Rationing again: For all ponies, there is some pony, such that you won’t get that pony

by John Holbo on August 30, 2009

Three weeks ago Megan McArdle was annoyed. Have you ever noticed how health care reform proponents act as though there’s deep wisdom in reminding us that there is going to be rationing one way or another? “This is one of the things that most puzzles me about the health care debate: statements that would strike almost anyone as stupid in the context of any other good suddenly become dazzling insights when they’re applied to hip replacements and otitis media.” I – and otherspointed out that there were problems with McArdle’s use of the word ‘ration’. Without missing a beat, McArdle has moved on to being impressed by the deep wisdom of the thought that (envelope please): there is going to be rationing one way or another. She muses about the ironic circumstance that no one wants to utter the r-word and – long story short – ends by suggesting that reformers are particularly remiss in this regard. They want the fact that there is going to be rationing, one way or another, to be invisible. Have you ever noticed this about health care reform proponents?

Silly reformers.

Let’s distinguish two senses of ‘ration’. McArdle now writes: “One way or another, we are going to ration care, if you use “ration” to mean “allocate inherently scarce goods”. But neither side of the health care debate likes to talk about this.” On this definition, it turns out that pretty much everything that isn’t strictly from Ponyland is ‘rationing’. So this sort of rationing is a good thing, in the sense that nothing else would be realistic. It can’t be a good idea to hallucinate that limited goods are unlimited. But this is a pretty low bar to clear: namely, seeing that ‘and a pony’ is not plan. Call this the trivial sense of ‘rationing’.

Second, per my previous post: ‘rationing’ means securing for everyone a minimum share by ensuring that no one gets more than than a certain maximum share. You do the former by doing the latter. The castaways adrift on a raft with limited fresh water logic of this arrangement is clear enough. Mixing fresh water with pie: you cannot grow the pie, so you are very careful about cutting the pie into fair slices, because fairness is good; and it is especially good when being fair will keep people from dying unnecessarily. Call this the substantive sense of ‘rationing’.

No one is proposing health care rationing in the substantive sense, pretty much for the simple reason that making it illegal for granny to buy a pacemaker doesn’t make pacemakers for anyone else. You don’t ensure minimums for anyone by enforcing maximums for anyone, in this case. (Health care isn’t like fresh water on a raft that way.) So rationing in this second sense will not be explicitly encoded into into any legislation. It will not become illegal to buy a pacemaker, or buy premium private pacemaker insurance, in the event that the government does not just give you one. This is just the ‘death panels’ canard. Now, given this fact, it is not exactly surprising that those whose job is to package reform attractively are not eager to emphasize that – yes, they are in favor of rationing! Bothering to say the trivial thing is just going to make it sound like you are saying the substantive thing. Soon enough, sure enough, someone is going to ‘discover’ that the bill includes Pony Panels.

On the other hand, policy wonks and other intellectual types of a reformist stripe are under no illusions. Yes there will be rationing, in the sense that there will be non-infinite allocations of non-infinite goods. No, there won’t be ‘death panels’.

Such, such is the lot of the reformer in relation to ‘rationing’. Basic clarity about the issue. A certain difficulty with the framing.

Let’s look at this article from “First Things” that has impressed McArdle with its bold willingness to speak truth (in contrast to the shameful reticence of reformers, re: rationing): “Come, let us speak of unpleasant things. How is health care to be rationed? Who gets the short end of the stick?”

The idea, basically, is that the invisible hand of the market is better than the visible hand of government. Because you can always see what the invisible hand is doing, because it’s visible. And you can’t see what the visible hand of government is doing, because it’s invisible.

No, seriously.

Private insurance plans sometimes include an element of implicit rationing, but because they are, at heart, contractual agreements between the insurance company and the insured are more likely to ration health care explicitly. The many pages of the healthcare plan describe what is a covered service, which providers will be reimbursed for services, the duration of coverage, the dollar limit, and so on. The advantage of explicit over implicit rationing is obvious: It gives potential customers of the insurance plan information to use when deciding which insurance plan to buy, and gives them clear expectations of services to be delivered.

The government, on the other hand, would probably make things confusing. “Rationing must occur, but it need not be admitted. Denying the truth of rationing is more common in government-run health care schemes than private ones, because the government is reluctant to have the people know this ugly fact.”

What can one say to an argument that what is preferable about the status quo – private health insurance plans – is the glorious, customer-friendly transparency of it all? (Remember the little boss in “The Incredibles”?) But let’s settle for this argument instead, for today: as things stand, a lot of people receive poor healthcare in the US, or are financially crushed by the cost of healthcare; but not because it is written anywhere – in any law or private contract – that legally, or contractually, this person is obliged to get poor healthcare, or to be crushed by the burden of paying for healthcare. It’s nothing that anyone expressly dictated, in so many words. It’s just a by-product of the system, an unintended consequence, a passive letting happen. I wouldn’t say it’s the invisible hand of the market, exactly, but it’s an invisible hand of sorts. This is consoling because it means that no one is guilty of having, specifically, deprived this person of health care. They slipped through the cracks. But no one built the cracks, in a positive sense. The cracks themselves just sort of slipped through the cracks in some higher sense. So you don’t have to think of these sorts of problems as rationing (which would imply a kind of explicit plan). Which is, on the whole, pleasant. Because it is unpleasant to feel guilty of having not allocated goods in such a way that people got what we actually feel they should get. Better if the ‘rationing’ aspect of the system is more or less invisible.

So if we are now going for unpleasant truths; if we want it to explicit about who gets the short end of the stick, surely an explicit – government-provided – minimum, a public option, would be the best way. The public option is, after all, the short end of the stick. You can top up your stick on the private market if you want a longer one. (No one is going to make it illegal to buy a pacemaker.)

I take it McArdle is now in favor of a public option?

In all seriousness: I realize I have been arguing, for several posts now, at an unsatisfactorily high level of abstraction. (I have seized on the strange case of McArdle because she started it, insisting on talking only at the philosophical level, thereby giving me an excuse to continue in that vein.) But there is a point. Philosophically, there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine. McArdle is very indignant when people accuse her of indifference to the fate of the poor, but – honestly – if it isn’t that, then it’s nothing. At the philosophical level.

At the practical level there are all sorts of reasons for thinking reform isn’t going to work out well: namely, because we have to be able to keep costs down long-term, but the only way to do that is to mess with the stuff people have got. But you can’t do that, in practice. Because people are loss averse. Damn, we might be stuck. Sure hope not. Still, we ought to be willing to say what the better thing would be: namely, affordable, universal, basic health care. (Not necessarily premium health care. That would be too expensive. But a solid package. Buy more if you want it.) If you don’t think that goal sounds right, say so. Don’t oscillate between saying reformers are wrong because they say rationing is inevitable and saying that reformers are wrong because they are unwilling to say that very thing. That doesn’t make sense.

{ 165 comments }

1

Ben Alpers 08.30.09 at 4:46 am

If you spent half the time, e.g., staring off into space that you do carefully analyzing Megan McArdle’s “arguments,” vastly greater benefits would likely accrue to society.

In other earth-shattering news, Althouse is saying idiotic things about torture. Perhaps you could cover that next.

2

John Holbo 08.30.09 at 4:50 am

What makes you think I’m not already benefiting society to a considerable degree by staring into space? (Facts not in evidence!)

3

Ben Alpers 08.30.09 at 4:57 am

I’m sure you are John. But I think the marginal benefit of additional staring into space far outweighs the marginal benefit of additional simulated debate with (an overly generous reading of) Megan McArdle.

4

Bloix 08.30.09 at 5:15 am

Once again, you are working far to hard.
There is no rationing now, and there will not be rationing in the future.

Make an analogy with food. Is there rationing of lobster and sirloin steak and meals at the French Laundry and the Inn at Little Washington? Of course not. If you have the cash, you can have the meals. If you don’t, you can’t. And so with health care -you can buy whatever you want. There are doctors waiting to serve you, if you have the cash. That’s not rationing, that’s the market setting a market price. It’s the exact opposite of rationing.

But if you are poor and you must use food stamps to eat, can you use them for dinner at Chez Panisse? Sorry, Alice Waters doesn’t take food stamps. That doesn’t mean those meals are rationed.

And so with health insurance. Your insurance program, private or government, won’t buy everything – but it should buy what you need to stay alive. That’s not rationing, and calling it rationing is cute but false. Nobody’s going to stop you from buying services outright, as long as you have the cash.

5

engels 08.30.09 at 5:19 am

You say that no-one is proposing rationing in the ‘substanive’ sense (making it illegal for people to buy services which aren’t provided to them by the public system…) I can believe that no-one is proposing this in the US but it has been proposed in Britain (and I’d bet) in other countries from time to time. There are several reasons for this, from the idea that it is just point-blank unfair for wealthy people to receive a better level of essential care than the poor to pragmatic concerns that allowing the middle class to buy their way out of the public system may lead to the evisceration of the public system.

6

Tom West 08.30.09 at 5:20 am

Well, in Ms. McArdle’s defense, an awful lot of people who are proposing single payer in the US somehow *do* seem to believe that it would allow *everyone* to get the same level of healthcare that the well-insured currently do. And *that*, specifically, is dreaming in technicolour.

Of course, as a Canadian who likes our health care system, I have no problem with real, honest-to-goodness rationing and denying Grandma the ability to buy her pacemaker (in Canada, at least). And yes, I and my family have been on wait lists for various treatments (including cancer).

It’s simply worth the trade-off of much lower health care costs for a little lower health-care standards.

7

engels 08.30.09 at 5:49 am

I see Tom makes the same point. This does seem to be an interesting example of something that happens a lot in debates in the US, where what seem to be theoretically respectable positions are just taken off the table from the very start–by common consent of liberals and conservatives it seems—as something that no-one in his right mind would defend, even though they are taken seriously enough (without necessarily persuading many people) in public discussions in plenty of other places.

8

Michael Mouse 08.30.09 at 7:05 am

I would like to propose a simple, easy-to-grasp term for the mechanism by which the (McArdle first sense) sort of rationing is carried out by the invisible – if occasionally contractually visible – hand of the free(ish) Market when allocating scarce goods. Why don’t we call it “rationing by price”?

Obviously, it would have been rhetorically stronger if we’d somehow managed to hoodwink economists into using this term for some time ahead of this particular debate. But a very young pony is better than none.

9

Henri Vieuxtemps 08.30.09 at 7:06 am

@6, hmm, that’s odd: why would you deny anyone the ability to buy a pacemaker? Pacemaker is just a gadget.

There is, of course, at least one equivalent of “fresh water on a raft” in healthcare: organs. Organs are rationed even in the US; most people agree that a straight bureaucratic rationing is much preferable to an organ market.

But a pacemaker?

10

engels 08.30.09 at 7:19 am

I am pretty sure that an important part of the meaning of rationing is that it is government interference in the market. Hence it’s use as propaganda for glibertarians. If you health insurance won’t pay for X, that’s just too bad. If the government won’t then it’s….arrrrgghhh..RATIONING!

Iow I have to agree with Ben A that you are trying to philosophically analyse something that is really just shallow rightwing propaganda. The word was presumably chosen for its Evul Gubmint connotations and not much else.

11

Belle waring 08.30.09 at 7:41 am

Husband, I, too, implore you to put your time to better use. Sincerely, your loyal reader etc., Belle

12

John M. 08.30.09 at 7:54 am

To echo a number of the other posts: brilliant as it is, where do you find the patience?

Also Engels and others: I don’t know about elsewhere (UK\Canada) but can say that the top up\ purchasing of additional healthcare etc is somewhat controversial in Ireland because the same hospitals, doctors and other infrastrucutre are routinely used for both private and public healthcare. So if you have private healthcare (which is 100% voluntary) you will get preferential treatment over public patients.

13

Anders Widebrant 08.30.09 at 8:03 am

As engels pointed out in #5, another perceived “fresh water equivalent” would be healthcare professionals. That is, the argument that if we let people go around shopping for pacemakers they’ll have to be installed by someone, who will during that time not be available to work for the public system. That would in turn either make the public system have to pay more for its workers as otherwise they’d abscond to luxury clinics, or it would decrease the quality of the public system since all the good doctors work exclusively for the higher-paying fully private clinics.

