I add to Russ’s three excellent questions about health-care my own, additional question: Why does there exist a widespread sense that each of us, as individuals, is incapable of — or should not be obliged to — providing for our own health-care needs in the same way that we provide for our own grocery needs, our own household-furniture needs, our own automobile-insurance needs, and many other of our needs?
A Fourth Health-Care Question
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Say an expensive medical event occurs when I'm 67 years old. Medicare pays 80%, which allows me to avoid bankruptcy. How does that 80% of the cost of the medical event compare with the 2.9% (half tax-free and compounded with interest) of every wage that I have ever earned in my entire 43 years of working? Did Medicare really save me from bankruptcy?
Money is fungible. If coercive monopolists really believed, as they say, that people have to be protected from their own bad judgement and planning, then why wouldn't they instead advocate forcing me to save for my own future, in my own private accounts? Clearly they are interested in something other than saving me from myself.
“others are there to lend a helping hand”
Of course he's lying. He doesn't really believe that. If he did, he wouldn't think it necessary to coerce people into doing so. In fact, if he did, he wouldn't need to do anything at all except get out of the way.
The uninsured who go to emergency rooms ultimately pay most of their bills. To the extend they don't, your private insurance premiums are increased by <2%.
Emergency rooms ARE flooded with frivolous complaints. And there is a tremendous amount of cost shifting to them, that increases your insurance premiums substantially. But those people are not uninsured. They are insured by the government.
You really need to take a closer look at government-run health programs in other Western countries, both quality measures and cost growth rates. Health care quality data are not clean, or particularly easy to find for controlled comparisons, but you can reasonably infer conclusions in many areas. And what is available does not paint a rosy picture for those systems, compared to what people commonly experience in the US.
Irrespective of quality, it seems the Western world has yet to implement a sustainable system. The solutions to what ails US health care are not to be found in Europe or Canada–though there are clear lessons from those places on what to avoid.
Singapore has what appears to be a sustainable system with reasonable quality measures, although I find the major component offensive to individual autonomy–a high value which since I refuse to lose it for myself, I certainly cannot deny for others.
It appears that in the US, either nothing will happen, or something will happen that exacerbates the financing problem. It seems then, that over the next quarter century or so, we will witness the implosion of Western medicine, which will in itself teach us something. Some of us, anyway.
I'm sorry Mr. Orlando, but im having a little trouble with your first article that you left a link to. You see, I'm confused by the fact that on the one hand you describe powerfully the enormous waste in the American system and all the 'unnecessary' treatments, but any attempt at fixing this problem- for example, HSAs which remove moral hazard- you deride because they force people to cut back on 'necessary and unnecessary' care.
I'm sorry but I don't know which one you want me to believe.
If there is so much waste in the healthcare system, then doctors, when facing patients with HSAs, would cut back on all the unnecessary stuff and provide only what is absolutely necessary to cure the patient.
The patient may not know which treatments are necessary and which are not, but the doctor does and only by providing the best treatment at the lowest cost will he get a patient to return to his surgery and not go somewhere else.
Therefore, a moral hazard caused by a third-party paying is the only reason why we would see unnecessary treatment and the biggest moral hazard is to be found in schemes like medicaid/care which you yourself call 'socialized medicine'. You even admit in your second article that HSAs do actually solve the problem of moral hazard.
A case for less, not more, government intervention, don't you think?
Could you point to the research that you speak of? I appreciate the difficulty in quantifying a lot of these measures, and I'd like to compare the numbers I've seen with the studies you're citing. Don't forget, data only makes sense within a model, which is why I presented a historical and economic framework on my blog.
I'm curious what you mean by “a sustainable system.” I like Singapore's system too, but the reason it has “reasonable quality measures” is because of its lack of “individual autonomy.” Also, it has a young, healthy population, and its economy has been very strong for the past 40 years. When the population ages and the economy cools…
Your point about individual autonomy is interesting and important. I'm sure Professors Boudreaux and Roberts are especially protective of this right. As a philosophical matter, it's too complicated to get into here, but as a practical matter, individual autonomy works poorly in the health care market, as shown in Kenneth Arrow's 1954 paper and the CDHC research I cite on my blog. It's a joke to think that we have individual autonomy currently; instead of government bureaucrats, we have insurance company bureaucrats — subtly different but certainly not much better. Also, as T.R. Reid pointed out in the Washington Post a few weeks ago, many other Western countries have more consumer choice than we do. The only thing that would increase individual autonomy would be CDHC (which, put another way, means eliminating the employer tax deduction), but as I said, on its own, CDHC has a mixed record.
Thanks for your feedback!
I was not talking about the potential fraud, this type of fraud does occur and will occur under any system.
I understood your fraud was real and is also terrible. I also agree that there would be less under the free market solution, however there will be fraud where you said there would NEVER be.
A few more things:
The federal research agencies only account for 4% of new drugs, so they can't be responsible for 'big medical breakthroughs'- private companies are.
The reason why infant mortality rates in the US are high is due to many more premature births (which are caused by certain ethnic and social factors)- not due to worse healthcare.
From the name I can guess that the reason the VHA does well with universal coverage is that it caters for a relatively small group of people, the veterans, with comparatively similar risks and illnesses.
You're not wrong about 'insurance company bureaucrats'. But the way to deal with that is to abolish state laws that stop people taking insurance across state lines and so enable many insurance companies to establish local monopolies, making them monolithic and bureaucratized. Repealing these laws would solve the bureaucaracy problem.
|> Say female knows doctor charges for 6 and doc pays female to keep quite [sic].
How much would the doctor pay the patient for her quietness? Enough to cover her increase in premiums?
