that provides a false security and a lack of freedom. Take note of the fact Hayek is trying to protect the truly needy, but he is not advocating redistribution or collectivism. He is the one that care’s about people, not that mob on the left. Take note of his “security of a different kind. It is planning designed to protect individuals or groups against diminutions of their income”. Take note of the Ben Franklin quote and the paragraph immediately preceding it.
I’m not going to try in detail to correct your queer interpretation for you will simply provide another equally unreliable soundbite without the context of the before and after words that provide meaning behind the ideas.
Hayek was correct about unlimited democracy. Our founders feared unlimited democracy and that is why we are a Constitutional Republic not a true democracy.
Yes, Hayek did recognize the problems associated with corporatism and fascism where the state and big business join forces to control the nation. A direction we are moving towards.
Hayek was not a conservative (common usage). Nor were our founders. Hayek could be considered a classical liberal as opposed to the capital ‘L’ Liberal of today. Alternatively one might refer to him as a libertarian not fitting into the anarchist group.
And how exactly do you think lawyers get paid for medical malpractice cases? Hint: they can fare far worse than simply “not getting paid” when they lose…
“Unfortunately in health care physicians and hospitals have for the most part lost their freedom to set their prices for their services”
Surely you jest. What role do insurance companies have in setting prices by way of reimbursements? Hospitals in areas with limited competition have enormous power to set prices, even against insurance. Hospitals also are gobbling up outside clinics to stifle competition and raise prices.
Do you then assume that “chargemaster” is the proper price? It appears you think the higher price is the correct price.
“The rise of high deductible plans linked to health savings accounts has been a major step towards reasserting sound market principles”
Again you get it wrong Paul. HDHP are a method of shifting risk to the patient while recognizing that premium prices can’t be controlled, so the only way to “sell” faux affordability is to lead with the low monthly premium while downplaying the real cost when care is needed. This is the practice of car dealers who sell low monthly leases but hide the real cost when those leases come due. HDHP work best for people who can actually afford the savings of rainy day preparedness – those with financial means.
@ Allan,
“…the case for the state helping to organize a comprehensive system of social insurance is very strong.”
Sounds like he would have no problem with single-pay system of health care.
Hayek is also quoted as saying, “…that a limited democracy might be better than other forms of limited government at protecting liberty but that an unlimited democracy was worse than other forms of unlimited government because “its government loses the power even to do what it thinks right if any group on which its majority depends thinks otherwise”.”
He also said: “free choice can at least exist under a dictatorship that can limit itself but not under the government of an unlimited democracy which cannot”
Hayek also recognized the insidious negative control that corporations (mega corporations) exert on government and the free market.
Hayek wrote an essay, “Why I Am Not a Conservative”included as an appendix to The Constitution of Liberty), in which he disparaged conservatism for its inability to adapt to changing human realities or to offer a positive political program, remarking, “Conservatism is only as good as what it conserves”.
Looks like Hayek has something for everyone, much like the Bible. Just pick the passage that suits your prejudice.
In chapter 9 Security and Freedom Hayek makes a case for specific state intervention where the state is well off. He makes a distinction between two types of security and “that this distinction largely coincides with the distinction between the security which can be provided for all outside of and supplementary to the market system, and the security which can be provided only for some and only by controlling or abolishing the market.”
He continues: “There is no reason why in a society that has reached the general level of wealth which ours has attained, the first kind of security should not be guaranteed to all without endangering general freedom.”
…”but there can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody.”
…”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 helping to organize a comprehensive system of social insurance is very strong. There are many points of detail where those wishing to preserve the competitive system and those wishing to supersede it by something different will disagree on the details of such schemes; and it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective. But there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom. To the same category belongs also the increase of security through the state rendering assistance to the victims of such “acts of God” as earthquakes and floods. Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself, nor make provision for the consequences, such communal action should undoubtedly be taken.
Continuing to the second kind of security: “The planning for security which has such an insidious effect on liberty is that for security of a different kind. It is planning designed to protect individuals or groups against diminutions of their income which although in no way deserved yet in a competitive society occur daily, against losses imposing severe hardships having no moral justification yet inseparable from the competitive system. This demand for security is thus another form of the demand for a just remuneration, a remuneration commensurate with the subjective merits and not with the objective results of a man’s efforts. This kind of security or justice seems irreconcilable with freedom to choose one’s employment.”
In his conclusion he states: “But while this is a truth of which we must never lose sight, nothing is more fatal than the present fashion among intellectual leaders of extolling security at the expense of freedom.”
…and then he quotes Ben Franklin “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety”
Note: Hayek in this discussion also includes an incidental notation on immigration which can be further interpreted to say that a free flow of immigrants and a welfare state cannot coexist.
Bob,
re your statement “But hispitals are setting their own prices all the time, at least for the uninsured and those out of network.”
Agreed, but this represents a tiny share of their revenue…most prices are set by medicare or often dominant health insurers (medicare rate +x%).
An interesting aside: the lowest prices often go to Candians who flee delays up north and come here for procedures. It is big business for health care systems along the border….and they offer great prices to attract the business….a real market….providers free to set prices and patients shopping for value.
Paul, I agree that doctors are hamstrung in many ways about their fees.
But hispitals are setting their own prices all the time, at least for the uninsured and those out of network.
Read any of articles on Megan Rothbauer, who was taken in an emergency of an out of network hospital — which charged her over $300K for a few days, and still collected $150K from a stupid insurer.
The American way of reducing health care inflation is pretty darned brutal.