I’m personally not so convinced by the argument (healthcare professionals aren’t really a finite resource), but it’s certainly alive and well in countries with public systems.

14

Chris Dornan 08.30.09 at 8:47 am

No Ben, I disagree, and find it therapeutic.

Seriously I think it is good to think this stuff through when done well, and if there was more of it there might be a little less confusion. That way, should the dead-wood press ever stop their inane horse-race fixation and make it their business to inform we might get a result.

15

g 08.30.09 at 9:21 am

Your universal quantifier looks redundant. Should be more like “for all people there exists some pony such that that person won’t get that pony”.

16

kid bitzer 08.30.09 at 10:09 am

“They slipped through the cracks. But no one built the cracks, in a positive sense. The cracks themselves just sort of slipped through the cracks in some higher sense.”

this seems an excellent point of very general import; indeed, far too excellent and general to be wasted on this debate.

in other words: this is a notice of intent to re-purpose.

in other words: i’m gonna steal that line one a these days.

17

Martin Bento 08.30.09 at 10:10 am

It’s well worth anyone’s time who would not otherwise be saving the world to argue with McArdle. Liberals have fallen too much for haughty sniffing, and all it does is convince people you are a snob, as when Kerry was too good to respond to that swiftboat nonsense. Many people do take McArdle and the sort of argument she makes seriously, sad to say. The state of critical thinking is not high, which is why it is important to respond to her abstract arguments in kind: show people how her thinking is silly and dishonest. Otherwise, people will be seduced simply by the fact that they are abstract. I imagine John teaches somewhere, this being an academic blog. Dismantling McArdle is an educational public service.

18

nickhayw 08.30.09 at 10:19 am

But perhaps you don’t need to specify the domain of either ‘all imaginary goods’ OR ‘all people’ in order to say that ‘there exists some imaginary good x that is scarce or unattainable for person y’ . Both seem to be implied (asserting the existence of a particular is dependent on the existence of the universal category of which that particular is a member, so it must be assumed?)

19

nickhayw 08.30.09 at 10:35 am

I should add that I applaud you for doing exactly what philosophers ought to do in the public domain: clarifying what we mean when we use certain words and teasing out the ‘arguments’ of the sophists among us. I imagine the discouragement of your project derives more from a general antipathy towards McArdle than anything else (‘she is below you’). That, and there probably aren’t that many CT readers who agree with anything she has to say (so what’s the point of arguing?). The facts of McArdle being beneath you and McArdle being incompetent should not, however, invalidate the goodness of your work.

20

John Holbo 08.30.09 at 12:22 pm

“You say that no-one is proposing rationing in the ‘substanive’ sense (making it illegal for people to buy services which aren’t provided to them by the public system…) I can believe that no-one is proposing this in the US but it has been proposed in Britain (and I’d bet) in other countries from time to time. There are several reasons for this, from the idea that it is just point-blank unfair for wealthy people to receive a better level of essential care than the poor to pragmatic concerns that allowing the middle class to buy their way out of the public system may lead to the evisceration of the public system.”

This is fair enough, but the proposal would be so alien to American political and economic culture – we really don’t have a history of forbidding the rich to buy extra stuff – that it seems idle even to bring it up. There are tons of things that people haven’t proposed and aren’t likely to want. It doesn’t make a lot of sense, I think, to hint that we are somehow on a slippery slope to these things. It’s also worth pointing out that if the motive is just egalitarianism, it isn’t actually a case of ‘rationing’, per se. (If everyone on the lifeboat thinks it’s important for everyone on the lifeboat to drink exactly the same amount of water, even if some of the people could easily acquire more without taking it from anyone else, then their equal shares aren’t exactly ‘rations’, in my second sense.) Admittedly, there is something to the ‘eviscerate the public system’ concern. But we could look to, say, public and private schools. How far along are we towards making private education illegal? Not very far, I should say. It just doesn’t seem to be in the cards. Americans wouldn ‘t go for it.

In general, saying we are maybe on a slippery slope to maybe worrying on being on a slippery slope, then we’ve got a ways to slip and could probably do something else with our time in the meantime.

21

Lichen 08.30.09 at 12:25 pm

I know that health care is normally delivered triage style when there are many people to serve, as in a busy emergency rooms. But what is wrong (if all things are otherwise equal) that a private (or let’s call it premium insured) patient getting moved to the head of the que over the public option insured patient?

If you have two people in line needing stitches on their forehead, why not go ahead and serve your ‘premium’ patient first? Is that really unethical? Does it not passify those people feeling their health care will be sacrificed to serve the great unwashed millions of undeserving humanity?

I personally think the rationing argurers are possibly small hearted mean spirits — but that’s what we have to deal with. Or as they say, it is what it is, so let’s try an work with it and see what we can offer.

22

Tom West 08.30.09 at 12:32 pm

@6, hmm, that’s odd: why would you deny anyone the ability to buy a pacemaker? Pacemaker is just a gadget.

Just to make it clear, I’m talking about medical services in general – not the gadget.

pragmatic concerns that allowing the middle class to buy their way out of the public system may lead to the evisceration of the public system.

John Holbo nailed it. Also, Canada has some geographic advantages here, and I’m all for taking as much advantage of it as possible. Specifically, Canada *does* have a second tier: it’s called the USA.

This second tier is just far enough away that it rarely impinges upon the our consciousness, but does allow the wealthy or the truly desperate to obtain extra health-care. This arrangement works beautifully as both a valve to release pressure towards a second tier and keeps pretty much all Canadians invested in the system.

23

Lichen 08.30.09 at 12:33 pm

I’m, of course, not talking about letting patients wait where it is critical that they are seen — as I said, all things being equal.

24

Barry 08.30.09 at 12:39 pm

First, hammering McArdle into the ground on a regular basis is a good thing. Otherwise, she becomes the ‘respectable center’.

Second:

Tom West:
” Well, in Ms. McArdle’s defense, an awful lot of people who are proposing single payer in the US somehow do seem to believe that it would allow everyone to get the same level of healthcare that the well-insured currently do. And that, specifically, is dreaming in technicolour.”

That’s odd, because I missed that awful lot of people.

25

ffrancis 08.30.09 at 12:57 pm

On the most recent of my occasional visits to the USA, I had some exposure to the health care system through daily visits to a hospital where a relative was slowly dying. Subsequently it occurred to me that, given the continuation of past and current trends, within a comparatively short time, the entire US GDP will be composed of either 1) the development, production, marketing, distribution, sale and consumption of goods and services damaging to health, and 2) the development, production, marketing, distribution, sale and consumption of goods and services intended to cope with the damage caused by 1).

What will the result be, economically speaking?

26

John Protevi 08.30.09 at 1:03 pm

Let’s go back to the “inherently” in “inherently scarce goods.” Let’s say that the presence of doctors in a society is a good, and that short of everyone being a doctor, the supply of doctors is “scarce,” and perhaps even “inherently scarce.” But what is “inherent” about any one percentage of the population being doctors? In other words, why aren’t the free marketism types complaining about the way the current supply of doctors is a result of artificial manipulation of the market for medical education? In still other words, isn’t there a strong sense of “rationing” at work in the AMA control of medical education, restricting the supply of doctors? (Am I correct in assuming the AMA works to control the supply of doctors?)

27

sg 08.30.09 at 1:04 pm

Engels, I don’t think that this:

I can believe that no-one is proposing this in the US but it has been proposed in Britain (and I’d bet) in other countries from time to time.

is true about the UK. Top-ups were for a long time banned in the public system but they weren’t banned per se. You just had to go get private care. And they were banned from the public system for a simple reason – they can’t be shown to work better than an existing, cheaper treatment.

28

Sam C 08.30.09 at 1:08 pm

Lichen said: ‘But what is wrong (if all things are otherwise equal) that a private (or let’s call it premium insured) patient getting moved to the head of the que over the public option insured patient?’

What’s wrong with it is that it’s unjust: money should not get one faster access to a basic good like healthcare; nor should it be able to buy better healthcare. Rich people’s lives and quality of life are not more valuable than poor people’s.

If you were just making the pragmatic point that there’s no prospect, today, of the US becoming just to this extent, you’re right. But it’s worth having the basic moral point in mind: even the best possible outcomes of reform now will still be a long way short of justice.

29

engels 08.30.09 at 1:36 pm

Sg, I only meant that people do in fact raise the issue of banning private hospitals in the UK, as they raise the issue of banning private schools. Not that it’s ever happened, or is likely to. In the US, as John says, though, it’s unthinkable. As to why top ups were banned within the NHS, I thought it was also held to be against the principles of the NHS, which forbid discrimination based on ability to pay…

John, fair enough.

30

harry b 08.30.09 at 1:56 pm

sg and engels — during the run up to the establishment of the NHS, the option of banning private care was considered quite seriously, even by Bevan, and was rejected on several grounds, including that any proposal including it would get smashed by the doctors. The BMA was obviously a key force to making the NHS work, and its acquiesence had to be bought. Bevan famously responded to someone who asked how he was going to silence to opposition of doctors: “We’re going to stuff their mouths with money”.

This (stuffing their mouths with money) is not an option here and now. Nor, obviously, is preventing people from buying private care. (I’m in favour, for various reasons, of allowing people to buy private care, but agree with engels that there are reasons to prohibit it; John is wrong to imply that there is nothing wrong with rich people buying care for themselves — indeed, one thing that is wrong is that they could be buying it, instead, for people who are less well off). What worries me, though, about John’s response to engels, is that his repsonse may prove too much. I don’t think there is a cost-saving and moderately fair option that is consistent with the prevailing US political consensus. All the good options are too foreign, and that is one of the reasons that reasonable reform is almost certainly out of reach.

31

Sam C 08.30.09 at 2:30 pm

harry b said: ‘I’m in favour, for various reasons, of allowing people to buy private care…’

I’d be interested to hear more about this, if you didn’t mind… in particular, I’m interested in whether the reasons here are principled or practical (or both).

32

Dan 08.30.09 at 2:41 pm

In other words, why aren’t the free marketism types complaining about the way the current supply of doctors is a result of artificial manipulation of the market for medical education? In still other words, isn’t there a strong sense of “rationing” at work in the AMA control of medical education, restricting the supply of doctors? (Am I correct in assuming the AMA works to control the supply of doctors?)

Indignant “why aren’t the free market types complaining about X, Y, or Z” questions seem to stem from ignorance 99% of the time, in my experience, because the chances are that we are, it’s just you don’t realize it. For this particular example, you might be interested in this article by Milton Friedman (http://www.fff.org/freedom/0194e.asp) , or the first part of this Will Wilkinson post (http://www.willwilkinson.net/flybottle/2006/03/19/health-care-fantasia/), or this piece from Lew Rockwell (http://www.lewrockwell.com/archives/fm/08-90.html), or any of the other hundreds of diatribes against occupational licensure you could find by taking 30 seconds to type “occupational licensure libertarian” into Google.

33

Dan 08.30.09 at 2:42 pm

Doh, the last two of those links only work if you delete the final bracket.

34

leederick 08.30.09 at 2:50 pm

“Call this the substantive sense of ‘rationing’.”

I’ve got to say I disagree. There’s a third sense of rationing which means to articifically restrict the supply of something. Credit rationing is a good example, it doesn’t mean “allocate inherently scarce goods” or “securing for everyone a minimum share by ensuring that no one gets more than than a certain maximum share” it means to make sure an artificially low amount of credit offered.

What’s the connection to health care? Well, one of the inspirations for reformers in the US and NHS proponents in the UK is to substantially reduce the amount of health expenditure. I completely support affordable, universal health care – but this this is advocated alongside a crazy desire to reduce healthcare insurance and expenditure which should be rejected. Healthcare and insurance are really good things for people to spend money, they’re undersupplied and the industries should be encouraged to expand; the wish to spend less on them so we have more cash to buy useful things like fast cars, alcohol and widescreen TVs is mad and largely comes from the healthy – who do most the paying – having a warped sense of priorities.

