Who Should Decide?

Who should decide?

Not Barney Frank….

Don - Doctors spend a considerable amount of time burying themselves in journals and attending conferences learning about new medical advances - and I don't think it would offend people who are aware of the role of incentives in decision making to suggest that drug and medical equipment companies convince some doctors to recommend advancements on the basis of kick-backs, golf games, and lobster dinners.

Given the steep learning curve for doctors themselves in understanding these advances, do you think some potential information asymmetry exists between doctors and patients (especially given the vulnerable state patients find themselves in when they're in the doctor's office)? I'm no fan of government panels making decisions - and with you I don't agree with putting all these decisions in the hands of such a panel, as the columnist suggests - but at least it's the job of these panelists to similarly bury themselves in the literature and attend the conferences to learn about these new advancements. The consumer is certainly better positioned to understand what they want out of health care, but is the consumer really better positioned to understand these advancements than some panel?

It seems to me that this information asymmetry combined with a fee-for-service approach to providing health care is the single biggest contributor to health expenditure inflation. A government panel is obviously no solution because it will be excessively conservative in adopting innovative medical advances, but I don't see how the market is a particularly obvious better alternative. One reason why a public plan appeals to me more than a mandate is that it will control costs in the way I described, but it won't constrain people who don't find that rationing of care appropriate to them. Usually, markets are supposed to ration themselves. This is true in the case of a good like bread, where the baker and the consumer are on a relatively even informational playing field. But the market for health care theoretically introduces problems in rationing the goods and services it provides, AND I think we've seen empirically that it can't adequately ration care. If a public plan can provide a strict rationing alternative that's not obligatory I can't see how that won't introduce choice into a market which by it's very nature is weighted towards overinvesting in unnecessary and expensive advancements - precisely because the consumers don't realize when they're unnecessary (again, unlike bread - you know when bread is necessary or not!).

And of course, that's the flaw of mandates - as you point out. The public plan (may... potentially) offer the option of managed rationing that people can choose if that makes sense for them. If you ration through the back door by mandating what kind of care people can purchase, you force them to see the necessity of health care the way that the panel that decides such things sees it.

So I suppose I agree with your response to mandates completely - as I did on the earlier post on mandates - but I'm wondering if there aren't still some underlying problems with the market for health care. Good letter!

Dan,

Surely you understand that the government panel will also be lured by kickbacks and other "incentives" to choose certain technologies. I expect you do. So, you then also understand that adding another panel to bribe will simply add to costs.

One reason why a public plan appeals to me more than a mandate is that it will control costs in the way I described, but it won't constrain people who don't find that rationing of care appropriate to them. Usually, markets are supposed to ration themselves.

Dan, a version of this has been implemented in Singapore and has been very successful - both in reducing costs and eliminating wait lists. Depending on the details, I don't personally have a problem with this approach. When the incremental cost to the user is nominal, the demand for healthcare increases. This results in health care price inflation, but the willingness to pay for other people's care declines. Shortages which result in rationing is the expression of inflation in such a supply constrained market. Obviously, those who simply wish to pay for more health care out of pocket should be able to do that. Not only will they receive care without waiting, but they will also take one more person off the wait list.

The problem is that the bill which passed all three committees in congress DOES NOT ALLOW THAT. The writers of the bill succumbed to the public hospital lobby and made private ownership of medical facilities illegal. So, the option to pay out of pocket disappears. If the government decides you don't get care, you don't get care. No options.

Further, the plan before congress dictates all the details of the nominally "private" plans which are meant to be available on the "health care exchange". Everything from coverage, terms, conditions, deductibles, co-pays, etc. is mandated by the government. It provides "choice" only in which private provider do you want to buy your government insurance from.

The current proposals don't offer the kind of coverage and options that the majority of those who favour a public option want. That's why I'm working to get these proposals scrapped. I think this is a point on which we can finally agree.

Of course that's a risk. That's why I said parenthetically that they "may... potentially" work. But that mention of kickbacks for doctors was probably a distraction on my part. I'm guessing that's not the source of most cost inflation - I would guess that the biggest source is the asymmetric information combined with a fee-for-service system. Even then, of course, that doesn't solve anything immediately - Medicare operates on fee-for-service system too, and the public plan is always described as being "just like Medicare". PERHAPS strict claims management will make all that OK, but I t hink that's something to be skeptical of.

