Should Government Make Health-Care As 'Affordable' As It's Made Housing?

by Don Boudreaux on September 30, 2008

in Current Affairs, Financial Markets, Government Intervention, Health, Regulation

My friend Nick Calapa sent me the following e-mail:

The one good thing that came out of this whole credit debacle, I now have the perfect pithy response to all the lefties who tell me that the government should take over health care and make it affordable to everyone.  You mean the way they made home ownership affordable to all through Fannie and Freddie?  How did that work out for you?

Go Nick!!

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{ 43 comments }

SteveO September 30, 2008 at 2:14 pm

could Don or Russ comment on the "mark to market" aspect of SarbOx? I just read an article by Gingrich saying to repeal it. I agreed with his other suggestions at the end, but book value based on fluid market price sounds like a good thing to me.

Future discounting the expected cash flows would only work for the more stable high equity or high downpayment mortgages. Valuing these 0 down interest only ARMs this way would have been pure fantasy, once the interest rate goes up and the people squat for 90 days and then mail the keys in.

Thoughts? Pros and Cons?

John Smith September 30, 2008 at 2:31 pm

There will be a NEW VOTE in the House this THURSDAY, October 2.

Want to help keep the pressure on? Thank those who voted AGAINST the Bailout and make sure those who voted FOR the Bailout know that you will vote them OUT on November 4th.

Feel free to Contact your Senators and Representatives using the script below.

Capitol Hill Switchboard: (202) 224-3121

OR to find your Representative’s number, go to http://www.house.gov/ and enter your zip code.

And why not send ‘em an email while you are at it (BUT MAKE THE CALL FIRST)

“Dear Senator/Representative: You MUST reject the Paulson/Bernanke plan for bailing out and propping up reckless banks at taxpayer expense. This is madness to ask us, the taxpayers, to cover the liabilities of Wall Street. We are tired of being fleeced. If you vote to support this plan, I will do everything in my power to remove you from office before you can give away any more of our money to failed businessmen.

Thank you, [Your name]”

Gary September 30, 2008 at 3:58 pm

The government is getting off too easy. The disaster is mostly contained to financial markets. Even if your house has declined in value, you can still live in it. When health care policy fails (and it will) people will die because politicians made poor decisions.

Ryan September 30, 2008 at 4:13 pm

I think people need to first be made to understand that free-markets have little to do with the finical failures (which seem to be the popular sentiment right now.)

But comparing the current 'crisis' to health care is an apt analogy none-the-less.

JerseyJim September 30, 2008 at 4:14 pm

As P.J. O'Rourke says:

"If you think healthcare is expensive now, wai'll you see what it cost when its free."

muirgeo September 30, 2008 at 9:40 pm

The governement needs to make health care MORE available then housing. Everyone should have access to government funded healthcare. The government did a great job getting people into houses which helped grow the economy. LBJ blew it when he let Fannie get privatized.

Likewise health care (Medicare) is being destroyed by corporate raiders who have infiltrated the system. We already pay 66% of all health care using public funds and it's terribly ineffecient.

A simple single payor plan would streamline cost and heck you could even let private health plans operate in parallel to the public plans as long as they play by the same rules. They couldn't compete of course because they'd have high overhead trying to pay shareholders and CEO's.

I can think of no reason not to have a public health care system. It's as illogical as having our highway and roads privatized.

Nathan September 30, 2008 at 9:55 pm

"I can think of no reason not to have a public health care system. It's as illogical as having our highway and roads privatized."

I, on the other hand, can think of no reason to have our highways and roads run by an inefficient, monopolistic bureaucracy, resulting in tons of unnecessary traffic, pollution, and accidents that could be avoided if roads were run privately on a for profit basis. But maybe that's just me.

muirgeo September 30, 2008 at 10:00 pm

OK lets play imagination. Lets assume you guys got what you wanted… a completely unregulated health care system.

Now lets pretend you come down with liver failure. Easily treated by a $250,000 transplant.

You tell your insurance company and they say. Oh that's too bad cause your policy expires next week. Of course we can keep you on with a little adjustment in you rates. Lets see now you used to pay $200 a month for bare bones coverage that's gonna go up to $10,000 per month.

You argue but I already have coverage. They reply yes but your transplant isn't likely to occur before your current coverage expires and the fine print says we don't have to pay for cost incurred after the terms of the contract expires. SORRY.

Have you guys really thought how this is gonna work out?

The idea of a completely privatized health care plan is like libertopia itself. No such thing has ever existed in the modern world (well maybe in Djibouti) to which you can point to and say see it works. Plenty of socialized plans exist that run on far less cost and are far more efficient.