35

Michael Drake 08.30.09 at 2:53 pm

Pace Belle and Ben, I find that whatever staring-into-space time was foregone in the preparation of this post is more than compensated for by the invention of the phrase “pony panels.”

36

geo 08.30.09 at 3:31 pm

Agree strongly with Martin (#17), Barry (#24), and Michael (#34). As an Atlantic reader and US citizen continually pummelled by smug, shallow libertarian arguments, I feel you’re doing God’s work here.

37

Ben Alpers 08.30.09 at 4:25 pm

@Martin Bento (#17): I agree that one should invest the time and energy to bat down politically significant arguments, however irrational they may seem to be (and Kerry and the swiftboaters is a great example). We should go after the Teabaggers and Betsy McCaughey with gusto. But I guess I don’t see McArdle’s schmibertarianism as being that politically significant. Nor do I think that it’s more intrinsically interesting or substantive on the merits than the stuff being shouted at town hall meetings…which, unlike a McArdle blog post, might actually have political impact in the real world.

38

John Protevi 08.30.09 at 4:51 pm

Dan @ 32: “why aren’t the free marketism types *in the current debate about health care reform in the US, as exemplified by, e.g., the subject of the post, Megan McArdle, and her ilk, that is, high profile MSM pundits* mentioning the AMA control of the supply of doctors?”

Is that better?

39

John Protevi 08.30.09 at 4:55 pm

Or if you want me to be polemical about it, when are “pure, real, genuine, intellectual, etc. libertarians” going to be held responsible for “actually existing libertarianism”?

40

The Raven 08.30.09 at 5:10 pm

McArdle is not engaging reality. Sure, if she was thinking it through, she is indifferent to the fate of the poor, but what she is doing (if she is not simply a lying propagandist) is avoiding thinking, and trying to get other people to do so, too.

“[...] people who are proposing single payer in the US [...] do seem to believe that it would allow everyone to get the same level of healthcare that the well-insured currently do. And that [...] is dreaming in technicolour.”

Yeesh, guy, didn’t anyone ever tell you about the dangers of adverbs? As to your point, probably not. People in the USA with good insurance actually get a level of care no better than poor Brits. My limited knowledge of the Mexican system suggests that rich Mexicans also get relatively poor care, despite being very wealthy. For some reason–and I don’t know if anyone knows why it is–it seems that when a health care system gives a large number of people poor care, the whole system delivers poor care, even to the high-status and very wealthy. This is entirely overlooked in US discussions of health care: most Americans can’t even hear it, as far as I can tell. McArdle certainly can’t hear it.

Also overlooked by the likes of McArdle, though sometimes mentioned, is that the US government spends much more per capita on health care than the British government, despite the US getting far less for its money.

41

lemuel pitkin 08.30.09 at 5:30 pm

Speaking of rationing, the world is full of smart blogs making genuinely interesting arguments in good faith, but with very few readers. The attention you’re giving to McArdle is attention you’re not giving them. Morally, how do you justify that?

42

lemuel pitkin 08.30.09 at 5:30 pm

(And no, I don’t have a blog.)

43

Adam Kotsko 08.30.09 at 6:04 pm

Why don’t I have a position at the Atlantic where I get to write breezily abstract posts with no concern for reality? That seems like the ideal job.

44

jack lecou 08.30.09 at 7:07 pm

Healthcare and insurance are really good things for people to spend money, they’re undersupplied and the industries should be encouraged to expand; the wish to spend less on them so we have more cash to buy useful things like fast cars, alcohol and widescreen TVs is mad and largely comes from the healthy – who do most the paying – having a warped sense of priorities.

I’ve got to quibble with this, especially to the extent you mean spending on actual health care, rather than spending on health care research.

One of the genuinely dazzling insights, that only occasionally gets pointed out in this debate, is that health care as such has only a relatively limited ability to affect health. The best that it can do, after all, is make you better if you’re already unhealthy. (And often not even that, as there are plenty of conditions where treatment is extremely expensive but not very effective, or which have no real treatment at all.)

That is to say, in most circumstances spending an extra 50% of your income on health care almost certainly isn’t going to make you 50% healthier. In fact, if you already had halfway decent health care at, say, 7% of your income, spending another 50% probably isn’t going to make you any healthier at all. You might have a hard time even figuring out how to do it. And that’s true at both a personal and social level.

Beyond that optimal level (which is probably a lot closer to what the NHS spends than what the US does) if we want to be healthier, there are lots of other interventions and things to spend money on that will do much more to make us healthier. Reorganizing our build environment to encourage more walking and exercise. Making various modifications to food policy to encourage healthier eating. Spending fewer stressful hours at work and more hours with your family and friends (and/or outdoors). Research and investment to reduce the use of toxic chemicals and their presence in our environment. Etc.

45

Lee A. Arnold 08.30.09 at 8:32 pm

(1) Rationing is a non-issue. The oncologist whom McArdle quotes seems to have forgotten about the law of supply and demand, which says among other things, that if you increase demand, supply will follow. So while there are likely to be some shortages in the short term, (and of course there are shortages already, depending upon the weather,) the thing to do is make provision for the most predictable ones, and to be glad that the only way to increase supply in the long term is to get more people (i.e. demand) into the system. It will for example provide more employment in the long term, and be a good target for the expansion of education. There is no real downside to this.

(2) The way to go is a two-tier system. My feeling is that of Tom West #6, above. If the public option covers a clearly baseline, rudimentary healthcare plan, i.e. there are things explicitly not covered, and you know that you can buy more private coverage for your rhinestone-encrusted lifestyle if you want it and can afford it, then people who choose to be covered ONLY by the public plan are choosing a form of rationing by their individual choice, and so “rationing” would be partly instituted by personal decisionmaking — a mechanism that libertarians above all other intellectual clowns ought to approve of!

(3) On cost savings, McArdle writes, “the proponents [of healthcare reform, prefer to minimize the problem of rationing] by discussing all the speculative ways that we might be able to save money by cutting treatments that don’t do any good, or the infamous “waste, fraud, and abuse” that politicians always promise they are going to use to save money.  Somehow, that money never makes its way to the budget’s bottom line in any significant amount. ”

She curiously misses a way which is not mere speculation: a public insurance choice, the “public option,” by which you could save the 20% markup by the insurance companies, which will certainly save money right there. The likely administrative overhead of a public insurance choice is likely to be only 5%. that is a lot of dough saved. And the private insurance companies don’t appear to provide any objective, quantifiable value-added for their extra markup. Will somebody please name something they do for it? They are a deadweight oligopoly. We also just bailed-out the insurance/finance clowns in the Wall Street meltdown. They are frauds coming and going.

(4) At this point, you can Google all your symptoms, and do it better than half the doctors you’ll see. You can type lots of words into Google. I successfully diagnosed that I am pre-diabetic. I got Australian websites more useful than anything in the U.S.!

46

bianca steele 08.30.09 at 8:38 pm

but not because it is written anywhere – in any law or private contract – that legally, or contractually, this person is obliged to get poor healthcare, or to be crushed by the burden of paying for healthcare

Hm. Maybe we should be prohibited morally if not legally from having more healthcare than those who have least–if I were required to refuse anything above the minimum, I might be more motivated to join a political campaign to increase the minimum–or something? At least, I would increase the chances that somebody might feel sorry for people in the same bad conditions, and they might try to help us out (as John’s trying to help out McArdle’s apparent prohibition against having a plausible argument–obviously not a perfect analogy, though, for at least two reasons)?

47

Martin Bento 08.30.09 at 9:40 pm

Ben, at #37, what makes McArdle politically significant is where she gets published. The Atlantic is an old prestige publication.

48

soru 08.30.09 at 10:03 pm

Should be more like “for all people there exists some pony such that that person won’t get that pony”.

If we are arguing in abstract terms, that is logically false, as it fails in the possible worlds in which I own all ponies, or in which there are people, but no ponies.

I think you want something like ‘for all pony-ownership-allocation methods involving finite numbers of ponies, there exists some person who would have more ponies under a non-identical pony-ownership-allocation method’.

49

Martin Bento 08.30.09 at 10:30 pm

wow, that’s pithy.

50

Phil 08.30.09 at 11:34 pm

Maybe we should be prohibited morally if not legally from having more healthcare than those who have least

I think conceding that personal add-ons to a universal system might provide more (or better) healthcare is already conceding too much. Here in the UK, for money to buy better or more appropriate treatment is very rare – “big story in the local news” levels of rarity. Generally, the quality of the care – and the surgeons, and the drugs – is the same either way. What private patients do quite routinely buy is better odds of a good outcome, by eliminating waiting time and reducing extraneous stress. And they do this essentially by loading increased waiting times and stress levels on everyone else – i.e. by introducing price rationing as a distortion, within a scarcity-rationed system. Which is perhaps why, for those of us in countries with universal healthcare, McArdle’s argument seems to come from Planet Illogic. “Paid-for healthcare gives me better outcomes!” Yes, better than the rest of us.

51

alkali 08.31.09 at 12:05 am

I realize I have been arguing, for several posts now, at an unsatisfactorily high level of abstraction.

A problem with arguing with libertarians at the level of abstraction is that libertarians have a comparative advantage in abstracting away the actual facts of the world in favor of the freshman-microeconomics models they have concocted in their heads.

Take the First Things article that McArdle quotes approvingly. The author argues that government health care plans would have an incentive to obscure rationing, but private health insurance would have the benefit of written contracts setting forth the details of coverage. As a purely theoretical matter, this might be defensible, if incomplete (wouldn’t private insurers have an incentive to obscure rationing too?). But it ignores some giant facts about the world in which we live.

First, with respect to the government: whatever its incentives, the government is fact subject to public and legislative oversight, which means that coverage determinations are incredibly public and controversial. Google for “Medicare coverage determinations” and you will find a mass of extremely detailed Medicare policy statements on coverage in particular kinds of cases. If anything comparable and public exists in respect of any private insurer, I am unaware of it. You can’t show (or get around) the existence of that mass of documentation by reasoning from first principles.

Second, with respect to private insurers, the fact of the matter is that coverage documents do not provide anything like the mass of detail you will find in Medicare coverage determinations. Indeed, the whole point of the widespread HMO form of health insurance is that HMOs can hold costs down by making better decisions in particular circumstances as to whether particular tests and treatments are warranted. That is why doctors are on the phone with HMO reps all the time arguing for coverage of this or that test or treatment — if you could just look up whether something is covered in the contract, those calls would be unnecessary. To be clear, this is not a criticism of HMOs: whether you like or dislike HMOs, that’s how they work. Reasoning from first principles doesn’t get you to that fact.

52

Joshua Holmes 08.31.09 at 12:45 am

Philosophically, there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

I would rephrase it as “no one is entitled to treat you, no has the right to stop your pursuit of treatment”. You aren’t entitled to treatment, if no one wishes to provide it. Conversely, you have the right to seek any sort of treatment you desire. The former attacks state provision of healthcare; the latter attacks state barriers against it (doctor licensing, FDA drug licensing, prescription requirements, etc.).

Or if you want me to be polemical about it, when are “pure, real, genuine, intellectual, etc. libertarians” going to be held responsible for “actually existing libertarianism”?

Milton Friedman, the most prominent libertarian in American history, doesn’t count as “actually existing libertarianism”? Lew Rockwell, who runs the world’s most prominent libertarian website, doesn’t count as AEL?

But I reject the premise generally: libertarians who ignore parts of their ideology to be more politically relevant are no different from any other group, part of whom gives up consistency for political relevance. Should I blame MoveOn for Obama’s escalation of Afghanistan? I don’t, and I hardly see how an anarchist like Rockwell has to answer for the thought crimes of McArdle.

53

jfxgillis 08.31.09 at 1:35 am

John:

Philosophically, there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

Just so.

That is the major premise at the cornerstone of all the argumentation against reform of the health care system, even by many of the poor ignorati wailing away at the Town Halls. Those folks I feel some sympathy for, they literally don’t know better. McArdle is supposed to know better.