I have a problem with the point you make about direct cost to user vs. third party payment cost. When people don't pay out of pocket it's not like their care is free, Methinks. Perhaps there is some psychological impact that affects demand, but for the most part I don't buy the argument that the market works better when you're actually in the doctor's office than it does when you're deciding what insurance plan is best for you. But obviously I agree with you - keeping people from paying out of pocket is the wrong approach entirely. Are you sure that option is gone? That sounds a little odd - but this is not my field so I haven't dug into the bill (not to mention it's changing so often).

I'm also wondering if you're overstating the control of exchanges - yes they do mandate facets of programs on the exchanges, but the whole point is some degree of flexibility, so they can't "dictate all the details". And even if they did, then the exchange is no different from a public plan, which I said I was fine with and you said you don't have a problem with, "depending on the details". I personally don't have strong feelings between an exchange or a public plan.

I do agree - there's a lot of agreement on health care. And even where I disagree with others like Don on something like the public plan, I think 90% of the other facets of health care I do agree with him on (although the remaining 10% is quite important).

Daniel,

I've read through the bill with a doctor. H.R. 3200 is Medicaid with everything pushed through primary care physicians as the gatekeepers. We don't have enough physicians today, in a system that doesn't rely entirely on them. The "public option" (medicaid) will pay the very low fees to physicians as it does now, cutting most physicians and pediatricians incomes by nearly a third and discouraging people from the field. Forcing people through the physician gateway even now would cause massive wait lists just to get into the system.

When people don't pay out of pocket it's not like their care is free, Methinks.

It doesn't have to be completely free to have the effect of inflating demand - and you know that. Or you should.

But obviously I agree with you - keeping people from paying out of pocket is the wrong approach entirely. Are you sure that option is gone?

Yes, unfortunately, I'm sure. They do it in a round-about way. Briefly: you have to file a "certificate of need" if you want to open a surgery center. The catch is that it must be approved by the hospital with which you seek to be in direct competition. The bill also places restrictive controls on the expansion of hospitals in the name of cost cutting, but hospitals have no excess capacity in their surgeries - which is one reason why surgery centers were opened. It is illegal to just open a center and certify it. The hospital lobby has been trying to kill surgical centers for years and they finally got their chance in this bill. Same for MRI centers. Private practice for examinations may still exist, but not for actual procedures like imaging or operations or even diagnostics. The doctor writing that blog entry operates her own surgery, so she'll be able to give more details (whenever I figure out how to start the blog - that was a job given to me and for which I'm a terrible candidate).

I'm also wondering if you're overstating the control of exchanges - yes they do mandate facets of programs on the exchanges, but the whole point is some degree of flexibility, so they can't "dictate all the details".

Read the bill. The government will dictate all aspects of every plan allowed onto the exchange. It basically takes the states with the most mandates and pushes those plans. Unfortunately, the stated intention is flexibility, but once you read the details, you realize that the minimum requirements are very expensive and extensive mandates.

In NYC, my plan cost $1200/month for two very healthy young adults. BTW, medicaid has a neat trick - they take patients with pre-existing conditions, but they limit the treatments provided. Once a medicaid patient is accepted by the doctor and medicaid pays for the visit, the doctor cannot accept cash payment for any procedures NOT covered by medicaid. So, they'll take you, but they won't treat you, and they'll prevent you from paying for treatment yourself. I've actually known several people to get stuck in this loop.

This is a bad bill, even for people who support a public plan, Dan. It's just a bad bill and the plan from the Senate isn't better.

Thanks for the details. Yes - I'm definitely not embracing this bill.

BTW - check out Tim Pawlenty's op-ed in the Washington Post today. His "system" in Minnesota sounds very much like what we're both converging on. Although he only mentions it as a state employee plan, and not a public plan. He doesn't provide details, but it jettisons the fee-for-service approach, rejects Massachusetts-style mandates, and seems to be doing well at controlling costs. Aside from some noxious pot-shots at Democrats that I don't think make much sense (perhaps you do ;-) ), it's a very good article.

I read the op-ed and I like the public employee plan because it gives people a way to buy the amount of health care they want.

The QCARE is more problematic for me because of it's top down quality measures. We could never get that to produce results that were valued by the end users in the USSR.

As an aside, I take issue with the pot-shot accusation you made. He pounds the Massachusetts plan ,which was Romney's idea, pretty badly. Democrats wrote this plan. This is not a bi-partisan effort. What makes stating that fact a pot-shot in your mind?