A few patients get just creamed with price gouging bills, and either go all the way to bankruptcy or escape with partial forgiveness. This does lower fees, because the cases are publicized plus the greedy hospitals eventually get exposed for suing janitors (c.f. Yale) or embarassed by selling old debts to bottom feeding collection firms.
In other nations, health care inflation is usually curbed by lowering the national fee schedule. Yes this is bureaucratic — but it is far more humane than the American practice.
Hayek in Road to Serfdom agreed that the state has a duty to ensure for all citizens “a minimum of food, shelter and clothing sufficient to preserve health and the capacity for work”. That is all I have found so far.
The modern state does provide such items….in one way or another…..that doesn’t mean that these programs completely destroy markets where suppliers or providers set a price and purchasers freely choose what to purchase and from whom to purchase.
Unfortunately in health care physicians and hospitals have for the most part lost their freedom to set their prices for their services….a most severe erosion to free markets….as well as the preponderance of plans where patients pay little or no cost….so their motivation to seek value is largely lost.
The rise of high deductible plans linked to health savings accounts has been a major step towards reasserting sound market principles to health care (restoring to patients a financial incentive to purchase wisely)….and the spread of these plans is a big reason why health care inflation has slowed.
Yes, Hayek made such a statement. Socialism had yet been invented when Adam smith was around.
Yes, I am not sure which book I read it in but I remember Hayek saying (paraphrase) Intervention in the healthcare arena can occur, but with as little effect on the marketplace as possible. Targeted subsidies are one way to limit the effects on the marketplace.
The question of health care being a right is always at issue. I can’t see it as a right for numerous reasons. We can’t even define the limits of healthcare. I am extremely sympathetic to that desire because of the way I was raised. But equally important is the recognition of what the state can do when one is not careful in applying that right. My spouse lived where healthcare was free. The only problem was for smooth access one had to bribe the doctor. I’d rather give up on that scenario and pay my own way being willing to help others that through no fault of their own are unable to pay.
So, yes, the big question is between health care being a right or not and is a valid argument. The discussion as to whether one truly believes in marketplaces if they are willing to provide subsidies is junk.
The question not raised is which government entity should be in control of healthcare, state or federal, hasn’t been addressed. Some people like the Constitution and the federalist system. Others don’t like the federalist system and still others don’t like the Constitution.
Where I have both agreement and possible disagreement with you, Saurabh, has to do with longevity. Nothing survives forever. We both recognize that, but “Will a meaningful market place survive in the long run? I doubt it.” neither does the other form. The marketplace offers so much more and at a less expensive price in all areas.
Without commenting on whether what Obama has done is good or bad (I don’t disagree with everything Obama has done or the rationals for doing those things if I understand them correctly.) Look at what has happened to our country since the beginning of the Clinton years through Bush and through Obama. It is not pretty. The rule of law has been perverted. Our freedoms have been infringed upon. Nat Hentoff is a Liberal of renown as is Turly and they both, being scholars of the Constitution, have noted unlawful activities that disturb the homeostasis developed by our three branches of government. Continue this a bit longer and Ben Franklin’s warning statement shortly after the Constitution was signed will soon be realized.
“A Mrs. Powel of Philadelphia asked Benjamin Franklin, “Well, Doctor, what have we got, a republic or a monarchy?” With no hesitation whatsoever, Franklin responded, “A republic, if you can keep it.””
Is Canada’s system not a “marketplace”? How about Germany’s, France, Great Britain, Taiwan?
Peter1
Thanks….yes you did limit your claim about insurance to health care…sorry for misreading it….
My interest right now is arguments about why health care can’t be a marketplace….so for now I don’t want to get into a debate about the efficiency of government single payor systems….
Paul, my sentence said “health care”, but in respect to auto insurance the fact that it is mandatory AND has government control/regulation speaks for how fair it would be without a referee.
Tell me why other health systems in more governmentally controlled countries are not “efficient” marketplaces when they do it for about half of what we do it for? Is your local government water/sewage system “efficient”? How about your fire department or police force?
Peter1,
re: The words “fair” and “insurance” in health care are diametrically opposed.
Would appreciate an explanation why you say that….does your statement apply to life insurance, auto insurance, liability insurance too? I might have been ill advised to use the word “fair” as it is interpreted in such wildly subjective ways by all of us….but I will wait for your analysis.
“but that the only hope of using healthcare resources efficiently as well as fairly is to remove the elements that bolux it all up from operating as a proper marketplace.”
Spoken like a true insurance insider. The words “fair” and “insurance” in health care are diametrically opposed.
Saurabh,
re health care marketplace:
“But healthcare is different. Even Hayek acknowledged that.”
Would appreciate it if you could help me find where Hayek said or
suggested that. Also, I’d be most interested in what leads you to think that.
I used to believe that….most people believe that. I began to ponder that many years ago when I was on a health insurance board and concluded that it is true health care was/is not a proper marketplace….but that the only hope of using healthcare resources efficiently as well as fairly is to remove the elements that bolux it all up from operating as a proper marketplace.
Thanks
Saurabh, health care, public transportation, public education, needs government controls and subsidies to provide the widest access for the most possible people, we just haven’t put “public” in front of heath care yet.
The U.S. has created a hodgepodge of government support for health care that creates a class system of access for patients which continues to embellish providers and insurance but which does not control costs. Patients are getting slammed by all sides, higher spending for subsidies, higher costs for care and higher cost sharing for the insured.
No amount of Hayek or Smith will improve this.
Did Smith or Hayek?