Here's a letter that I sent recently to the Los Angeles Times:
that "we abdicate collective responsibility and let individuals fend
for themselves" ("When it comes to healthcare, the U.S., Britain and
Canada are hurting," April 7).
Mr. Klein's anthropomorphizing of
the collective causes him to get matters backward. Collectives aren't
sentient beings; they're abstractions. As such, a collective cannot be
responsible (or irresponsible) any more than it can be sexually excited
or break its wrist. Only individuals are capable of acting
responsibly. But when some individuals, masquerading as oracles for
"the collective," take resources from other individuals and then use
some of these resources to subsidize individuals' consumption, each
individual whose consumption is subsidized does behave irresponsibly.
Each subsidized individual is freed from the necessity of taking
account of the full costs of consuming the resources he uses. That
individual, therefore, no longer ably responds to economic reality; he
becomes truly irresponsible.
Sincerely,
Donald J. Boudreaux
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{ 44 comments }
When did healthcare become this commodity that everyone is entitled to but no one is responsible for? Everyone goes on and on about the new dawn of socialism, but the medical profession has been semi-socialized in the USA for a long time. All of the problems of skyrocketing costs and lack of availability are due to the lack of a free market in medicine. Is this not so?
Don,
Well put; reification of collective is often useful to propagandists advocating a superhighway to serfdom. Reification of the corporation is commonly written about by advocates of "corporate social responsibility" (i.e., stakeholder "theorists"). On this latter subject the key insight was Milton Friedman's who explained that the responsibility of executives of for-profits was simply to, without fraud or deception and within the confines of law and custom, use the funds entrusted to them by shareholders to increse the profitability of the firm. That is, it was not the responsibility of corporate CEOs to indulge their personal passions for the cause de jour (or whatever) with shareholders' money.
Donald, while your arguments are correct you're attacking a straw man. No reasonable pundit is advocating writing a blank check to certain individuals (or any solution that creates poor incentives). If guaranteeing minimal standards of health assistance for some people is a public good, than you have to live with the fact that the solution has to be "collective".
Ridiculous consumption subsidies and pointless wealth redistributions should be fought, but you are unconvincing in that you don't address the concerns of people you criticize at all. Even a libertarian can view the problem of providing health care to those who can't afford it as a public good one.
Nothing on earth justifies the notion that some individuals are entitled to free (or reduced cost) economic goods and services to be provided by the involuntary labor of other individuals. We fought a huge and horrific civil war to eliminate an institution based on that notion.
There can be no such thing as the "right" to the product of another man's labor — because there is no such thing as a right to ANY amount of involuntary servitude.
Suppose the white plantation owners in the southern U.S. had proposed the following in, say, 1860:
“There is no need for a war on this matter — we agree to end the system of slavery. No longer will the blacks be required to work our cotton fields compensated only by the room-and-board prison in which we keep them. Instead, from this day forward, they will be free men — PROVIDED they agree to henceforth turn over to us 39.6% of their earnings each and every year. You see, we NEED that 39.6% — otherwise, we cannot pay our doctor bills, we cannot properly feed and cloth our children, we cannot educate them, we cannot pay the mortgage on this plantation. You must pay this, or we and our innocent children will suffer greatly“.
Would anyone have accepted this as a proper, moral and just solution to the system of slavery? No? Why, then, it is acceptable to impose precisely this same principle on the nation’s most productive, innovative, rational and entrepreneurial of men? If it is evil to impose even a part-time scheme of involuntary servitude based on skin color, how evil is it to impose a partial scheme of involuntary servitude based on human ability, rationality, work ethic and energy?
The truth is the welfare state is rotten to the core — it’s a monstrously unjust system of punishing the rational for the mistakes of the irrational — of making the wise and honest pay for the consequences of the lazy, the shiftless, the stupid, the foolish, the ignorant, those who’ve never done an honest day’s work and those who never intend to.
You are now seeing this principle of injustice applied on a grand scale as everything from the irrationality of GM and Chrysler and the UAW to the irrationality of AIG’s executives becomes YOUR burden, to come out of YOUR hide — so that YOU, who are innocent of any wrong-doing or bad judgment in these matters can be made to pay so that the GUILTY can escape the consequences of their errors.