"Washington take-over of the health care system", and "1975 socialized medicine model" where the more annoying distractions - but as you said above - politicians always take pot-shots at each other, and that really wasn't a big problem for me. I just generally don't like scare-tactics on either side as a way of rallying the public behind them.

I'm confused at why you're concerned about QCARE and how it bears a resemblance to the USSR. If you like the Minnesota public plan, don't you want some sort of cost control and coverage rationing mechanism in the public plan - with the opportunity to seek private coverage of that isn't adequate?

I'm personally not clear on how Minnesota has moved away from fee for service, exactly - and that seems to be the key to me. If not fee for service, as Pawlenty seems to suggest, then how are the payments made?

Well, this bill actually is a Washington take-over of the healthcare system. That's the problem with it. If that's scary to you, then don't blame the person telling you, blame the writers of the bill. Better yet, tell your congressman that's not what you want.

I'm confused at why you're concerned about QCARE and how it bears a resemblance to the USSR.

reread my post - top down quality measures.

If you like the Minnesota public plan, don't you want some sort of cost control and coverage rationing mechanism in the public plan

What I like about it is that it is explicit and honest about limiting the amount it will pay and allowing people to pay for as much health care as they want out of pocket. Ideally, we would have a national market in health insurance which is decoupled from employment, no tax advantages to employers that aren't also enjoyed by individuals, widespread HSAs and doctors and hospitals competing for health care dollars. That would bring down prices and increase options for consumers.

I'm personally not clear on how Minnesota has moved away from fee for service, exactly - and that seems to be the key to me.

Be careful what you wish for. Fee for service pays by procedure - which provides incentives to perform more procedures. The other plans have their own draw-backs. A capitation plan results in doctors packing their practice with patients but not spending very much time with them and providing very poor service as a result. Lots of things get missed that way - a big problem on the West Coast, btw. A flat fee (salary, if you will) leads to a "no treatment" policy. Procedures are expensive for doctors to administer - medication and tools are expensive. With a flat fee, if a patient comes in doesn't need procedures, that works great. The minute the patient needs a procedure, the cost of it comes out of the doctor's pocket since he can't charge for the procedure. So, they observe but don't treat the patient until the condition gets so bad that they can reasonably pass it off to an expensive specialist (patient dumping). That increases costs, not decreases them.

Paying on outcome creates the incentive to always select to treat the patient who is least sick - he'll suck less of your time and you'll get a bigger pay off. No matter how detailed we get in defining "outcome", the bias will always be to NOT treat the sickest patients most in need of care. If we narrow the definition of "outcome" too much, imagine the size of a government (or insurance) bureaucracy that will be necessary to decipher payments to doctors. That plan will cost more but not treat the sickest patients.

Another complication is that the trial lawyers have gotten their lobby to arrest any tort reform. So, malpractice insurance costs will not go down under either the house or senate plans. Under the plans, doctors' pay will decline, but their risk won't. I'm sure you understand the effect this will have on the supply of doctors.

Personally, I don't see how we can actually bring costs down without forcing doctors and private insurance companies to submit to national competition first and then seeing where the government may need to engage in some limited wealth redistribution to ensure a basic level of care for all. That plan would actually be cheaper but will take years to implement and require rewriting of masses of laws and regulation. Libertarians may not like the government component, but I don't think we can get around it and I'm not sure all libertarians are necessarily against this kind of involvement.

As you can see, it's a very complicated issue and it's impossible to cobble together a bill that won't make everything worse in a couple of months and will be impossible to undo once implemented. That's not a scare tactic. THAT is actually scary. We need more time and something entirely different from what they're proposing, that's why I don't want them to pass this thing now.

On QCARE - so you don't mind the lack of management of the plan, since they have a strict dollar limit? That's a fine solution too - I just don't personally see the problem of managing care to limit costs if the program is optional to begin with. It's just another cost control strategy. The problem with the USSR wasn't that they managed care - private insurance companies do that in the US, after all. The problem with the USSR was that you had no choice - and that's not the case with the Minnesota public employee plan. That's all I was saying.

As for fee-for-service - you're also raising points about exactly why I wish he had talked more about moving away from it - because there are problems with salaried doctors or capitation as well. However, I'm not sure they would inflate costs in the way that FFS would. Sure they'd limit access and provide lower quality care - but I don't see how shunting patients off to specialize alone is going to inflate costs the way FFS does. They already do that, and under a salary or capitation plan a doctor would be as likely to ignore the need to see a specialist, as they would do push them to specialists more than they currently do. So maybe there's a combination solution? I don't know. But the problems with salaries and capitation don't just erase the cost inflation of FFS.