If she would just say what you said and argue from there, that would be fine. But she won’t.

54

Martin Bento 08.31.09 at 1:38 am

On the question of private vs. public coverage, given that the private coverage is profit-maximizing,it will also seek to deny coverage. What will keep it from denying coverage in all cases? Two things: the government and reputation effects. Libertarians put grear emphasis on reputation effects, but if reputation effects were sufficient to keep businesses honest, we would not have seen old, reputable ratings agencies rating junk AAA. So largely those who have no faith that government has the competence and integrity to live up to its commitments largely have faith nonetheless that the government can and will compel the private sector to do so. Is this faith specific to the Court system? Well, no. There are plenty of libertarian grievances about that too.

55

Doctor Science 08.31.09 at 1:55 am

alkali:

A problem with arguing with libertarians at the level of abstraction is that libertarians have a comparative advantage in abstracting away the actual facts of the world in favor of the freshman-microeconomics models they have concocted in their heads.

Not just economic models. The working definition of libertarianism I have come up with, by observation, is “libertarians do not believe humans are social animals”.

So for instance: if you don’t have any money, you shouldn’t be entitled to any medicine is quite reasonable if the sight of people dying for want of medicine doesn’t bother you, and if you can assume it doesn’t bother anyone else (their families, for instance). If you’re a true *individualist*, the collapse of any sense of community is all to the good, because “community” is a delusion.

What most libertarians *do* seem to believe in is *corporations*. I have never been able to figure out if corporations, in their minds, are replacing communities, or if they’re kind of like individuals only cooler (that is, richer and more powerful).

56

Wax Banks 08.31.09 at 2:52 am

Holbo -

I know a tiny (but larger-than-a-lecture) nonacademic audience is gratifying for PhD’s in unsexy fields, but there are more interesting, and indeed more popular, noses to swat than this imbecile McArdle’s.

57

Wax Banks 08.31.09 at 2:53 am

i.e. Listen to your wife.

58

Lee A. Arnold 08.31.09 at 3:01 am

I think the real flaw in libertarianism is that libertarians conceive liberty and rationality as being in full and cosmic supply, if only we would get out of the way and allow it to happen.

In reality, liberty is consumed and rationality is a scarce good.

Liberty is consumed because time is limited: you only get twenty-four hours in a day. Over at Marginal Revolution I got into arguments with commenters who were excoriating Tyler Cowen for his defense of the recent bailouts as being the most expedient thing, given the enormity of the collateral damage that could have occurred. (Cowen didn’t write it that way and I hope not to put words in his mouth.) But the libertarians just think the whole system should have been allowed to crash, then sorted-out in bankruptcy court. This would still be going on, of course. In the meantime, without payrolls or viable mortgages, people would be living on the street.

And rationality is scarce. It doesn’t cover complexity fully. You could let the whole financial system crash, and it still wouldn’t make people do things better the next time. The system is getting too complicated for that. Even bounded rationality doesn’t always suffice — this is an unexamined pretense not only of libertarianism but of economics.

In fact the libertarians’ misunderstanding of complex systems is a recurring theme. They jumped to automatic suspicion of the global warming scenarios, for example. In Capitalism and Freedom, Milton Friedman advocated privatizing the U.S. national park system — a major reason that wildlife ecologists believe him to have been a dangerous fool. You can imagine the hue and cry if an ecologist held forth on economics without any study of the subject.

Libertarians seem to have misconstrued Hayek’s argument about knowledge. Markets don’t pick up the slack in rationality — and Hayek didn’t argue this. His point was that markets transfer “supply” and “demand” information better than central systems. That’s all he wrote about it — and that is not enough.

We all want liberty and choice, but if we keep having repeated problems in a certain area, the solutions are institutions — as I believe Hayek himself indicated. The incapacity of individual rationality can be overcome by public institutions that refer to experts on policy, and that reduce transaction costs of individual searching, bargaining and enforcement . That saves time, and in turn results in greater quality of life or greater labor productivity, or both.

Government institutions are naturally dangerous both to freedom of choice and to economic efficiency, (just like any private monopoly and just like the “monopolistic competition” defended by the growth theorists,) so the thing to do is make them organizationally simple, tightly targeted on the addressed problems, transparent to inspection, and responsible to democracy. It’s just innovation at a different social level than the growth theorists usually frame it.

We have had about 10 financial bailouts in the 20 years up to this latest debacle, and strengthening the regulatory institutions is in order, using very simple rules.

On healthcare the U.S. needs to do two things, to remain a moral society and to remain competitive: (1) get everybody covered, and (2) bring down long-term costs. The only way to keep that SIMPLE is a public insurance choice.

59

John Protevi 08.31.09 at 3:05 am

Joshua Holmes @ 52: no, Friedman and Rockwell don’t count as “actually existing libertarianism.” Maybe you missed the allusion to the Cold War practice of claiming that all leftist theory was utopian nonsense, and in practice did nothing more than provide rhetorical cover for the USSR, which was “actually existing socialism.” So to be just as unfair as that old practice, I get to claim that Friedman and Rockwell spout utopian nonsense that in practice does nothing more than provide rhetorical cover for stupid corporatists like Megan McArdle, who is the embodiment of “actually existing libertarianism.” See why I said it was a polemical move?

In fact, #38 is a better, more productive response to Dan @ 32.

60

John Protevi 08.31.09 at 3:10 am

Joshua Holmes @ 52: no, Friedman and Rockwell don’t count as “actually existing libertarianism.” Maybe you missed the allusion to the Cold War practice of claiming that all leftist theory was utopian nonsense, and in practice did nothing more than provide rhetorical cover for the USSR, which was “actually existing socia!ism.” So to be just as unfair as that old practice, I get to claim that Friedman and Rockwell spout utopian nonsense that in practice does nothing more than provide rhetorical cover for stupid corporatists like Megan McArdle, who is the embodiment of “actually existing libertarianism.” See why I said it was a polemical move?

In fact, #38 is a better, more productive response to Dan @ 32.

61

Martin James 08.31.09 at 3:16 am

Doc Science
I don’t think its strictly true that libertarians don’t believe that humans are social animals. For example, they often rail on the fact that humans gang up socially to impose things like taxes, drugs laws and immigration quotas.

It seems like you are using “social animal” as a placeholder for empathetic. Aren’t there are a lot of cruel acts done socially by human animals? Torture and genocide are usually team sports.

62

e julius drivingstorm 08.31.09 at 4:15 am

Shorter Lee A. Arnold @45, pt. (1).

Health care rationing? This is America. We will fix this.

Lee’s right that it will fix itself. We just need the sound byte.

63

Lee A. Arnold 08.31.09 at 6:02 am

Metafilter sends us to DeathPanels.org, easily the best and simplest collection of information. Send it to everybody you know:

http://deathpanels.org/

64

Joshua Holmes 08.31.09 at 12:28 pm

Shorter Protevi @ 3:10 am:

“I’m going to keep moving these goalposts until I get the field goal I want.”

65

JoB 08.31.09 at 12:31 pm

42 – but I have!

66

Doctor Science 08.31.09 at 1:27 pm

Martin James:

Libertarians view taxes or laws as the product of “gangs” — aberrations — and believe that humans are naturally self-reliant and independent. They do not seem to recognize that the natural state of a human is in a social group, and that concepts like “property” are functions of particular social relationships, not Platonic ideals.

Either way, I still don’t understand how corporations fit into the libertarian world-view. They talk a *lot* about individuals versus the Big Government, but don’t seem to notice the actions of Big Corporations.

67

Steve LaBonne 08.31.09 at 1:50 pm

It’s easy, Doctor Science- just ask them. The way corporations fit into the libertarian ideology is simply that HEY LOOK AT THAT SHINY OBJECT OVER THERE! At least that’s the only answer I’ve ever gotten from them.

68

John Protevi 08.31.09 at 2:39 pm

Shorter Joshua Holmes @ 63: why, yes, I was ignorant of a common allusion, but if I accuse my interlocutor of something he wasn’t doing, maybe no one will notice.

69

Doctor Science 08.31.09 at 3:13 pm

Steve:

*nods* There’s also a lot of talk about how “if I don’t pay taxes, the government can send someone to my house and SHOOT ME, not even Microsoft can do that.” Which always seems weird to me, because I’ve never actually felt physically threatened by a non-police government agency, but I have *definitely* felt myself in direct physical danger from my health insurance company.

70

zic 08.31.09 at 3:29 pm

Martin James @60 got it right; Libertarians lack empathy.

They also lack any ability to appreciate the advantage they’ve gained from government; and so would deny those same benefits to anyone else, deluding themselves that they defied gravity and pulled themselves up by their own bootstraps. As a result, they promote social welfare for corporations but not people, since it’s through corporations that people support themselves, alleviating the need for a libetarian’s precious money to be “lifted” via taxes for others. And this leads to a sorry result: the inability to see that investing in people can, and often does, pay a significant return.

As Martin James said, a lack of empathy.

71

Dan 08.31.09 at 3:51 pm

The ignorance in this thread is remarkable – do you people not bother to do the slightest amount of research on the views of those who you disagree with before going off on uninformed rants about them? The majority of libertarians I’ve ever met, and I think it is a reasonable cross-section of the libertarian population, would be in favour of abolishing limited liability corporations altogether. I certainly would. For example, you might be interested in this Cato Unbound discussion http://www.cato-unbound.org/archives/november-2008-when-corporations-hate-markets (note the overwhelming agreement with Long in most of the libertarian responses) , but, then again, you might prefer to continue in a blissful state of unawareness. Wouldn’t want the facts to get in the way of a bit of libertarian bashing now, would we.

72

Steve LaBonne 08.31.09 at 4:13 pm

Dan, please point to any prominent libertarian voices audible outside the small circles of the elect that are calling for the abolition of corporations. Meanwhile, essentially ALL mainstream “libertarian” commentary comes from corporate shills who, to add to the irony, are themselves employed by tax-exempt corporations which get much of their funding from for-profit corporations (funny you should mention the Cato Foundation). Guess we’re back to that ‘actually existing libertarianism” thing, eh?

73

John Protevi 08.31.09 at 4:18 pm

Dan, I’m going to explain this slowly and carefully. We all know that libertarian think tanks are against corporations; that’s why we’re able to point out that that side of libertarian thought is missing in the astroturf campaigns and MSM punditry in the health care debate.

But since you continue with your misplaced whinging about our “ignorance,” maybe you’d like another dose of Cold War libertarian tactics, namely, pointing out that you are “objectively pro-corporate,” in that yer fancy dan libertarian think tanks don’t do anything but provide rhetorical cover (“free market, fuck yeah!”) for the establishment, protection, and expansion of corporate power. Like it or not, Megan McArdle, blogger at the Atlantic Monthly, is part of the “actually existing libertarianism,” that you just can’t wash your hands of, no matter how many Cato Institute links you provide.

74

jack lecou 08.31.09 at 4:35 pm

I’m not sure that being against corporations necessarily suggests a greater appreciation of economic and social necessity than the reverse anyway.

75

Substance McGravitas 08.31.09 at 5:10 pm

Meanwhile, essentially ALL mainstream “libertarian” commentary comes from corporate shills who, to add to the irony, are themselves employed by tax-exempt corporations which get much of their funding from for-profit corporations

Schrödinger’s Cato: a place where we can conclude both that there is and is not money in libertarianism.

76

Dan 08.31.09 at 5:56 pm

please point to any prominent libertarian voices audible outside the small circles of the elect that are calling for the abolition of corporations

Ah, I get it. Any libertarians I do point to as opposing corporations somehow don’t count, because they are in “the small circles of the elect.” Oh, don’t let the fact that the world’s biggest and most influential libertarian think-tank and the world’s most popular libertarian web-site both link approvingly to arguments advocating the abolition of limited liability corporations fool you – everyone knows that Megan McArdle (who is apparently supposed to be the USSR in what is certainly the most tortured analogy I’ve seen today) is really our official spokesman here.