Don, I really appreciate your blog, the letters you send to increasingly irrelevant newspapers, and your clear thinking.
Klein, like so many others, thinks individual choice, in health care, can only oppressive. Why is medical insurance such a special case? Why isn't collective cost sharing the 'best' option for every other part of the economy- like food consumption, car ownership, and technology? I can be allowed to fend for myself in buying a house, a car, and cheese– why not health care?
For comparison:
Annual US housing costs: $16,500
Annual US household spending on an automobile: $6,400
Annual consumption of confectionery products (candy, but not gum for some reason): $60.50
Average US Consumption of cheese (32 lbs of it, mostly mozzarella) $41
Sporting events: $48.48 per year (I was surprised)
Average family eating out: $4,557
Average per capita annual cost of health care in the US: under $7,000 (all costs, across the board)
Richard wrote:
If guaranteeing minimal standards of health assistance for some people is a public good, than you have to live with the fact that the solution has to be "collective".
There is no such thing as “a public good” — because there is no such entity as “the public”. All that actually exist are individual human beings.
The “good” is an aspect of reality evaluated in relation to the needs of a living being. Nutritious food is “good” for man because it supports his life; poison is “bad” because it retards, damages or even ends his life. So the concept of “good” has meaning only in relation to individual human beings.
Thus, the concept of a “public good” can only mean the good of particular individuals. In practice, anything done for “the public good” always means something done that benefits some individuals at the expense of other individuals. It means granting some individuals special rights that are denied to other individuals — it means that some receive while others surrender, that some benefit while others lose.
You tell me, Richard, what justifies the notion that some of us possess rights denied to others, rights that we must pay for? Why does one man deserve free medical care — while another man must pay not only his own doctor bills, but those of the first man to boot?
I say nothing justifies it. If a gunman robs you, it does not matter what he proposes to do with the proceeds of the robbery — it's still a robbery and he's still immoral, even if he uses the money to pay his sick mother's doctor bills. One man's "needs" do not entitle him to another man's property.
Michael, by "public good" I just mean the economic concept. I'm not here to reinvent public economics. I don't think that assistance to the poor should be given by the government because they have a "right" to health care. That doesn't change any of the arguments for doing so, some of which have to do (for example) with positive externalities (living in a city full of miserable ghettos is very undesirable, I benefit from you spending on charity, etc).
Even though I support many libertarian ideas, it's astonishing how many libertarians completely refuse to recognize or even understand the basic economic arguments for welfare, let alone give a proper answer to them. As much as I hate to work to pay for others' political arrangements because of an oversized government, the case for zero welfare seems to me to be completely foolish and ill supported by basic economic theory.
Richard,
Economic theory, as such, has surprisingly little to say about government-supplied welfare. It can only say that IF there is a generally positive good to having certain types of persons receive handouts from other types of persons, and IF those other types of persons are unlikely to offer these handouts in sufficient quantities, and IF a government system of forcibly making these transfers will not be too costly or risky, THEN a plausible case for forcible transfers is made.
But even then, economic theory cannot address deep ethical issues, such as, is it right for person A to force person B to support person C? Economic theory can answer this question neither in the affirmative nor in the negative.
Oh, and by the way, each of those "IFs" mentioned above is significant. They are not to be brushed off lightly, or answered cavalierly.
it's astonishing how many libertarians completely refuse to recognize or even understand the basic economic arguments for welfare,
As much as I hate to work to pay for others' political arrangements because of an oversized government,
What a conundrum, you hate to have to provide welfare necessitated by an over sized government, so the only solution is to maintain an over sized government.
What is the economic argument for government provision of welfare?
Because people NEED it?
Donald, you are very right. These IFs are extremely important. However, I would say that many intelligent people are very convinced specially of (1) and (2). So here's a suggestion (and a cordial challenge) for the blog: write about these ifs. It seems to me that if the economic case for forcible tranfers is valid, then the ethical question is way more complicated: if there is no welfare, than many people (probably a majority in most countries) would be forced to live in a society (let's put it like this) they don't agree with and would be willing to pay to change.