Malpractice is one thing I'm never sure what to think on. Of course I'm not a trial lawyer, and my impression is there's no good reason not to do tort reform. I've heard, however, that that would barely make a dent in costs. Not sure what's exactly right, but even if it would be small potatoes it's still a good thing to do.

Dan,

I'll spell out my problem with QCARE - "quality" is arbitrarily defined by the payer, not the user. Distortions always occur in that model. It's similar to the USSR (and frankly, to the model we now have here) in that way. The customer is not the one that defines "quality" or any other metric. BTW, in terms of medical care, we actually had a lot of choice. We could pay additional out of pocket to entice doctors to treat us or we could just wait. The problem is that we didn't have a lot of medical innovation and limited resources and a burgeoning, unreliable black market. After immigrating to the United States, I discovered that half the procedures performed on me in Soviet Hospitals were folk remedies! But, that's a story for another day.

So maybe there's a combination solution? I don't know.

Well, you're facing the same problem that the dedicated, educated and very smart Soviet central planners had. How do you efficiently deliver a product which is desired and in the desired quantities? It's an impossible task for them because they cannot know all that they need to know to make that happen. If the consumer decides how to spend his health care dollars, then this goal will quickly be achieved. Note that it is achieved in areas of medicine where insurance and the government does not get involved - LASIK eye surgery and plastic surgery. Both have come down in price while service and technology has gotten much better. The problem of asymmetric information still exists, yet the market seems to have dealt with it without government or insurance companies. Do we know the Mayo Clinic provides excellent comprehensive care because our insurance company told us so? Of course not.

The issue of malpractice is too big for me. In general, I want to be able to sue a doctor for negligence or malfeasance. On the other hand, it's so easy to get into court! Even if the plaintiff doesn't win, the doctor (or, specifically, his insurance company) will spend a lot of money responding to the suit. I think it's a bigger issue in terms of this particular bill. It cuts doctors' compensation while leaving the risk of malpractice suits unchanged. Of course, that means fewer doctors will continue to practice and fewer will be attracted to the industry while at the same time trying to add another 50 million people into the medicaid system. I don't have any suggestions. I was just alluding to the effect of leaving malpractice risk high while lowering compensation on the supply of doctors in the context of H.R. 3200.

RE: "Well, you're facing the same problem that the dedicated, educated and very smart Soviet central planners had. How do you efficiently deliver a product which is desired and in the desired quantities?"

Maybe you misunderstood my point. Obviously to the extent that there is a public plan, they'll have to grapple with this too - but I see this as a problem that both public and private insurance providers need to deal with, and that fee for service is a contributor to cost inflation in both the public and private sector. It's not a question of central planning - and certainly not in the sense of setting prices and quantities. Perhaps in a limited sense when it comes to a public plan (although even in that case, "planners" aren't making people choose specific plans - they're simply saying "if you choose a public plan, these are the options we're making available"). And I think I've said quite clearly I don't think the public plan should be the primary provider of insurance.

RE: "If the consumer decides how to spend his health care dollars, then this goal will quickly be achieved. "

I think we've circled back to Kenneth Arrow's insights now.

RE: "The problem of asymmetric information still exists, yet the market seems to have dealt with it without government or insurance companies."

What asymmetric information exists? Patients know when they can't see well or when they want a new nose, and uncertainty about the success or necessity of a proceedure is well available. I don't understand where the asymmetric information is in these cases.

Good thoughts.

Maybe you misunderstood my point. Obviously to the extent that there is a public plan, they'll have to grapple with this too - but I see this as a problem that both public and private insurance providers need to deal with, and that fee for service is a contributor to cost inflation in both the public and private sector

The other compensation methods create costs that are not easily accounted for on a ledger - pain and suffering by patients.

It's not a question of central planning - and certainly not in the sense of setting prices and quantities.

Of course it is. All third party payers have to do that.

I think we've circled back to Kenneth Arrow's insights now.

What asymmetric information exists?

Unless you're saying that patients and doctors have the same amount of information about the medical procedures in question, asymmetric information exists. Patients who have no expertise in the field of medicine must choose doctors and procedures (there's more than one way to get a boob job or liposuction, for example).