And just by the way, if you’re going to make a snarky point, it helps to get the facts right – something like 80% of Cato’s funding comes from individuals, not corporations.

77

Dan 08.31.09 at 5:58 pm

I’m not sure that being against corporations necessarily suggests a greater appreciation of economic and social necessity than the reverse anyway.

How quickly the goalposts shift…

78

Steve LaBonne 08.31.09 at 6:02 pm

Oh, don’t let the fact that the world’s biggest and most influential libertarian think-tank

A non-profit COPRPORATION which gets its money by shilling for for-profit COPORATIONS. Can you say “hypocrisy”? I knew you could! Oh and by the way, could you point us to the public campaigns it has mounted in favor of abolishing corporations? Because, you know, stuff that’s buried in pious lists of principles or obscure position papers hardly balances out all their massive publicity campaigns in favor of goodies desired by, well, corporations (the ones that paid them to mount those very campaigns).

I won’t even say “nice try”, because it wasn’t.

79

jack lecou 08.31.09 at 6:23 pm

I’m not sure that being against corporations necessarily suggests a greater appreciation of economic and social necessity than the reverse anyway.

How quickly the goalposts shift…

Oh? Would you care to point to the post where I used different goalposts?

80

jfxgillis 08.31.09 at 6:54 pm

Dan #70

The majority of libertarians I’ve ever met, and I think it is a reasonable cross-section of the libertarian population, would be in favour of abolishing limited liability corporations altogether.

That will never happen.

So libertarians get to argue for the pony because they reject in principle the policy that prevents ponies, rendering their arguments internally consistent.

And the funniest part is, libertarians follow all that up by demanding to be taken “seriously.”

81

John Protevi 08.31.09 at 6:56 pm

Dan, can I remind you that Megan McArdle’s brand of the libertarianism, and the politically important role it plays in the current US health care debate, is in fact the subject of this blog post and subsequent thread? It seems I need to remind you of this because your repeated attempts to shift discussion to, in Steve LaBonne’s apt phrase, “pious lists of principles or obscure position papers,” is, how might I put it? Oh, yeah, “goalpost shifting.”

82

Dan 08.31.09 at 8:03 pm

Steve, have you ever considered that Cato might not have run any high profile campaigns against the existence of limited liability corporations because time, money, and political capital is scarce, and as #70 eloquently put it, “that will never happen”? Or are you seriously saying that people don’t get to claim to believe in something unless they have run public campaigns promoting it? Much as I’d like them to make more of this issue, I don’t see that they are under any moral obligation to squander their resources; deride ‘position papers’ all you like, but it is still more than anyone else is doing – if you can point me to anything similar from a mainstream left think-tank, please do. (And again, at the risk of repetition, you’re talking pure BS about Cato’s funding – 80% of it comes from individuals.)

John, I was mainly responding to the ignorance of comments like What most libertarians do seem to believe in is corporations (#55) and Either way, I still don’t understand how corporations fit into the libertarian world-view. They talk a lot about individuals versus the Big Government, but don’t seem to notice the actions of Big Corporations.(#65) and The way corporations fit into the libertarian ideology is simply that HEY LOOK AT THAT SHINY OBJECT OVER THERE! (#66) and they promote social welfare for corporations but not people (#69). But hey, I must have missed the part where you were bitching at them for being off topic or shifting the goalposts.

83

Chris 08.31.09 at 8:38 pm

Which is, on the whole, pleasant. Because it is unpleasant to feel guilty of having not allocated goods in such a way that people got what we actually feel they should get. Better if the ‘rationing’ aspect of the system is more or less invisible.

It’s a trolleycar problem. The trolley is hurtling toward 50 million people and McArdle’s ilk are agonizing over pulling the switch because there *might* be someone on the side track, and intentionally changing the System in a way that harms that hypothetical person or people is so much worse than allowing the impersonal System to crush the 50 million. Nobody’s to blame for the System, right? It just sort of happened.

I don’t think most people examine it head on, but what is really going on here (IMO) is status quo bias – allowing the people who are currently being harmed to continue being harmed has little or no moral weight, compared to the people who might be harmed if we (gasp) act. Because only action has morally relevant consequences, not inaction. (There’s also a component of “I’m all right, Jack” or “I got mine”, of course, but nobody wants to *openly* argue that part.)

Government doesn’t get to play Pontius Pilate. Because a government is the *unique* (within its jurisdiction, by virtue of its ability to exclude other governments from that jurisdiction) expression of the people’s collective will and actions, it cannot sit back in the hope that someone else might act – on many problems no one else has the capacity to act. A collective choice to keep the government out of X is just as morally laden with the consequences as a choice to have it act. People killed by government inaction are no less dead than those killed by government action.

84

Chris 08.31.09 at 8:49 pm

Cato’s funding – 80% of it comes from individuals.

I don’t suppose you happen to know how many of those individuals derive most of their income from their status as part owners and/or high-ranking officers of LLCs? (I’m sure partners of law firms, for example, would be eager to embrace a libertarian argument for why their firm should not enjoy limited liability status. And a pony.)

85

Steve LaBonne 08.31.09 at 10:09 pm

75% individuals according to CATO itself. Aside from the obvious point made by Chris, there is also the question of why an organization that supposedly has a principled opposition to corporations a) IS a nonprofit corporation itself, and more importantly 2) accepts much of the other 25% of its funding from the usual corporate suspects. According to rightwingwatch’s writeup on CATO: “Cato’s corporate sponsors include: Philip Morris, R.J. Reynolds, Bell Atlantic Network Services, BellSouth Corporation, Digital Equipment Corporation, GTE Corporation, Microsoft Corporation, Netscape Communications Corporation, NYNEX Corporation, Sun Microsystems, Viacom International, American Express, Chase Manhattan Bank, Chemical Bank, Citicorp/Citibank, Commonwealth Fund, Prudential Securities and Salomon Brothers. Energy conglomerates include: Chevron Companies, Exxon Company, Shell Oil Company and Tenneco Gas, as well as the American Petroleum Institute, Amoco Foundation and Atlantic Richfield Foundation. Cato’s pharmaceutical donors include Eli Lilly & Company, Merck & Company and Pfizer, Inc.”

“Liberty” for me and not for thee, eh?

86

engels 08.31.09 at 10:28 pm

80% of it comes from individuals

Indeed, I believe much of it came from Charles Koch, its co-founder, who was, as you so perspicuously note, an individual and not a corporation, and therefore can not possibly be suspected of wanting to pursue any pro-corporate agenda.

(But nowadways ‘most of its financial support from entrepreneurs, securities and commodities traders, and corporations such as oil and gas companies, Federal Express, and Philip Morris that abhor government regulation,’ according to Jean Stefancic and Richard Delgado of the University of Colorado Law School.)

87

jfxgillis 08.31.09 at 10:31 pm

Dan:

Let’s switch to unicorns for a moment, since there’s as much chance of unicorns existing as there is of abolishing limited liability corporations

In effect then, libertarian claims reduce to: Because I believe in unicorns, therefore, a pony.

88

Bloix 08.31.09 at 10:38 pm

#8 – “Why don’t we call it “rationing by price”?”

Because the hallmark of rationing is that it is a mechanism to allocate a scarce resource that DOES NOT USE PRICE. A certain amount of the resource is allocated to each person, and no more, regardless of ability to pay. If you allow the market to allocate a resource, you’re not rationing.

McArdle would never claim that food is rationed, or air travel, or big houses in the suburbs, or shoes, or gasoline. Why let her get away with saying that health care is rationed?

89

David Wright 08.31.09 at 11:14 pm

Still, we ought to be willing to say what the better thing would be: namely, affordable, universal, basic health care. (Not necessarily premium health care. That would be too expensive. But a solid package. Buy more if you want it.)

All right, I’ll agree to that. But two things…

1. The basic package should be so bad that no non-destitute person would want it to be their only coverage. Like a 1980 standard of care (which was good enough to buy us a 70-year lifespan). Like the NHS with a QUALY priced at 1/3 its current price. Antibiotics, casts, and X-rays, but no MRIs and no advanced cancer or heart treatments.

2. We need some mechanism in place to prevent the basic plan growing beyond (1), becoming a middle-class entitelment that eats the private market. This is a real worry, because (a) it happened (unintended) in Britian and (intended) in Canada, (b) it’s happened in other markets, like the school system, in the U.S., and (c) many progressives want it to happen.

If any progressives are on board with (1) and are willing to work with me to find legal mechanisms to prevent (2), they’ve got my vote.

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Dan 08.31.09 at 11:23 pm

Steve, to answer your questions: a) is silly given the primary problem libertarians have with corporations is that they are granted limited liability and other special state privileges which other forms of organization are not; (you may have not have noticed or you may have chosen to ignore that I have been reasonably careful to make this qualification throughout). If you think you have a solid libertarian case against non-profit corporations I’d love to hear it, but my guess is you think this is a gotcha moment simply because you don’t understand the position we’re coming from. As for b), from the link that engels so helpfully provided we can see that in 2006 Cato received a massive 3% of its funding from corporations (whether this counts as “much of the other 25% of its funding” I will let you make up your own mind). In addition, and I quote: “Cato’s corporate fund raising may be hampered by its staffs’ tendency to take positions that are at odds with some of the interests of some large corporations. Cato has published numerous studies criticizing what it calls “corporate welfare,” the practice of funneling taxpayer money to politically well-connected corporate interests.”

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Doctor Science 09.01.09 at 12:26 am

David Wright:
The basic package should be so bad that no non-destitute person would want it to be their only coverage. Like a 1980 standard of care (which was good enough to buy us a 70-year lifespan). Like the NHS with a QUALY priced at 1/3 its current price. Antibiotics, casts, and X-rays, but no MRIs and no advanced cancer or heart treatments.

… wow. That’s really frank, dude. Half of poor people should die by age 70, lest it “eat the private market”. No breast cancer treatment for you, 50-year-old poor woman! Hey, maybe you have a brain tumor, or an aneurysm, but Your Kind doesn’t get the fancy machines, they’re for your betters! The last 40 years of medical progress were never intended to help *you*.

I can’t find a direct link, but I’m pretty sure hilzoy at Obsidian Wings did a Katrina-remembrance post a couple years ago about how for American conservatives the poor have an important function: they should die, so other people can feel well-off by comparison.

Mr. Wright, the rules of this blog do not permit me to express what I think about you, but being a member of your species makes me feel unclean.

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mart 09.01.09 at 1:44 am

Just seconding what Dr Science @90 said re David Wright – if that’s what you believe, it’s pretty disgusting.

I think the generous interpretation of libertarians here is that they want at all costs to preserve the private market in healthcare, but have utterly failed to convince any non-libertarian of why this should be the case. As a Brit, I fail to see how having the NHS – not even proposed for the US – crowd out the private market has led to some kind of substantially worse standard of healthcare for people here. Sorry.

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Charles Peterson 09.01.09 at 2:06 am

Great dialog, but infrequently mentioned (first in #51) that insurance contracts tell you very little about what the insurance company is actually going to do. They are filled with weasel clauses such as “medically necessary” and “reasonable and customary”. Bottom line, you have no idea if in the end they’re going to pay for your future bone marrow transplant or not, and they many as yet unregulated mechanisms to deny it, including cancellation of contract (because you once took an aspirin, but forgot to mention that). And, if you fail to get the treatment you thought you had been paying for over 40 years, you can take them to court. Good luck. I understand that in the state I live, no one has collected in court against their own insurance company in decades. Really existing courts are from from Milton Friedman’s ideal.

In the area of health insurance, national government has the mandate and history of being far more transparent, and no profit motive to steer them otherwise, and denials could make the front page because they don’t threaten corporate sponsors.