If the doctor makes it a habit to overcharge the insurance company, wouldn't said company (who is not only Evil, but also Greedy) not realize that some doctors seem to demand payments significantly higher than the norm?
If the patient makes it a habit to take bribes from doctors, how many insurance companies will said patient have to defraud before the patient becomes uninsurable?
Will private insurance completely stamp out fraud? Of course not. But there are some very good feedback mechanisms to curtail it.
Do you provide your own military needs? Police service needs? Sewer needs? Don't be an ass
I agree
I'm not against that idea, but the problem is that insurance is regulated differently in different states, like community rating. If we are to do this, we need to establish a set of federal regulations for insurance companies, which is actually one of the aims of the bills currently under consideration in Congress.
I agree that HSAs are part of the answer, and the moral hazard of employer-based tax deductions is one of the primary problems with the system. However, the evidence that I highlight in my second article shows that HSAs do indeed result in consumers cutting back on “necessary and unnecessary” care. The reason isn't because doctors are cutting back on the wrong care, but rather because consumers don't go to the doctor as much as they should. As Arnold Kling might say, consumers aren't cutting back by “voice,” but rather by “exit.”
All of which means, yes, we should have less government intervention for some illnesses — the kinds that consumers are good at balancing with out of pocket costs — but we should have government coverage of illnesses where consumers can't tell the difference between necessary and unnecessary care, like chronic conditions. (See the quote by Ezra Klein re the French system in my second article.)
Also, I should point out that eliminating local monopolies would be a big step forward, but it still doesn't give us “individual autonomy.” How much care is rationed to us would still be dependent on “insurance company bureaucrats.”
Most drugs aren't created by federal agencies, at least not in the form that they reach the consumer, but most drugs that reach the consumers began as federal research. As Marcia Angell puts it, “[The] pharmaceutical industry is not especially innovative. As hard as it is to believe, only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). The great majority of 'new' drugs are not new at all but merely variations of older drugs already on the market.” As Gordon Tullock showed several years ago, we'd probably be much better served by a system that motivates pharmaceutical companies by prizes than patents.
Can you point me to the research you're thinking of for your points about infant mortality rates?
Yes, that is probably part of the VHA's success, but don't forget that the VHA was quite unsuccessful until the late 1990s; we can still learn a lot from the changes they made. Also, other countries with similar systems (and very different populations) have similar records of success. In any event, as I point out in my second article and my comments above, we'd probably be better off by having a hybrid VHA/HSAs system.
Thank you for all this feedback!
Insurance companies don't ration care, they make decisions about their contractual obligations to pay (without having any power to prevent you from consuming by other means)–with appropriate denials reflected in the premiums they must charge. Insurance is a product, which for the time being at least, we still have the option of buying. It is not a requirement for health care consumption–and as people are figuring out in growing numbers, it isn't even a good deal for consumption in the way people traditionally use it.
When a controlling legal authority unhindered by any kind of voluntary contract and able to compel membership tells you without recourse the limits of your consumption, THAT is rationing.
Many local markets are plagued by unfair competitive advantages. God knows why anyone in their right mind who recognizes that problem would suggest we need to institute MORE unfair competitive advantages that are even LESS constrained by market forces.
“I agree that HSAs are part of the answer, and the moral hazard of employer-based tax deductions is one of the primary problems with the system.”
That is not the moral hazard of HSAs, that is the moral hazard of health care as the Federal government has defined it since WWII. There is no change in moral hazard by shifting to HSAs. Another very good reform would be to replace the employer benefits tax exemption with a revenue-neutral personal income tax cut. But that is reasonably treated as a separate issue.
“consumers cutting back on “necessary and unnecessary” care. “
The reason health care consumption is inefficient, is because people have no incentive to personally economize. But such economizing REQUIRES people will be spending less on health care.
As to whether you or some expert thinks the person is making the wrong decision regarding health care versus some other kind of consumption is really not a judgement that you or anyone else is capable of making, since your values are not the values of the decision-maker. If you WANT to know what his values are, then simply look at what he chooses to buy.
“….providing for our own health-care needs in the same way that we provide for our own grocery needs, our own household-furniture needs, our own automobile-insurance needs, and many other of our needs?”
[Late] Answer:
Because government hasn’t interfered sufficiently in those markets (yet) to warrant this level of interference.
This is The Mob, writ large.
And not nearly as effective. At least La Cosa Nostra has cultural ethics, and are quite good businessmen. I prefer to do business with voluntary gangsters rather than government ones.
And they’ll give me a quick answer for “end of life care.”
Thanks again for the great feedback! I should point out that my proposed solution includes HSAs, so I am supportive of freer markets for at least part of the health care market. The answer to your final paragraph is that, even without the trouble of local monopolies, there would still be significant market failure (asymmetric information, moral hazard, and adverse selection).
I see your point about rationing. All I was saying was that both systems — either private insurance or government-run care — a third party determines what is “cost-effective” to cover, and you have to pay the rest. That latter part, of course, is rationed by price — which is to say, the consumer's ability to pay.
I agree with your first point. That was exactly what I was saying. I did not say that there was moral hazard with HSAs. I made the same point as you: moral hazard is part of the employer tax-deduction system created by the federal government during WWII.
To your second point, I'm defining “necessary and unnecessary” based on “evidence-based medicine.” It wasn't a value judgment. People can cut back on some care and not experience worsening health, but other care (“necessary” was the word I used) is essential to maintaining optimal health. Consumers are bad at telling the difference.
Again, thanks for pushing back on these points!
It isn't for you or I to decide that everyone MUST value “optimum health” over all other consumption goals.
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Margaret
http://lotterymegamillions.net
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