The data is remarkable. You guys are simply data and reality averse.

With universal coverage corporations could be free of their current cost of providing health care.

Workers would NOT be tied to a job solely because of concern of losing their health care and this would spur entrepreneurs to step out on their own creating more innovation.

The overall population would be healthier thus improving worker productivity.

And all the claims deniers, health plan ceo's and administrators could be retrained to do something productive like take rectal temperatures and clean up vomit freeing up the nurses to provide better care.

And finally are you gonna be OK with letting the poor just die on the streets because they have no money to treat their pneumonia… THAT'S WHAT WILL HAPPEN. Our you gonna be OK with outbreaks of measles and other infectious diseases because we've left a large part of the population uncovered?

Adam September 30, 2008 at 10:07 pm

Nathan, it's not just you.

Oil Shock September 30, 2008 at 10:16 pm

Obama promises a war on death. he will put an end to it.

Adam September 30, 2008 at 10:17 pm

Muirgeo,

Let's turn that around, shall we:

>>>>>
Now lets pretend you come down with liver failure. Easily treated by a [free] transplant.

You tell the government and they say. Oh that's too bad cause in order to keep costs down we only provide liver transplants to people under the age of 50 who have never drunk alcohol. Of course we could put you on the waiting list to get on the waiting list (liver donors are hard to come by these days).

You argue but I isn't healthcare universal? They reply yes but it's not universal in the sense that your coverage is universal, only that everyone has the same piss-poor coverage. SORRY.

Have you really thought how this is gonna work out?

The idea of a completely privatized health care plan is like libertopia itself. No such thing has ever existed in the modern world (because of rent seeking politicians and business owners) to which you can point to and say see it works. Plenty of socialized plans exist that run on far less cost and are far more efficient, than the crap-fest, unfree, corpratized, fascist system in America (that's like saying grasshoppers taste better than tree bark, it may be true but it's meaningless).

With free market coverage corporations could be free of their current cost of providing health care.

Workers would NOT be tied to a job solely because of concern of losing their health care and this would spur entrepreneurs to step out on their own creating more innovation.

The overall population would be healthier thus improving worker productivity.

And all the bureaucrats could be retrained to do something productive like take rectal temperatures and clean up vomit freeing up the nurses to provide better care.

And finally are you gonna be OK with letting the people just die because innovation has completely stalled in medicine… THAT'S WHAT WILL HAPPEN.
<<<<<

Wow, that was fun.

Martin Brock September 30, 2008 at 10:23 pm

And finally are you gonna be OK with letting the poor just die on the streets because they have no money to treat their pneumonia… THAT'S WHAT WILL HAPPEN.

Will happen? Terribly catastrophic shit will go down if we don't adopt a state program that we haven't adopted yet? Why aren't poor people dying the streets of pneumonia now?

Rudy September 30, 2008 at 10:56 pm

Knowing the German social medical system, give me the libertopia any day. Speaking of transplants, in Germany they’d send me home and tell me to come back in six months (which translates into more than that). You can’t even buy aspirin in a retail stores; you have to go to the pharmacy for everything. It would take me at least three days to see a doctor when I had the flu or other illnesses. Here, no waiting for days. I’m amazed how fast the doc in the box that is near my home. I certainly do not want “affordable” medical care from the government. My health can't afford it.

Rudy September 30, 2008 at 11:10 pm

Martin,

Hillary says there were people dying on the streets!

brotio September 30, 2008 at 11:21 pm

Adam,

If you're expecting anything but platitudinous muirdiocy from Muirduck, don't hold your breath – you'll suffocate.

So far, all Muirduck has cited as reason for the US to adopt totalitarian medicine (HT: Sam Grove) is because Canada and Britain have and people are still alive there.

Hans Luftner October 1, 2008 at 12:23 am

How do you know what prices would be for a liver transplant or for this guy's insurance premiums in a free market health care system? The current system, which is not free market, is littered with price distortions. You don't know what that means, though.

Your attempt to scare us into totalitarian medicine by making up prices & then calling us data adverse was funny, however, but you don't understand why.

Feel free to reply by making up more stuff to try to emotionally manipulate us with.

I'm not scared of dying in the streets on pneumonia any more than I'm scared of starving under a free market food system. You don't understand how that works, either.

muirgeo October 1, 2008 at 12:34 am

Have you really thought how this is gonna work out?