Not a question of "central" planning - certainly of planning.

They don't know everything about the proceedure - I don't know how to make a loaf of bread. But patients' knowledge of the certainty of the outcome of the proceedure, and the need for the proceedure in the first place far exceeds their knowledge of those things in other proceedures, where I'd worry much more about asymmetric information.

Just because you couldn't do what someone who produces the goods and services you doesn't mean there's information asymmetry. The problem comes when you don't even know what good or service you're really buying or whether you need a good or service - I don't see that problem in lasik surgery.

whether you need a good or service

Always a problem in health care. It's often hard for even the doctor to know for sure the best course of care. But, you know, that's what second and third opinions are for. BTW, for marginal LASIK patients, this is an issue.

Not a question of "central" planning - certainly of planning.

You're just allergic to the word "central". Doesn't mean it isn't true. Patients may not always know whether they need a procedure or how much it should cost, but planners don't either.

RE: "You're just allergic to the word "central". Doesn't mean it isn't true."

Haha - no. I just think if we expand the meaning of "central planning" to include private agents who plan things, comparisons to USSR central planners start to lose meaning. Everybody plans - individuals plan. That doesn't make it "central planning". I'm fine with the word - just don't want to overuse it.

*sigh*. I'm not opening up the meaning for private agents and "we" never have. YOU may have perceived it that way, but I don't have the energy to get on this merry-go-round with again today.

I was thinking the same thing. I was always talking about private providers in addition to public providers, which is exactly why I wanted to clarify that when you brought the "central planning" language in.

I'll take a look at the op-ed. Politicians take pot shots at each other all the time - it's expected. If Democrats are in power as they are now, they will be the focus of complaints in op-eds too - just as Republicans rightly were when they were in power.

I don't care who crafts what legislation - as long as the legislation is good. So, if the Dems can come up with a good bill on health care, I'll support it. I don't think we're going to get government out of health care entirely. There is broad support for government involvement at a very basic level - to guarantee basic care for everyone, but without killing choice. If that's the case, we should be looking at a Singapore type model. This bill is written by the very far left socialists of the Democrat party. That's the problem. It is a take-over of the health care industry. They need to scrap this and start over. A month time frame on something this complicated and important is insulting to the people of the United States, frankly.

Incidentally, in committee, the proposal to submit congress to this plan was voted down by the Democrat majority. That just tells you how bad it is and that the authors of this plan know it.

"Surely you understand that the government panel will also be lured by kickbacks"

Friedman put it well to Donahue:

http://www.youtube.com/watch?v=RWsx1X8PV_A

I've always loved that interview. Thanks for posting it, VV.

However, in the case of new medical treatments, the information required for a rational personal cost/benefit analysis is not easily available. Being a fairly rational, well educated person having to make a decision on trying cardiac ablation, where they burn some of your heart tissue, hopefully correct atrial fib., vs continued drug treatment that only partially works with occasional trips to the hospital for an electrical "reboot" of the heart (cardioversion of AF), the lack of data required for a totally rational analysis is apparent. I do read the primary scientific literature for the information, but in the overview, with the rapid change of technology and experience, a totally rational decision is not possible by me or a government bureaucrat.

From the personal economic viewpoint, the medication is very expensive and puts be in the donut hole on medicare part D and the operation is fully covered by medicare (the medication doesn't work and I have tried several so medicare pays). However, there is a probability that it will kill me or create shrinking of the pulmonary artery that would make my cycling impossible, or other possible impacts with bad outcomes. If it works, I would have a benefit of the donut hole for up to 20 years or so along with no more reboots, but if the Dr. makes a mistake, the government saves 20 years of SS and medicare costs.

Will the cost/benefit analysis by the bureaucrat be from my perspective or the governments cost perspective? Having me utilize a high risk procedure which either works completely or kills me quick is in the governments interest. This would be especially true if they included SS cost of the extended years in the calculations (something not being proposed).

Making more information available to the users of medical procedures would at least be a start.

I just saw Jon Stossel being interviewed about health care by Huckabee on Fox News. He was perfectly brilliant. It is very rare that I can find absolutely nothing to disagree with, and nothing to add.

Hopefully it will be on YouTube. I highly recommend it.

For the politicians, the entire health care debate has nothing to do with health care.

It has everything to do with transferring wealth and from the private sector to the politicians and robbing individuals of liberty. The minuscule number of uninsured in this country are pimped out to gain support for this giant redistribution scheme. Hopefully, enough Americans will see it for what it is to pose enough of threat to their congressional representatives that they vote "no" on this horror.