An infrequently mentioned mechanism for healthcare denial (call it rationing or not, probably not to be consistent in arguing that government insurance cannot ration per-se either since the market is still there if you can pay) is network-based rationing. You can assume that the insurance company chooses and chooses to stick with doctors who keep their costs down, which may not include the doctors most known for getting successful outcomes in difficult cases. I’ve read of one such case recently where a primary doctor advised patient “not to bother” with the in-network cancer specialist. Going out of network, in my experience, is likely to mean you pay nearly the whole astronomical cost-shifted-to retail price (forget out the contract claim of 80% or 50% coverage or whatever) because then you don’t get the benefit of the negotiated price and other limitations, and the insurance will be sure not to pay any more than the stated percentages of those, while the doctor/clinic/hospital may be loath to pad your bill any less than they do in the first submission to insurance, especially if they ARE submitting it to insurance to get the paltry sum, if anything, insurance will pay in such cases.

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Steve LaBonne 09.01.09 at 2:22 am

Dan, precisely why would you distinguish between for-profit and non-profit corporations? Both have EXACTLY the same problems within your ideology- they’re both creatures of the state with special legal status and privileges as artificial quasi-persons, and they both shield individuals from the responsibility you say you want them to have. Remember these are YOUR proclaimed principles (and CATO’s), not mine.

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engels 09.01.09 at 2:39 am

And next week on Crooked Timber, Dan argues that the Green party is not pro-environment because none of its members are trees.

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David Wright 09.01.09 at 5:54 am

Mart @ 91 & Doctor Science @ 90:

Interesting that while your posts express the same sentiment about my moral failings, your take-aways are precisely opposite. Doctor Science claims that a system that denies the most expensive procedures to those over a certain age would be so unthinkably horrific that it would be unacceptable even as a safety net for the indigent. Mart lives under such a system, and thinks it’s so fine that he can’t imagine why a society wouldn’t want to apply such a system to everyone.

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magistra 09.01.09 at 6:46 am

Doctor Science claims that a system that denies the most expensive procedures to those over a certain age would be so unthinkably horrific that it would be unacceptable even as a safety net for the indigent.

David – you clearly stated that you wanted to deny more expensive procedures to people regardless of age if they are poor. The NHS funds cancer treatment that may not be cutting edge, but is certainly using well post -1980 techniques. Its rationing is for very expensive procedures that have only marginal benefit, whereas the US system (which you obviously support) wants to gold-plate the treatment of a fortunate few and couldn’t care less about the rest.

If less fortunate people die prematurely and unnecessarily you are happy to accept that if it means maintaining a market system. What benefit from the market can possibly be important enough to justify people die who could be saved with the same amount of money? (The NHS is less expensive than the US system, after all). Or is your morality nothing more than ”this system benefits me, to hell with the rest of you’?

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nickhayw 09.01.09 at 7:01 am

No, I think Mart’s point is that the unthinkably horrific consequence of having a public plan that extends beyond ‘so bad’ / ’1980 standard of care’ has not led to a general deterioration in healthcare for the individual (in Britain).

He’s not just saying your position is a morally bankrupt, he’s saying that your argument-from-unintended-consequences is invalid. Healthcare under the NHS isn’t any worse than healthcare under the current system in the US, and it serves more people well.

Why exactly should it be such a bad thing that a public plan give MRIs or provide for cancer and heart treatments? What exactly do you stand to lose by having such a plan? I’m not seeing where this ‘middle-class entitlement that eats the market’ comes from, nor how it is in-itself a bad thing.

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Mandos 09.01.09 at 7:02 am

I agree with Belle. It is a valuable service to debunk McArdle, but who but the converted and the severely antagonistic read Crooked Timber?

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nickhayw 09.01.09 at 7:03 am

Sorry, that was in response to David @ 94.

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David Wright 09.01.09 at 8:01 am

Let’s be clear about two aspects of the NHS: (1) It is an excellent system if your metric of comparison is the number of quality-adjusted-life-years bought with a given pot of money. In fact, it is, theoretically, the best possible system by such a metric, because the maximization of that metric is the precisely the optimization problem that the QUALY allocation mechanism solves. (2) It most certainly does operate by denying expensive treatments to old people that it grants to younger people. That is an essential aspect of a QUALY system. You can’t have one without the other.

Now for a welfare system, the number of quality-adjusted-life-years bought with a given pot of money is precisely what I want to maximize. That’s just plain good stewardship of taxpayer dollars. But having said that does not obligate me philosophically or morally to want to apply such a metric beyond the level of a government-funded minimum safety net. Beyond that level, other aspects become important, such as the positive incentives faced by consumers, providers, and innovaters in a competitive marketplace.

The situation is exactly analogous to, say, public housing. Whatever pot of money the government allocates to house the indigent, I want it spent in a way that maximizes the number of quality-adjusted square feet per housed person. But I don’t want to apply that principle to the entire “housing system,” which would entail something like taking 25% of everyone’s gross income and dividing the quality-adjusted square footage that could buy equally among everyone. I don’t want to do that even though such a system would theoretically increase average quality-adjusted square footage enjoyed by my society, because I value the cabaility to work hard and buy a nicer house, and the innovations and effeciencies that induces among competing housing providers, and the work ethic it induces among workers.

Having made the distinction between the goals of a welfare system for the indigent and the rules of play in the wider society, it merely remains to determine how much money we will allocate to the safety net. The NHS buys, in terms of dollars spent per capita, about a 1990 level of care. But the U.K. experience shows that level of money will “eat the market,” or come close to doing so, so I want a lower level. 1/3 of the currentl NHS budget buys, again in terms of dollars spent per capita, about a 1980 level of care. (Once we determine the amount of money to spend, the QUALY mechanism will be a better way to allocate those dollars than a standard-of-care-in-year-X mechanism, because some new treatments are cheaper; but in approximately broad strokes the correspondence will hold.)

For those who don’t care whether the public provision eats the market, I would ask whether you would have any objection to living under the housing system I sketched above.

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Iorwerth Thomas 09.01.09 at 9:47 am

“For those who don’t care whether the public provision eats the market, I would ask whether you would have any objection to living under the housing system I sketched above.”

Why should I have an objection to such a housing system?

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Phil 09.01.09 at 10:52 am

It most certainly does operate by denying expensive treatments to old people that it grants to younger people.

At the margin, and it’s a much smaller margin than a lot of people seem to think. Alex:

while the transatlantic bit of the whole palaver played out, my grandfather was waiting for the results of an NHS case conference as to whether they could carry out a procedure to place a rather special stent at the very top of his throat, in order to re-open it, without the tumour interfering with his breathing. He’s over eighty, he’s been ill for some time, he’s already had several rounds of radiotherapy. And, of course, he’s not Stephen Hawking, but an old sailor and former GEC Marconi electronics engineer, an orphan who was a communist from the Depression until he got to know Yugoslavia in 1945. The procedure is complicated; they need the respiratory specialist to be present at the same time.

They provisionally scheduled it for Friday after next.

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JoB 09.01.09 at 11:16 am

Not to mention the trifling fact that people don’t die (at least directly) from a sub-optimal way of housing allocation.

(and what is the sense of “nicer health care” in your analogy – if it’s “better hospital food” then, by all means there will remain a market for it)

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JoB 09.01.09 at 11:19 am

I take that back: people do die from a sub-optimal housing allocation which is why there are, in effect, a lot of countries that sensibly do just what you put as the devilish thing to do (and, many of these countries have the rich living in acres of land in 6-bedroom villa’s).

So the point you don’t have is even wrong.

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Alex 09.01.09 at 11:21 am

Unfortunately, your whole argument rests on factual misstatement. Private health care is available in the United Kingdom; this is not a controversial statement. Companies exist that provide it and make a profit from doing so. Therefore, the private market has not been “eaten”. If you want to spend money to avoid having your treatment with the riffraff, you can.

The NHS buys, in terms of dollars spent per capita, about a 1990 level of care…It most certainly does operate by denying expensive treatments to old people that it grants to younger people…

Life expectancy is higher in the UK today, in 2009, than it is in the US. Perhaps we’re just genetically superior and will eventually crush you?

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David Wright 09.01.09 at 11:59 am

Alex @ 102: Your second point seems to be arguing against a statement I didn’t make. I said at the very beginning of my post that the NHS is “an excellent system if your metric of comparison is the number of quality-adjusted-life-years bought with a given pot of money.” I am not surprised that the QUALY mechanism can, with 1990 standard of care, produce more quality-adjusted-life-years than the U.S. system. That is simply not the metric I am interested in maximizing, for reasons I also clearly stated.

And in regard to your first point: according to the U.K. statitics office (http://www.statistics.gov.uk/articles/nojournal/ExpenditureonHealth08.pdf), private expenditure on health care in 2002 (the last year reported) was 16% of the total and falling fast. I’d call that having eaten the private market.

Magistra @ 95 and Doctor Science @ 90: I’m curious why you, or other who, like you, who believe that any system that allows the rich to buy better care than the poor is beyond the pale, didn’t attack John Holbo for his original blog post. He clearly proposes such a system. (“Basic health care … a solid package. Buy more if you want it.”) Yes, I would like vote to spend less than he would. But if you can go all morally ballistic with statements like “Half of poor people should die by age X” when X=70, why not for X=75? If the threshold for moral outrage isn’t full parity, what is it?

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Charlie 09.01.09 at 12:38 pm

The situation is exactly analogous to, say, public housing … For those who don’t care whether the public provision eats the market, I would ask whether you would have any objection to living under the housing system I sketched …

But surely the fact that you can draw an analogue isn’t in itself a good reason to treat two things in the same way. Universal public health care provision, where it exists, is usually justified on the grounds that it seems that just about everyone wants to be in good health (and free from fear of poor health). Also of significance is the fact that we also have near-consensus as to the best methods for practicing medicine. Preferences with respect to other things are often much less clear cut, as are the best ways of going about them. Hence markets.

Conceptual symmetry – often attractive but not necessarily your friend?

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engels 09.01.09 at 12:40 pm

David, could you expand your argument that allowing poorer people in the US access to a post-1980 level of care (which included ‘advanced cancer and heart treatments’) would undermine the ‘work ethic [the current system] induces among workers’?

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Salient 09.01.09 at 12:50 pm

It most certainly does operate by denying expensive treatments to old people that it grants to younger people.

No it does not. Perhaps it operates by refusing to pay for expensive treatments to old people that it grants payment for to younger people. It does not “deny” those treatments to those people, in the sense that those people are certainly welcome to buy private insurance which covers those treatments, or pay for the treatments out of pocket. The NHS does not make these treatments illegal for older people to obtain.

I don’t want to do that even though such a system would theoretically increase average quality-adjusted square footage enjoyed by my society, because I value the capability to work hard and buy a nicer house

Again, if the comparison is to be apt, you’re welcome to spend your own money to “top up” your house, build a mansion, etc. The HousingNHS does not make it illegal for you to buy additional property.

(You might argue that property, unlike health care, is a finite good that is impossible to expand: if we take all the land in the UK and divy it up, there would be no land to buy, at any price. This is unlike health care, in that we can just train and employ a few more doctors to provide the additional services to private buyers. This is one reason why your analogy doesn’t apply terribly well.)

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engels 09.01.09 at 12:56 pm

David, could you expand your argument that allowing poorer people in the US access to a post-1980 level of care (which included ‘advanced cancer and heart treatments’) would undermine the ‘work ethic [the current system] induces among workers’?

Actually, on second thoughts, I’d rather you didn’t.

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Doctor Science 09.01.09 at 1:08 pm

David Wright:

John Holbo was talking about a solid package of basic health care for everybody. You are talking about explicitly setting the baseline at substandard for the poor, a level of care which will mean they live *decades* less than the wealthy. That’ll solve those pesky Social Security and Medicare funding problems, all right — people won’t live to use them. It’s not just old people’s treatments that your plan would deny, you’re also saying “no neo-natal ICU for the poor” — that is, after all, extremely expensive post-1980 technology, for the most part.

It may be that you don’t realize that the average lifespan at birth in the US is already 78, and in a number of countries with “socialized medicine” it’s over 80. It’s even more likely that you don’t know how much the profit motive seems to be the driving force for our outrageously high medical costs.

The US medical system is the worst of both worlds: quality is low *and* cost is high. Lowering the overall quality yet further will not improve this dynamic. What you call “eating the private market” at least has a track record of *working*.