Adam

The difference being what I said was true what you said is bull crap and just not true.

muirgeo October 1, 2008 at 12:44 am

Feel free to reply by making up more stuff to try to emotionally manipulate us with.

Posted by: Hans Luftner

Hans, I'm not the one making stuff up and guessing about things. What free market medical system can you point to as an example of what we should be doing?

I'm not a faith based type person. I need facts. You are convinced a free market system would be best. WHAT…… DO……YOU……. BASE….. YOUR …… CLAIM…. ..ON?

Is it based on a thought experiment? Come on Hans one little bitty fact that supports your faith.

Come on Hans where is the system we should model ours after? I'm pretty sure its in your head nice and neat…. perfectly organized and perfectly efficient. In your neat little head you get right sided abdominal pain and anorexia and then go shopping for the lowest cost CBC, CT scan and surgical suit and antibiotics and everything works out great as you drive away from the drive-through medical-mart with the smallest of scars. But I'm also pretty sure you won't be able to give us a real life example. It's a complete mind experiment on your part and you think just because it sounds so neat and perfect and free-markety that we should all join your cult. Sorry but I practice evidence based medicine. I only treat my patient and decide things based on evidence and facts.

muirgeo October 1, 2008 at 12:46 am

Why aren't poor people dying the streets of pneumonia now?
Posted by: Martin Brock

Cause they have public health care called Medicaid.

Hans Luftner October 1, 2008 at 1:12 am

WHAT…… DO……YOU……. BASE….. YOUR …… CLAIM…. ..ON?

My claim was that you invented prices out of your own head & used them in an attempt to emotionally manipulate us into being afraid of not enough state control over our lives. Your own posts are what I base my claim on. Your reply didn't address any of my objections.

Hans, I'm not the one making stuff up and guessing about things.

So where did you get those prices? Is this the "data" you're always talking about from your "real world"?

Feel free to just flip out again. Your little tantrums only bolster my argument.

Sam Grove October 1, 2008 at 1:25 am

With universal coverage corporations could be free of their current cost of providing health care.

But corporations don't pay the current cost of health are anyhow. It's considered as part of the cost of the worker and that cost MUST be paid for by his labor.

The reason corporation include health care as a benefit is because the government has provided certain tax breaks to encourage them to do so, but ALL of the costs are borne by the labors of the workers.

Hans Luftner October 1, 2008 at 1:40 am

With universal coverage corporations could be free of their current cost of providing health care.

So if the corporations won't be paying for universal coverage, who is the state going to tax? I just assumed his plan would be to tax corporations. I shouldn't have assumed that. Apparently corporations will be exempt from this health care tax. I'm truly surprised.

Or will it not be a tax? Where will this single-payer state get the money to pay for all this health care? I'm genuinely curious.

Hans Luftner October 1, 2008 at 1:48 am

Of course, if there truly has never been a free market health care system in the modern world, then there's no way to know that people would die in the streets from pneumonia or pay $250,000 for a liver transplant.

maximus October 1, 2008 at 2:24 am

"Where will this single-payer state get the money to pay for all this health care? I'm genuinely curious."

From the big piggy bank in the sky, where else? The problem with universal healthcare is it doesn't solve the basic pricing problems currently found in the industry. Basically, costs are determined by third party buyers(insurance) and not through voluntary transactions between patient and physician. But you already know that I'm sure. When I was growing up in the early 60's I remember Mom and Dad deciding which physician to visit and paid him directly. If we decided we didn't like him we simply went elsewhere. Sounds like my definition of a free market, consumer soverneignty.

Christopher Renner October 1, 2008 at 4:10 am

muirgeo:
The difference being what I said was true what you said is bull crap and just not true.

Since WHO data apparently end the argument.

Randy October 1, 2008 at 5:36 am

It occurs to me that the path to a truly free market healthcare system is for the state to completely nationalize the current system. At which point, those who are denied the type of care they desire through the national system will create a free market system.

It also occurs to me that, given the likelihood that those who can afford to do so will drop out of the public healthcare system, the best way to implement a public healthcare system would be to make it a simple tax. Everyone pays in, and then everyone is free to make their own arrangements.

Babinich October 1, 2008 at 5:46 am

muirgeo says:

"The overall population would be healthier thus improving worker productivity."

That is a generalization based on ideology not fact.

I am sorry M but health care availability does not correlate to health.

The relationship between insurance and good health may be driven by other factors not so easily seen.

Please reference the UMich study on this topic.

vidyohs October 1, 2008 at 7:07 am

muirduck!!!
No shit Sherlock!!!

"We already pay 66% of all health care using public funds and it's terribly ineffecient.