I would like to see libertarians talking more about the economic case made for welfare instead of focusing mainly on the ethical questions (for which they are much more convicing).
Richard writes:"I would say that many intelligent people are very convinced specially of (1) and (2)."
The "many" you speak of may be "intelligent", but they are ignorant if they are "very convinced" in general (without the details of specific cases "of (1) and (2)."
I hope this letter gets published Don. But I think you'd have better luck with the LA Times if you took out an ad on the opinion page.
A brillint and remarkable post. Another home run.
Congratulations!
Micheal Smith,
Your analogy of the slave owners was great!
Prof Boudreaux,
You wrote,
"Economic theory, as such, has surprisingly little to say about government-supplied welfare."
Mine has this to say:
Why would the liberals want to guarantee health care for the poor, but not food, clothing, and housing; don’t they want food, clothing, and housing for them? If there were enough health care to go around, the poor would already have it; and, since there isn’t, who should it be taken from; or, to provide enough for everyone, given up for it, food, clothing, or housing? The choice is not between health care and no health care, but health care and other necessities, and, for some and for others. What the liberals want for the poor, apparently they don’t want for others; and whatever for the poor, certainly not the freedom to make their own choices.
And this:
Taking from the rich to give to the poor does not make the poor richer but poorer, and does not reduce but increases inequality.
I would like to second everything Michael Smith has said. Nice posts.
"All of the problems of skyrocketing costs and lack of availability are due to the lack of a free market in medicine. Is this not so?"
It is true. Most of the advocates of a government health care monopoly are also zealots for Keynesian economics. But Keynesian economics predicts (correctly in this case) that a massive government subsidy into the health care sector will stimulate demand and raise prices. Surely 50% of all health care spending qualifies as "massive".
By raising the cost of health care, government has priced many people out of the market. Then they use that fact to argue in favor of EVEN MORE demand subsidy to the tune of 100%.
Of course that will make the "crisis" even more pronounced. But it is crisis they seek, to further their political power.
The answer will be, as it has been in other socialized systems, criminalization of health care services, shortages, denial of care, decline in quality, and even further impoverishment of taxpayers.
Health care rationing; the solution to an aging population.
Richard,
"…you have to live with the fact that the solution has to be "collective".
No it doesn't.
Political government eventually destroys order.
How?
Because it disrupts the functioning of the market with the introduction of fiat signals that mask economic realities, preventing people from conforming their decisions to those realities.
Countries that have bought into collective decision making in matters such as the distribution of health care resources are in a state of decline.
"Oh, but it works so well in (pick your country)." People will say never realizing that that the economy ties everything together and that issues, such as unemployment and riots in France, are not unrelated to political distribution of health care, etc.
Let's look at those countries in 10 to 20 years and see how things are going.
Richard,
"If guaranteeing minimal standards of health assistance for some people is a public good, than you have to live with the fact that the solution has to be "collective".
Posted by: Richard | Apr 11, 2009 8:53:56 AM"
You wanted Don and others to address the "ifs" Don spoke of; but, let's address your "if" first.
How do we transmorgify "guaranteeing minimal standards of health assistance" into something that has to be collective?
I certainly believe in minimal standards of health assistance, and I make sure my doctor practices them; I see no reason why I should worry about those who can't take that simple precaution.
What exactly are you trying to debate in Don's post? Delivery of health care is not the same things as health care itself. Standards of health assistance is not the same thing as health care itself.
I believe that Don spoke against, and I heartedly support his views, guaranteeing health care to everyone under a government owned and administrated single payer system.
You went off on a tangent and I am not sure what you were trying to turn it into.
Like dg lesvic, said above, and I said in a recent post about protectionism; if we are to guarantee each individual health care and pay for it out of our pockets, why do we stop there? Why not guarantee him, as a public good, better clothes, healthier food, a trouble free auto (that doesn;t pollute), a dog that doesn't pee in the house, a garden that never needs fertilizer or water, kids that obey and behave, and a wife that adores him and shows it every night?