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David Wright 09.01.09 at 1:12 pm

Salient @ 106:

Tell me, when someone complains that an insurance company has denied them some treatment, do you jump in to pedanticly point out that the treatment hasn’t been denied, merely the payment for it?

In 2006, just 12% of the payments for health care in the U.K. were private. Would you advocate a “housing system” reform under which the government increased taxes by 88% of what people spend on housing and used that to buy equal housing for everyone? Would you defend such a proposal by pointing out that people could always use the 12% of their housing budget that the government left them to to “top up” their housing if they wanted to?

Engels @ 105:

I’m not sure what’s unclear about that argument. If you need to get a good job in order to get advanced treatment, you are more likely to work hard to get a good job. If your lot in life depends less on how hard you work, you are likely to work less hard.

Charlie @ 104:

Your point is well taken. I grant that analogies are not always appropriate. But I don’t think you have identified the relevant criteria to justify government provision. There is an even stronger consensus on how to make good LCD televisions than there is on medical practice, and nearly everyone wants a good LCD television. (NPR listeners who do not want televisions play the role of prayer healers in this analogy. :-) But that is not a good reason for the government to provide LCD televisions.

The standard economic criteria for government provision is an uncapturable positive externality. You can kinda make a rather weak argument for health care from that angle, but only if you squint real hard. In any case, that isn’t the usual progressive justification, which is essentially moralistic, not economic.

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Barry 09.01.09 at 1:26 pm

David Wright 09.01.09 at 1:12 pm

“I’m not sure what’s unclear about that argument. If you need to get a good job in order to get advanced treatment, you are more likely to work hard to get a good job. If your lot in life depends less on how hard you work, you are likely to work less hard.”

Said of a country which is becoming *less* meritocratic than Western Europe.

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David Wright 09.01.09 at 1:26 pm

Doctor Science @ 108:

Yes, I was proposing to accept a 7-year difference in life expectancy. (Note, 7 years is not “decades.”) I was quite well aware of that.

So, if the life expectancy of those on Holbo’s government plan were, say, 3 years less, would that be okay? You have granted you are willing to have those on the dole get slightly less good medical care than the rest of us. Please quantify that willingness: how much shorter can their life expectancy be?

I might add that, since you and I both agree that an NHS-style QUALY allocation mechanism can buy more years of average life expectancy than a market allocation, we should both expect that a QUALY-allocated 1980 standard of care would buy better than the 70-year average life expectancy the U.S. enjoyed in 1980. Given that the U.K. buys a 77-year average life expectancy with a 1990 standard of care, we might guess that my on-the-cheap plan could get the poor a 73- or 74-year life expectancy. Would that still not be equal enough?

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Charlie 09.01.09 at 1:36 pm

There is an even stronger consensus on how to make good LCD televisions than there is on medical practice, and nearly everyone wants a good LCD television.

That’s not obvious to me, at least. I don’t have an LCD TV, although I can afford one. But for argument, lets imagine a society with a constant near-universal preference for a certain design of LCD TV, no matter what substitute goods might be in prospect. Why shouldn’t such a society just hand out TVs to everyone?

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Iorwerth Thomas 09.01.09 at 1:53 pm

“If you need to get a good job in order to get advanced treatment, you are more likely to work hard to get a good job.”

And if your illness renders you unable to maintain a good job, or if good jobs aren’t available?

(Also, ‘working hard’ is not a sufficient condition for acquiring a ‘good’ job [1]; there exist all sorts of social factors that might prevent the hard working from getting a decent job. We do not live in a just universe, and this sort of assumption — that there’s a straightforward correlation between earnings and some desirable moral property — makes it even less so. And that’s assuming that there even should be a link between my earnings and my right to treatment for physical or mental illness, which seems far from clear.)

[1] Where ‘good’ seems to mean high-earning, as opposed to any other measure of the value of a job. Which seems an odd way of classifying things, but there we are…

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harry b 09.01.09 at 1:54 pm

Dan, I think everything depends on how you define “libertarian”. My guess is that you have a pretty purist definition (as indicated by your website) on which hardly any public figures and participants in public debate in the US count as libertarian. That’s fine, but on that purist definition, libertarians are as irrelevant as socialists to US public debate. And, indeed, almost all public figures in the US who have “libertarian” attitudes (broadly, minmise government intervention in the economy, especially when it comes to distributing income or basic goods) have beliefs that are not so libertarian regarding other issues (eg, they strongly support government involvement in marriage and discrimination against same-sex couples; support government involvement in reporductive decisionmaking, though not parenting; etc). But that libertarian attitude to the economy has enormous influence in public debate, and is often underpinned by highly unsophisticated “libertarian-ish” justifications. Organisations like Cato, whatever their funding sources, have played a very conscious and deliberate role in promoting these attitudes (and the half-baked justifications underlying them). Its very hard to defend the good faith of those organisations — the extent of their coporate funding is irrelevant. Of course, some individuals (I think of Rick Hess at AEI, for example) do outstanding and intellectually honest work; but as a whole there is a deep dishonesty. This is no reflection on serious. purist, libertarians — but I think it is ok to use “libertarian” in this much broader, inclusive, sense that people have been using here. You must be familiar with this broader use, no?

As for the fact that the UK has better average health and longevity outcomes than the US, and better outcomes even within different demographic groups; it is very hard to disentangle the effects of having a private and non-universal health care system from that of having a highly unequal society which imposes enormous stress on the losers and creates considerable stress even for the winners. So its not a slam dunk. Its just that it would deprive defenders of the status quo of one major argument if they were honest. But….

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David Wright 09.01.09 at 2:00 pm

Charlie @ 112: I expect you can make this argument yourelf. If you get your good LCD television regardless of whether you have earned enough to buy it, then you will work that much less hard. The more your standard of living is disconnected from the value you add, the less value you will add. I spent time in eastern Europe before the wall fell; I can vouch that this problem is not merely theoretical.

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JoB 09.01.09 at 2:04 pm

So David thinks his plan is worse, that the counter-arguments to his plan are ‘merely moral’ and that his plan is superior because everybody will know they have to work really hard to have the chance to retire and sit in front of a good LCD screen (the latter being an economical argument, because as we all know the state of the economy is directly proportional to the hard work done by those that aspire to have an LCD television).

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Salient 09.01.09 at 2:14 pm

Would you advocate a “housing system” reform under which the government increased taxes by 88% of what people spend on housing and used that to buy equal housing for everyone?

My advocacy for such a thing would be directly proportional to the chance I felt such a thing had of passing with a reasonable amount of popular support. So, in today’s climate, no; but ideally, sure, subject to various reasonable constraints and protections which aren’t worth outlining right now.

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David Wright 09.01.09 at 2:28 pm

Thanks to everyone for their engagement. I’m sure you’re all as flabbergasted to see that there are people who think like me as I am to see that there are people who think like Salient and Iowerth.

Job, I particluarly enjoyed your comment @ 116. It’s a barb, but one that indicates you have read carefully, and I appreciate that.

Harry @ 114, a quibble: U.K. and U.S. life expectancy are equal within a few months. The U.S. may even be up by a few months right now. (Which is not deny that the U.S. spends more on health care, or that there are other countries with average life expectancies greater than the U.S. by a few years.)

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Charlie 09.01.09 at 2:37 pm

The more your standard of living is disconnected from the value you add, the less value you will add.

Of course, ‘substitute goods’ can include leisure … the assumption is that people in our LCD TV society prefer having a TV to leisure, so it’s likely that they’ll do the minimum it takes. It’s possible that there will be some free riders.

But as it happens, I live in a society where getting fed is guaranteed no matter how lazy I am (I suspect you do too). I could free-ride on that. However, this state of affairs isn’t one without various other (non-punitive) incentives I have for trying to be (very?) good at what I do. As with many people, self respect is at or near the top of that list.

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Salient 09.01.09 at 2:42 pm

The more your standard of living is disconnected from the value you add, the less value you will add.

Insofar as this is a societal fact, it’s sad and worth dwelling on. What kind of sociopath only contributes to the health and well-being of society only because they stand to gain more in standard-of-living than they contribute? That’s the kind of person with no inherent sense of community whatsoever. :(

If you get your good LCD television regardless of whether you have earned enough to buy it, then you will work that much less hard.

Possibly. After all, LCD TV is the kind of luxury good that people might work in order to obtain, like a luxury car. Except, how does that answer Charlie’s point in 112, in which he says he doesn’t want an LCD TV? I don’t either.

Maybe we should distinguish “want” from “need” in some reasonable sense that defines health care as a need. Would you agree to that distinction?

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Salient 09.01.09 at 2:49 pm

I’m sure you’re all as flabbergasted to see that there are people who think like me as I am to see that there are people who think like Salient and Iowerth.

I’m mostly just pleased to have a hard-line-ish interlocutor who is nonetheless pleasant and engaging to read. And while I don’t completely understand this 1980 vs. 1990 means for measuring healthcare quality, I would agree that “1980 for everyone” > “what we have now” and would be amenable to a U.S. bill which establishes “1980 care” for everyone via a public option. (Unless I’m just not comprehending the metric.)

Actually, I’m also very pleasantly surprised that you support “1980 for everyone” as around here where I live, people deride the NHS as providing “19th century care for everyone and 21st century care for no one” — you can imagine how I live in a psychic state of permanent flabberghastery, in this environment. :)

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engels 09.01.09 at 2:49 pm

I’m sure you’re all as flabbergasted to see that there are people who think like me

Actually, no. After several years of reading this blog I mostly just feel numb.

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Alex 09.01.09 at 2:50 pm

So, basically, your argument is that *whatever* the advantages or indeed the actual performance of the NHS or a similar system, it’s unacceptable because it’s not libertarian enough? We know it works in practice, but does it work in theory?

What is this great good that is served by having a somewhat bigger private healthcare industry?

Also, claims require evidence. We have already demolished the imbecilic drivel about there being no private healthcare in Britain. What evidence is there that anyone works harder where there is no public healthcare? (Further, if so, what evidence is there that they produce more whilst they’re at it? You surely don’t intend to increase the volume of pointless clockwatching in the economy.) What evidence is there that the NHS provides “a 1990 standard of care”?

You seem to assume that the two systems’ productivity is identical, so that if one of them spends roughly what the other did in 1990, it will get the same results; but you also think the British system inefficient relative to the US one. These propositions are mutually exclusive, to say nothing of stupid. Who on earth would assume equal performance in two car engines of fundamentally different design?

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Steve LaBonne 09.01.09 at 2:53 pm

However, this state of affairs isn’t one without various other (non-punitive) incentives I have for trying to be (very?) good at what I do. As with many people, self respect is at or near the top of that list.

One of the many problems with libertarianism is that (perforce, given its commitment to extreme individualism) its only model of human psychology is the most extreme caricature version of Homo economicus. Mainstream economists have long since realized that basing theories of society on such a completely unrealistic model of human behavior guarantees massively erroneous results, but libertarian ideologues not only didn’t get the memo, but wouldn’t read it if they did, because taking it on board would void their ideology of all substance.

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John Protevi 09.01.09 at 3:00 pm

David Wright, I don’t think people are “flabbergasted” so much as “dismayed” at your thoughts. “Flabbergasted” I think implies some sort of encounter with the novel and unexpected, whereas your thoughts are depressingly familiar. Which is not to say you are not well-informed and incisive in your presentation.

130

Salient 09.01.09 at 3:01 pm

Has anyone else here read Cohen’s Why Not Socialism?

His argument — that comprehensive socialism is presently infeasible because we don’t have good designs for institutionalizing generosity-based incentives, not necessarily because that generosity is unharnessable — obtain here. Maybe designs for institutionalizing generosity as a motivating force in the health care system can be later refined and generalized.

David, I’d love to convince you to read that book (it’s short and inexpensive and would leave you substantially less flabbergasted at the existence of little ol’ me, though I’d doubtless still seem awfully impractical).

131

JoB 09.01.09 at 3:14 pm

Yeah, David, 118 left me flabbergasted because acknowledgement of 116 is dismaying to say the least. But now I’m sure: you’re just having a bit of fun (in a ‘racist joke’-kind of way).