The "big picture" for progressives is how to get government as 50% of GDP like they do in Europe. Everything else is window dressing.

Don't imagine that the politicians' goals are as modest as 50%. This is America. Everyone reaches for the stars, Pelosi and Obama included.

You think they're aiming for Soviet communism?

The Soviets were Communists for about 2 weeks in 1917. It didn't work. After that, the socialists were always (in theory) striving and sacrificing toward a brighter communist utopia. There aren't enough uneducated peasants to swallow that ideology. Yet.

What they're striving to do is create Soviet totalitarianism run by an ensconced Nomenklatura perpetually terrified only of senior politburo members. Just watch the carrot and stick action of Ried and Pelosi and the transfer of power from individuals to government, and by extension, the Nomenklatura. If we don't stop them from taking over health care, it will be too late.

Already, they have adopted many of the same restrictions imposed on Soviet dissidents who wished to immigrate. The U.S. has the right deny renouncement of citizenship, it confiscates a portion of your assets as a precondition to renunciation and it is one of the only countries on earth that taxes based on citizenship rather than residency. Americans become captives of their government more and more each day.

The frog is boiling.

Methinks - I think you don't give enough credit to the American people. Whenever we get pushed to the brink of totalitarianism, we push back. FDR and the 1930s was far worse then what you describe, and yet America pushed back from that. After the new wave of socialism from Nixon & Carter, America pushed back with Reagan. So on it goes. Sarah Palin waits in the wings...

I don't know about Sarah Palin, but if this legislation passes, it will create such an enormous entitlements and such huge interest groups that it will be impossible to push back.

Now, before this health care nightmare passes, is the time to get informed and push back.

The worst entitlement FDR created was the SS ponzi scheme and we've never been able to get rid of it. This is worse.

1. The Blue Dogs are not on board with the public option
2. The GOP is fighting back hard
3. Obama's poll numbers on health care look bad

So don't give up hope!

ArrowSmith, I'm not here to argue that Americans are stupid. Have you, son of emigres, pushed back? Have you called your representatives and told them you will vote them out of office if they vote for a public (non)option and that they must go back to the drawing board to come up with legislation that maximizes choice and competition and minimizes government involvement or you will actively campaign against them?

By the way, the blue lapdogs ARE on board with the public option as of yesterday.

Push back. And tell your parents, who doubtlessly haven't forgotten the single provider health care of the motherland, to push back too. Remind the dogs of all colours and stripes you're their boss because they've forgotten.

Yes I have contacted my Republican congressman. So far he's indicated he'll be opposing the public option. My parents live in the same district as I do. We've always voted Republican. I've even given donations the last couple of years. There's not much more I can do.

Then, sir, you have pushed back and made your thoughts known. It's all we have in America - our ability to vote out the would-be thieves.

Incidentally, if you wish to take a few minutes to do more, call you senators. Even if they weren't planning to vote "yes", the extra support from their constituents gives them extra confidence in their vote.

You can also contact other representatives and Senators in other districts and states. They are voting on a bill that will be effective nationally. this is not a local issue and I find it helps to remind them that their political opposition will not refuse your campaign contribution in the next election even though you are not in their district.

http://www.congress.org/congressorg/home/

Yeah I just emailed my 2 Democrat senators. I've heard Maria Cantwell is not fully onboard, so there is some hope.

I've rarely even known who my rep was, let alone called them. I despise politics. I've taken time off from work to get the word about this disaster brewing in congress - if that tells you anything. Hope is all I have.

Giving Maria Cantwell another shout some time in the next three weeks and getting your parents to contact your reps individually would not hurt. They look at the volume of calls.

Thanks, Arrowsmith. Pass the link to find the representatives along if you want and have a great weekend.

"Surely each person can reliably judge whether or not the cost of some particular type of coverage is worthwhile for him or her – or, certainly, each person can make such a judgment more reliably than can bureaucrats who do not know that person."

Might some people prefer to leave the judgment to others? Deciding if you want the car that is going to replace your current model with all-wheel-drive will have an impact on how you are going to get to the store, the school and to work over the next year. You can take a view about the chances of snow, flood and so forth, and their impact on daily life, in your part of the world. It's far harder to decide on whether you or your family are going to need an insurer that will get you to treatment for, say, cancer, with new-device A or new-drug B. A greater imperfection of knowledge applies to the latter decision than the former.