What the hell, we can pay for it, right? It is only money, right? Or, we can all assume the debt, right? Christ's Sake it's only the individual's sweat and labor we are talking about here, right? Stupid individual, so foolish as to think he has a right to his own fruits of labor…..God what a ninny!
I am sorry; but, if Bessie Sue Dopshuter who lives in Bangor, Maine has a heart attack because of an unhealthy life style, a life style she has been counseled on repeatedly by her family, and doctor, and is near death's door unless she receives urgent health care, as far as I am concerned she can go, reduce the burden on the emotions and finances of her family, and as I do not know her, nor accept responsibility for her, I will feel neither sorrow nor regret, no more than I would if she had lived and died in Lancaster, England, Peking, China, or for that matter in Houston, Texas.
A government that forces any individual to work to care for someone they have never known, much less taken responsiblity for, is criminal and evil. Sharing a border is not a relationship, it is a circumstance.
"If there were enough health care to go around, the poor would already have it; and, since there isn’t, who should it be taken from?" – DG Lesvic
Excellent point, DG
Another commenter on this blog (possibly you) made this point, some time ago:
You can either stand in line for health care, or you can pay for it. But, one way or another, health care will be rationed.
brotio,
Thanx for the kind words, but that other quote wasn't mine. Wish it had been.
"If there were enough health care to go around, the poor would already have it; and, since there isn’t, who should it be taken from?"
But isn't that the cringe factor that no one wants to hear? Yes, some people will go without medical services, maybe even life-saving treatment because they just can't afford it and the hospital just can't afford to use up resources without any compensation (apart from a feel-good factor).
Gil,
Sorry, but I don't get your point.
Certain groups cringe at the thought that there may not be enough hence they call for socialised medicine.
"Certain groups cringe at the thought that there may not be enough hence they call for socialised medicine."
Socialized medicine routinely denies important and even life saving care. They usually target the elderly (as not being a good investment of scarce health care resources) and those with rare but expensive conditions (e.g., recombinant Factor VIII for German hemophiliacs).
And given the abomination of a socialized health care system, those are the right decisions. If you were in charge of limited health care funds, and your target was "society" as an aggregate, then you would be playing to statistics, and to heuristics like "the needs of the many outweigh the needs of the few".
You think it is tragic when some great benefit exists that some distressed person cannot afford? How tragic would you consider it when the limitation is not finances, but the law? Or when a stifling political system means that potential benefit never even comes to exist? And in each case, who is the villain?
To whom does socialised medicine deny care to? Those who can't afford medical care anyway? Most places have a two-tiered system – a public service for everyone and a private system for those who can pay. How would those who can't afford private health services going to be any better if the system was privatised?
"How would those who can't afford private health services going to be any better if the system was privatised?"
Forgive the length of this response, but you asked a question with many answers…
First, the Canadian system is what is most often proposed for the USA. That system makes illegal all private health care (for humans that is, dogs typically get much better care). Although a Quebec court disagrees with the legality of that system, that is the system admired by "single-payer" enthusiasts.
Second, parallel private/public systems like in Britain suffer the problems in the public system that I have mentioned. In addition, the cost of the public system, and the crowding out of private resources, simultaneously impoverishes purchasers of private health care through taxation and increases its cost.
Finally, if the US system were privatized, prices would plummet. This would result in a decline in the price of health insurance premiums. It would result in workers having more take home pay with the half-taxed 2.9% payroll tax removed. The decline in demand would put a huge competitive strain on supply resulting in a marked incentive for consumer-oriented care as providers and health care companies around the country struggle to stay solvent and attract and keep patients. Since people would be allowed to keep what they did not spend on health care, the health care market would restructure to reflect the true priorities of patients.
Significant further advances in affordability could be achieved (as part of privatization) by removing state coverage mandates on insurance policies, and lifting tax-incentives for private third party payer financing.