A simple single payor plan would streamline cost and heck you could even let private health plans operate in parallel to the public plans as long as they play by the same rules. They couldn't compete of course because they'd have high overhead trying to pay shareholders and CEO's.
I can think of no reason not to have a public health care system. It's as illogical as having our highway and roads privatized.
Posted by: muirgeo | Sep 30, 2008 9:40:14 PM"

It seems nothing in this world will ever allow you to see your own contradictions, even when they follow one another in the same post. Is that the definition of stupidity? Uh-huh.

You lobby for a failed idea and then turn right around in the same post and give the reasons why your failed ideas won't work. Pathetic.

muirgeo October 1, 2008 at 8:01 am

Don suggest that because of the housing market we might not also want the government to run health care.

I should have countered; Do you really want the free market that came up with predatory loans, liar loans, fake credit rating agencies, fraudulent accounting practices and who turned mortgage securities into CDO's bringing down the whole financial system to run health care???? Really…. do you want that???

Cashbaugh October 1, 2008 at 8:46 am

Muirgeo, I believe it is rather fallacious to argue that fraud is limited to the free market. Most free market economists would want fraud to be still considered a crime, first of all. Secondly, fraud still occurs in socialized economies, in fact, there have been some very compelling arguments that corruption is a rather systemic problem in those situations, as opposed to simply being part of human nature (as in the free market).

Hammer October 1, 2008 at 9:01 am

OMG ASPLODE!!!!!!!!1

Ahem, sorry, it just seemed appropriate after Muir's little breakdown there.

I think a good example of how government necessarily has more overhead than private organizations is the Welfare system. I will have to take some time later to find a reference, but I have seen statistics a few times pointing out that the Welfare departments usually distribute <50% of the money allocated to them yearly by the federal budget. In other words, over 50% of the money budgeted towards welfare sorts of things never gets to the people it is supposed to go to, but rather the government folks charged with giving it away. In other words, the government can not even be more than 50% efficient at giving away money when that is its given mission.

At any rate, the real issue with health care, currently and especially under universal coverage, would seem to me to be that there is no incentive to NOT go to the doctor for whatever ails you. Have a cold? Go to the doctor immediately, even though he will just tell you "Drink lots of fluids". The only thing you wasted was time, and really if you are taking off work due to sickness, the doctor's note will be handy if you are off work for 3+ days. Who cares that it costs your insurance X amount of dollars for your needless visit when it only costs the patient a small percentage of that?

I really suspect that the reason most Doctors are so in favor of such measures is that it encourages use of their services, whether such use is beneficial or not. It isn't as though they will lower their prices as a result, just that everyone will have the same price.

Oil Shock October 1, 2008 at 1:08 pm

The real question is, Do you want Socialists scums who came up with ideologies like fascism, Nazism, Marxism, Stalinism, Leninism, Totalitariansm, Utopianism, Mobrule, Persecutionism, Propagandaism etc. to run your life?

Rudy October 1, 2008 at 2:41 pm

Oil Shock,
Muir believes government is able to actually limit itself and provide only what (in his mind) needs to be done. You and I both realize that the difference between a minimal welfare state and totalitarianism is time.

John Smith October 1, 2008 at 5:20 pm

"Nearly every reform proposal offered to fix "the health-care crisis" calls for increased governmental control of medicine.

These proposals are the logical result of the belief that there is a "right" to medical care. But there is no such right. Rights, properly understood, do no include an entitlement to the services of others."

— William Dale, “Free Medicine” [1994]

Adam October 1, 2008 at 6:08 pm

I find that most people in the medical profession who are in favour of totalitarian health, favour it for one simple reason that they will never admit. They're afraid of competition, the same reason any established player in a market wants more government intervention. People like [name removed to protected the bone-headed] have a hard enough time with the current weakened competition they deal with now. In a free market, they'd simple be out of a job.

Crusader October 1, 2008 at 7:21 pm

The painful facts are that 80% of health-care expenditures are for 'end of life' treatments. The ironic thing is that government run health care basically let's old people die to save costs.

muirgeo October 2, 2008 at 1:59 am

"I find that most people in the medical profession who are in favour of totalitarian health, favour it for one simple reason that they will never admit. They're afraid of competition, the same reason any established player in a market wants more government intervention. " Adam

I'm not in favor of totalitarian health care. I favor single payor (basically Medicare for everyone). One of the big reasons IS because it would increase competition making doctors able to return to small practice only having to compete mano to mano with other doctors. Now I have to compete with one of 3 major Health Care Corporate providers and not as an individual.I'd love to have the option of solo practice pediatrics but in the current system it just isn't doable in most urban and suburban areas thanks to corporate dominated medicine.