Rhetorical question.

And, here in England, Nanny State treats us NICE. http://en.wikipedia.org/wiki/National_Institute...

Regards

"Might some people prefer to leave the judgment to others?"

Your argument assumes:
1. The government is making those decisions for you as you would want,
2. The freedom of individuals doesn't accommodate such deferred decisions.

The risk of leaving the judgement to others is no less if you leave it to some highly politicized coercive monopoly institution (like the government) than to some altruistic or profit-seeking organization (like Good Housekeeping, UL, Consumer Reports, your parents, your friends, your employer, your insurance agent, Oprah Winfrey, etc.).

There is at least one important difference, however. If in your eyes one of the latter looses its reputation, you can readily seek the advice of someone more reputable--and in certain cases possibly sue for damages. If the former looses its reputation, you must both keep paying for it, and you must be forced to continue to live by its dictates.

In addition to the restrictions that places on you, consider the incentives it places upon those organizations.

There will always be sheeple who want Big Daddy Government to take care of them. I just prefer that they don't force me to go along with their infantilism.

Thank you for the responses. Professor Boudreaux provides persuasive (and witty) arguments in favour of his opinions several times each week with the copies of letters sent to various publications.

As a layman, I am interested in learning more about how advocates of economics of a freer-market address and deal with inequalities of bargaining power and imperfections of knowledge in free markets.

I accept that I (and others in the population) am not dumb and I may be uncomfortable to leave decisions to some highly politicized coercive monopoly institution (the Goverment), but if I'm flying to the U.S. from London, it will be a take-it-or-stay-at-home choice between a flying in product designed and assembled by Boeing or Airbus (highly politicized coercive monopoly institutions?). I won't know whether or when United or a third-world carrier last carried out necessary airfame or engine inspections.

More broadly, how would the free market have ensured the onset of safety in the workplace - machine guards, provision of protective eyewear?

I'm not an authoritarian socialist - far from it - but would the law of torts, and fear of suit, have given an incentive to factory owner A to increase overhead by installing safety measures? (Would liablity-insurers have stepped in with safety requirements for the issue of cover, making OSHA unecessary?)

Can anyone suggest a "101" textbook on this?

OSHA is necessary? For what? Standing in the way of EFFECTIVE safety rules?

http://www.thefreemanonline.org/featured/warnin...


mises.org has several articles on the subject. Here is a good one:

http://mises.org/story/3440

Thanks for the help.

In case you haven't seen it yet, OSHA humour

http://austrianeconomists.typepad.com/weblog/20...

Regarding your safety issue in the market:

1. It's in the interest of the airlines to make sure their planes are safe as possible, at least in the USA because of competition.

2. In a factory, the owner has an interest in safety procedures, because if a skilled worker is injured he can't just be replaced instantly and you lose overall productivity. So even if the owner isn't a humanitarian, he has a profit motive for safety in his factory.

Adam Smith's "invisible hand" works wonders if you let it be.

Doesn't requiring insurance companies to accept anyone despite pre-exisiting conditions simply close a loop? After all, anyone who doesn't pay into the system and use the emergency room as primary care causes costs to go up. Those costs get passed onto the insurance companies. All I see is a bookkeeping exercise.

First, cost shifting from the uninsured amounts to about 2% of health care spending (CBO numbers), and that is based on the prices charged to the uninsured (which are often far higher than prices charged to the insured).

Second, it isn't the uninsured filling the emergency rooms. It is the insured. There is no shortage of Medicaid covered people walking into the ER day and night with problems you and I (and the uninsured) would probably wait to go away on their own. Since Medicaid doesn't fully reimburse the ER, and Medicaid providers can't typically bill the patient for the difference, there is cost-shifting to the paying, usually privately-insured, patients, and to taxpayers. But mandating specific coverages increases the cost of private insurance and only adds further to the burden already imposed by cost-shifting.

Imagine, for a moment, a world where Congress passes a law that requires all current and newly elected congressmen to read both The Road to Serfdom and Stigler's 1964 presidential address to the American Economic Association prior to taking the oath of office.

Ok, you can all go back to reality now.

How about if instead we create a fundamental law of the land that prohibits legislators from such villainous practices. Or better yet, make the law of the land specifically lay out just those few things the government is even allowed to do.

Oh, I guess we tried that already. Any other ideas?