There would then be no more incentive for an employer to negotiate group insurance coverage than for any other party to do so. If an employer did negotiate but did not pay anything, he would unlikely be concerned about allowing former employees to stay on the group policy. Although economies of scale would retain advantages for group coverage, there would be increased incentives for individuals to purchase their own coverage. Regardless, the result would be a greater delinking of health insurance and employment. This would give workers much more flexibility in the workplace, and make them less dependent upon their employers, forcing employers to compete more to retain and acquire workers. This efficiency would raise incomes.
The final result–nearly everyone would be able to easily afford their own health care and/or health insurance. The few who would or could not would not only be much smaller in number, but the burden of welfare for each of those individuals would be decreased. With the Medicare/Medicaid burden lifted from government, this level of welfare would be trivial.
In short, following transient turmoil in the health care industry and a temporary burden of assisting those who spent a lifetime funding Medicare, the health care problem would reduce to one costing little more than the current food care problem or clothing care problem.
You cannot apply basic economic theory and free market principles to health care. Health care is fundamentally different and should be considered a public good.
First, health care is completely self-regulated and controlled. A person does not have free choice when choosing a provider. Due to an unholy alliance of provider networks, insurance underwriters, pharmaceutical conglomerates and private for profit hospital corporations such as HCA.
By negotiating with providers and developing one-size-fits-all prescription formularies and treatment protocols, we remove the ability for the consumer to make independent informed decisions about the value of various treatment options.
We rely upon one the ratings of physicians who have a self-interest in controlling access and information to accurate information through their reliance upon Certification and Licensing Boards. By limiting access into the profession, health care costs are inflated and it is near impossible for the consumer to determine the fair value of a health care service.
Second, the consumer is far removed from the negotiating process, so we do not have a good sense of the fair, free market value of one particular service in comparison to another. All you need to do is look at any EOB (explanation of benefits) report for your last trip to the hospital.
Billing codes are used and assigned through various service departments and the insurance carrier then decides which services are covered and at what rate. They use the terms like "Reasonable and Customary Rates" and then choose to pay 80% of that. So by definition, that 20% must be built in to the billing rates to adjust for the actual (and expected) rate of reimbursement.
Such complicated billing procedures and methods are so complicated and technical that the end recipient of services (the consumer) really has no idea if an X-ray costs $90 or $73. Add into that a separate fee for the radiologist, and sometimes a charge just to use the facility, and even smart people find it difficult to understand.
The bills are then processed by an insurance adjuster who must determine primary and secondary (supplemental) plans and determine who is responsible for what, the end cost and intricate design is truly "priceless."
Good luck to those people who actually purchased supplemental plans they saw advertised on TV, you've been duped. Giving people (especially the infirm and the elderly) a false sense of security is unfair and unjust.
Without regulation, intervention and enforcement, many people will continue to believe they are prepared and protected from that ultimate for "just in case" scenario that results in major, catastrophic medical loss.
Yeah, right. The administrative cost alone on the part of the "Responsible Party" is probably more costly than the initial service they received at whatever hospital for whatever condition.
I would write more, but unfortunately I just realized that I have some forms I forgot to file to authorize the assignment of benefits and the appropriate party for providing those services in good faith that it would be irresponsible for me to waste any more time explaining the obvious on this random page I found on Twitter.
Happy Easter, Happy Passover to all.
Elyssa Durant
Medicaid Recipient
Nashville, Tennessee
vikinvista,
Amazing post. Neither Boudreaux nor God himself could have done Better
Elyssa Durant
There were no happy Easters or Passovers in the National Socialist welfare state of your dreams.
You cannot apply basic economic theory and free market principles to health care.
Yes, you can.
Health care is fundamentally different and should be considered a public good.
No, it isn't.
Who would suggest that health care is more important than access to food?
Anybody want to make that claim?
The only thing government intervention into the production and distribution of food has accomplished is to make it cost more.
The greatest impact of this, of course, is on the poor.
Klein readily relies on the fabled
4750 million uninsured. He actually implies that when these people get sick the wait time is zero because they get no treatment. Along those lines, I'd expect a few more heart-wrenching statistics about how many people must certainly be dying as a result of having no insurance. Where are those missing dead? I wonder.Klein's just a kid. That's not an ad-hom; he's just got a lot to learn yet. A couple of years ago he came out in favor of Bush's SOTU '07 proposal to make individual health insurance premiums deductible:
Then the other libs schooled Ezra on how this would allow healthy people to escape from paying for the sick (leaving everyone's premiums at the mercy of their individual medical history, God forbid), and a couple of days later Klein was taking his koolaid full strength again.