Hey why in the hell are all you so called rugged Individualist Libertopians so comfortable in a corporate dominated world? I see it almost as bad as communism. The only way to succeed is to follow the corporate rules, kiss ass and back stab to the top of the ladder. What a pathetic way to make a living… to live. That's not freedom. That's not liberty.

brotio October 2, 2008 at 2:34 am

"Hey why in the hell are all you so called rugged Individualist Libertopians so comfortable in a corporate dominated world?" – Muirduck

I'm not supposed to do this, but WTF.

Where on this blog have you ever read a posting by a libertarian claiming to be comfortable with a corporate-dominated world? You are the one who sees human beings as needing Masters. You are the one who is living in an either/or world of government versus corporate masters, and you would prefer your Master to have the power to imprison or execute those who chafe in its yoke.

The idea of two people freely engaging in commerce without permission from your Master scares the piss out of you, and you have the gall to claim you value freedom and liberty. You value the security of the yoke.

Adam October 2, 2008 at 4:14 am

"One of the big reasons IS because it would increase competition making doctors able to return to small practice only having to compete mano to mano with other doctors. Now I have to compete with one of 3 major Health Care Corporate providers and not as an individual.I'd love to have the option of solo practice pediatrics but in the current system it just isn't doable in most urban and suburban areas thanks to corporate dominated medicine."

Thank you for so clearly making my point for me. You want this totalitarian payer system in order to fashion your competition in your preferred way. You're scared that you won't be able to complete in a free market.

Hammer October 2, 2008 at 10:16 am

"The only way to succeed is to follow the corporate rules, kiss ass and back stab to the top of the ladder"
-Muir

That's why no one should ever take you seriously. It is not necessary to do such things to exist and succeed in a free market. The sheer number of people with their own companies, or who work for perfectly pleasant companies, goes a long way towards demonstrating the sheer foolishness of your statement, perhaps even all the way.

Now replace "corporate" with "government" in your sentance, and tell me it does not make much more sense? The difference is you can opt out of dealing with corporate rules and difficulties. Government kills you if you try to opt out of theirs.

For an example you can try, walk into your boss' office tomorrow (or today!) and tell him you refuse to work as he sees fit, and thus quit. Start a private practice running things as you see fit. If he calls you up and asks you to come back, or demands you finish up the week, refuse. See if your old boss shoots you.
Then, write your local medical authority, and tell them you no longer want to practice medicine and follow their rules as they see fit, and that you quit. Run your medical practice doing exactly what you want to do, without reguard to their rules. If they send you a fine, refuse to pay it, and when they send men over to your place to make you stop, refuse to go with them. See if they shoot you.

Sam Grove October 2, 2008 at 11:55 am

The government favors corporate rule, the government is corporate rule.

How did the auto industry kill the Tucker?
They got their political friends to instigate an SEC investigation on Tucker and their investors backed out.

PG&E, PAC Bell are government sanctioned and enforced monopolies. There are numerous examples.

HMOs, PPOs, etc. are intermediate steps to government managed health care.

A crisis similar to those extant is likely to occur in the health care industry.

It would be much better for us if we could keep our money and save and spend on health care as we see fit, but the government makes it difficult to do it that way.

vidyohs October 2, 2008 at 7:28 pm

Thank you for another muirpidity, this is number #27.

"I'm not in favor of totalitarian health care. I favor single payor (basically Medicare for everyone). One of the big reasons IS because it would increase competition making doctors able to return to small practice only having to compete mano to mano with other doctors.
Posted by: muirgeo | Oct 2, 2008 1:59:44 AM"

First off, muiridiot, single payer health care is totalitarian. How can you be so stupid as not to recognize that?

How can you be so consistently stupid as to insist that single payer health care will not only allow competition but increase it? My God, do you ever see how idiotic that is? If not then talk to another intellectual Chihuahua about it, maybe he will see what you're missing.

Last but why would you go "hand to hand" against another doctor…….you fool. Mano o Mano means hand to hand, not man to man.

muirduck, the omni-idiot, which means that no matter how you look at him he is an idiot.

maximus October 3, 2008 at 12:44 am

I was hoping the good "doktor" would enlighten us on how single payer care will increase competition. Seems to me it just shifts the price determination from one third party (insurance cos) to some Government agency. It doesn't really change much except who writes the check.
Only way to get real competition is by returning price determination to the consumer.

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