Ezra Klein's no expert; he's debatably not even competent.
"You cannot apply basic economic theory and free market principles to health care. Health care is fundamentally different and should be considered a public good.
First, health care is completely self-regulated and controlled. A person does not have free choice when choosing a provider.
Happy Easter, Happy Passover to all.
Elyssa Durant
Medicaid Recipient
Nashville, Tennessee
Posted by: Elyssa Durant | Apr 12, 2009 10:23:44 AM"
Elyssa,
How is health care fundamentally different from buying a pork sandwish at Subway?
The market principle is exactly the same. One person has a service to sell, and another has a need or desire for that service.
A doctor is one's employee, not one's master. Do you pay him or does he pay you?
Why should health care be considered a public good? My body isn't public, and the health of my body is no concern of yours, nor is the health of your body any concern of mine.
I haven't asked for your help, please don't ask me for mine.
I constantly hear sob sisters talk about how much money the public treasury has to spend on the health care of people who do not take care of themselves and also do not have any means of paying for their health care. I wonder how stupid can they be when they can't see the solution is to let those people die, and then bury them in a simple pine box out by the landfill; but, if, and only if, their relatives can't be found and offered the chance to bury them in a more elaborate way.
For instance, Elyssa, I don't know you. This is the first time you've posted here, but even that is irrelevant. I don't believe that I am being anything but honest when I tell you that, having no relationship to you or with you, should you die tonight, I'd never hear of it and I could certainly not feel sorrow, or that your death was a tragedy.
People die, it's part of the big plan that we haven't yet learned to circumvent.
The problem with health care and with government is that we have a vast majority of people in this nation that have no clue as to what the words "free market" actually means, and they don't know that government is the problem they want to rid themselves of, not invite in to run the house.
For instance yourself, if you'd just go back and read what you wrote with the knowledge of what a free market is, you'd see that everything you said was irrelevant enculturated nonsense.
In essence I can sum up what you said thusly: the health care market isn't free therefore it can't be free, because it's not.
Not good reasoning.
Happy Easter to you too.
Sir Vidyohs
Medicade Refuser
Texas
A free market isn't supposed to supply the impossible, a cost free life.
Political allocation cannot accomplish the impossible either, but it certainly makes the possible cost more.
Gadzooks vidyohs! When did you get knighted?
Let me echo Vidyohs's comments to elysa:
Of course market principles apply to health case markets.
The evidence is plain: in the market most divorced from government interference [where market forces apply most fully], cosmetic surgery, has seen market price declines for a range of procedures from breast implants to vision corrections.
Elyssa Durant: "You cannot apply basic economic theory and free market principles to health care. … Due to an unholy alliance of provider networks, insurance underwriters, pharmaceutical conglomerates and private for profit hospital corporations such as HCA."
What are the "unholy" alliances in which HCA and other for profit hospitals participate? Please explain.
Have you ever worked for a "for profit" hospital, Elyssa?
My wife has worked for HCA for 14 years. She has worked for a number of profit-seeking and non-profit hospitals for the past 32 years. She believes, and I agree with her, that the free market is very much alive and well in the hospital industry. What makes you believe it is not?
It is true that the federal government controls some of the pricing decisions in the hospital industry, so the market is not completely free. But hospitals very much compete for their customers.
"Gadzooks vidyohs! When did you get knighted?
Posted by: Gil | Apr 13, 2009 8:00:26 AM"
Happened 1963. That young Irish widow in Portsmouth, Va., said to me as she served me coffee the next morning, "Oh sir! You are one hell of a night."
Being the shy one I am, I don't use the title she bestowed on me that often.
Thank you very much.
If you intended that to be a double double entendre, you missed your calling as a comedian. ;o)
I did, and thank you.
Elyssa Durant,
I just had a new granddaughter last night.
Keep your hands off of her!