132

jack lecou 09.01.09 at 3:27 pm

David – I share the objections above to the “people should work harder to get good health care” argument. I think there’s just very little evidence for the proposition. In addition to the dubious question of whether hard work actually guarantees getting ahead, and whether people are even primarily motivated to work hard and accomplish things by material gain alone, I’d suggest that if everyone is guaranteed a decent level of health care, the arena of competition and status will simply shift to something else. My guess is various results from cognitive economics tend to back that up – human beings are very good at resetting their level of expectations, and turning just about anything into a status good.

And I would suggest that to dismiss the moral argument – that health care is a need and, unlike flat panel televisions, should not be a status good – is to dismiss something very important. Both to the debate, and to understanding the behaviour of people and societies generally.

At the minimum, I’d ask that you actually quantify the benefits of insisting that people “work hard” for their health care. In particular, note that the US objectively wastes something on the order of 5-7% of GDP on health care compared to the UK. Is the “working hard” incentive worth more than that? Do people in the US work anywhere near that much harder or more productively than people in the UK? (Indeed, harder at all?)

(I also suggest that this business of referring to “1980″ or “1990″ levels of care is confusing at best, and very possibly subtly misleading . I think I understand you to be using those years to refer to the corresponding per capita spending level, but if so, why not just use per capita spending levels? The use of a year subtly suggests that “1980″ health care is inferior to “2010″ health care – but as you know, since they refer only to spending levels, that’s not necessarily true at all. Beyond a certain level, per capita spending and actual outcomes are obviously only very minimally connected.)

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Chris 09.01.09 at 3:59 pm

@115: The idea that people not working as hard as they could have been ranked high on the list of Eastern Europe’s problems seems bizarre, to say the least. (Totalitarian political systems, widespread corruption, and police brutality seem like bigger issues than the unavailability of designer jeans or even lines at the state run grocery store.) The idea that society is always on the brink of collapse from laziness flies in the face of, well, all of human history (including Eastern Europe, where there was plenty of enterprising activity — on the black market). Plenty of societies have been brought down by the corruption, decadence, and/or stupidity of elites (again including Eastern Europe). Not one has ever collapsed under the weight of a million lazy bums on the dole.

Humans have an instinctive drive to do stuff, whether they’re being economically rewarded for it or not; they also have a drive to have something their neighbors don’t have, which necessarily means something *not* provided by the dole, even if the dole provides all necessities of life at a basic level. So the “welfare bums destroy society” story needs a different species to be written about.

Also: there’s a clear difference between LCD TVs and health care, namely that no one’s lifespan is shortened by their lack of an LCD TV. Your position amounts to claiming that the *only* way to get welfare queens (or everyone!) to work is to threaten them with death — they wouldn’t possibly work just to have LCD TVs or iPods or jewelry or DVDs or concert tickets or any of the other nice but not lifesaving things that our society can provide for a price. This is incomprehensible to most human beings who know other human beings. What leads you to take it seriously as a theory?

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Ceri B. 09.01.09 at 4:02 pm

It’s worth noting that this whole “1980″ thing, which I’ve seen in various forms from a bunch of libertarians and conservatives, is just wrong. Really, really wrong.

The advance of medicine is partly in newer, more expensive gadgetry and chemistry, yes. But a lot of it is also in improved understanding that leads to treatment that is cheaper, different, or both. Take ulcers. Turns out that microbial infections make them, though stress does weaken immune systems generally. A relative of mine got an ulcer while on a trip to Africa in the early ’90s, just as awareness of the microbial causation was spreading, and got prompt relief with suitable treatment. I would like to think that people advocating anachronistic care standards wouldn’t want to see people continue to get ineffective treatment just because in year X we didn’t know as much, but I’m not confident.

Then there’s the matter of changing technology and decisions about its use that reduce costs. I take two medications which are pretty pricey in brand-name versions but are available via Fred Meyers’ program of $4 for a 30-day generic supply. Would a year-X-oriented program simply not let people have newer, cheaper, more effective medication, or settle for charging them unnecessarily high prices?

The basic criterion is stupid. If you really must have a cut-rate program, the right way to look at it would be cost-effectiveness without worry for whether a development is new or old or whatever.

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Chris 09.01.09 at 4:07 pm

#123: So, basically, your argument is that whatever the advantages or indeed the actual performance of the NHS or a similar system, it’s unacceptable because it’s not libertarian enough? We know it works in practice, but does it work in theory?

Deontological libertarianism is dismayingly common, in my experience. You can’t really argue with a deontologist – their commandments are their commandments come hell or high water. Without some commitment to the idea that results are important, that the wisdom of actions is judged at least partly by their outcomes, there’s no reason to engage with the messy real world of causality at all. This may make deontology psychologically attractive, but basically rules it out of public debate.

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Uncle Kvetch 09.01.09 at 4:49 pm

Deontological libertarianism is dismayingly common, in my experience. You can’t really argue with a deontologist – their commandments are their commandments come hell or high water.

Bringing the thread full circle, as it were:

You seem to be under the mistaken impression that I have a workable political program. I’m a libertarian.

Megan McArdle

137

chuck 09.02.09 at 12:55 am

Guys. Go get leukemia, like I have, with the very expensive health insurance that I have and really rethink all these arguments when your insurance simply stops paying for things and gives you all sorts or gibberish as the reason. You have no idea how bad the current system is IN REAL TERMS.

138

Ryan w. 09.02.09 at 1:45 am

But there is a point. Philosophically, there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

First, there’s a difference between ‘a case against reform’ and ‘a case against the house bill that Obama backs.’

For instance, lets say you try and control costs, as is currently done, by mandating what can be billed for certain procedures. And this allowed fee is less than what the procedure costs, as it sometimes currently is. This creates problems.

Lets say you mandate certain coverage for anyone with insurance, as New York has done. This leads to a skyrocketing in the price of insurance and an increase in those uninsured, which then leads to an increase in externalities as emergency rooms take the balance.

It also assumes that noone wants tort reform.

This is a little different than saying ‘if you don’t have the money, you shouldn’t have any medicine.’

All public healthcare plans have ended up costing vastly more than they were expected to. ‘Obamacare’ is no different. The taxes are phased in immediately and the benefits slowly, meaning that once people have come to rely on Obamacare the price will skyrocket.

Saying “this is a slippery slope which will eventually cost far more than it is supposed to, as all public healthcare plans have done” is another argument against universal healthcare, even if we accept, arguendo, the benefit of a public option.

Saying “public healthcare reallocates wealth by taking people’s money and using it to purchase ‘free’ healthcare that they might not otherwise have bought” is another argument against it.

Also, it’s worth considering how having to pay for other people’s health effects peoples’ moral decisions. I don’t think ‘Obamacare’ requires death panels. I’m in support of end of life counseling and even rationing of end of life care by the government.

On the other hand, I note that in Brittan if you go outside the gov’t healthcare plan you’re removed from it. Privtate providers have become competition to the government. Innovation is far slower in Europe and drug development depends on the American market (note: I don’t think we should allow Europe to free ride) and if you compare those who are exposed to the American vs. those exposed to the European healthcare system by looking at things like cancer survival rates, you see that the American system does a far better job.

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ChrisD 09.02.09 at 1:56 am

I like how you all start off saying there will never be rationing, then 5 posts down the Canadian guy (Tom) says, “Well, obviously there’s rationing,” but nobody misses a beat. Continue on.

140

John Desmond 09.02.09 at 2:43 am

Salutations, gentlefolk,

During the years 2001-2004 – the last years of my parents’ lives – I spent more time than I like to remember in hospitals and medical facilities. And if I may give my views on ‘rationing’…

Does the USA have enough hospital beds and medical facilities. Perhaps not, but putting up the bricks and mortar, and filling buildings with the high-tech gear of modern medicine, is not a major problem. Like computer chips and hybrid cars, the first dialysis machine or replacement hip joint that comes off the assembly line costs millions, the second a trivial amount. Mass production brings costs down.

Can we train the people to staff the new system ? Paramedics and LPNs and RNs relatively quickly, primary-care MDs have a longer lead-time. Top surgeons and specialists take still longer – endocrinologists will probably be overworked for the next two decades.

But if you tell the freshpeople entering college this week, that there will be significantly more places in medical school waiting when they get their BS’s, and financial incentives to make the grind worthwhile, it should be possible to double the number of medical school graduates within ten years.

There will still be only so many beds in the Mayo Clinic or Massachusetts General, and ‘the top three doctors in the speciality’ will retain their status. But may I ask: First, how often they can cure what no other physician can ? And second, how often, today, do they choose their patients for ‘ability to pay’, alone ?

Medicine is still partly an art dependent on the unique skill of the healer, but also a science, with results replicable by any competent practicioner. And it is becoming more of a science – think of the ‘extraordinary breakthroughs’ of a few years back that are reenacted at your local hospital every day.

Are medical professionals likely to see any decrease in income or status in a reformed system ? Highly unlikely. Indeed, increasing the share of their energies that goes to ‘curing the sick’ instead of ‘hassling with the insurance companies’ will likely raise their self-esteem.

So, I don’t see talk of ‘rationing’ as being anything but a red herring. If Americans are willing to continue paying the current share of GNP for health care, and the ‘administrative costs and overhead’ portion of that is reduced, the quality of US healthcare – for everyone – should increase in a reformed system.

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Helen 09.02.09 at 5:40 am

Uncle Kvetch @136
I followed your link and noticed there’s a photo of this Megan McArdle (not so well known to me as I’m an Australian – note we have Medicare, a still very efficient and effective public medical system.) One thing I notice is that she’s still a fairly young adult.

As Chuck points out, wait till she’s a bit older and up against a medical complaint or three. She may feel differently about the ability to Work Hard and Earn Better Care.

142

Helen 09.02.09 at 5:43 am

McArdle:

We [the US] also pay more for inputs, because no one player has the bargaining power of a government, which has the power of a single buyer, and also the power of an institution that can, if it so chooses, break your patents

So, this libertarian admits that Governments can buy and distribute goods more cheaply than the free market!

143

Ryan w. 09.02.09 at 6:32 am

Helen; So, this libertarian admits that Governments can buy and distribute goods more cheaply than the free market!

Yes and no. Europe can use collective bargaining to get lower drug prices, but it is acting as a free rider on the innovation that the American market funds. Once a drug is developed and approved, it can be cost effective to sell it in a price controlled market. But without the American market to drive innovation, there wouldn’t be nearly as many new drugs or innovations to collectively bargain for.

The problem with some of the socialistic price controls is that they’re only functional when some other market exists where a profit can be made. It’s possible to demand by fiat that emergency rooms treat anyone who enters, regardless of ability to pay. Or that doctors only charge x for a certain procedure. But if you demand that emergency rooms be free for EVERYONE then you won’t have anyone in the emergency room business.

Similarly, in the short term you can limit what doctors get paid. Their medical schooling is a sunk cost. In the long run, however, this is likely to result in a doctor shortage or a decline in the standards of medical personnel.

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Ryan w. 09.02.09 at 6:34 am

Helen: As Chuck points out, wait till she’s a bit older and up against a medical complaint or three. She may feel differently about the ability to Work Hard and Earn Better Care.

Megan has had some pretty serious medical problems, including severe asthma.

145

Marcus 09.02.09 at 6:52 am

@Helen – Governments are, in fact, fantastic at (re)distribution. With government patent breaking and price capping everyone soon enjoys the delicious flavor of roasted golden goose. Of course, pillaging your producers can only last so long.

146

Charles Peterson 09.02.09 at 7:47 am

I do start from the moral proposition that countries of moderate wealth and above should see that everyone has healthcare. However, it makes sense in other ways. One doesn’t know what future healthcare one is actually going to need, and it’s likely to cost more then, so it’s essentially impossible (except for the very wealthy) to save for. It’s impossible to shop for the price when you’re dying, and it’s nearly impossible to do anyway, since prices are rarely quoted, and when quoted never include all the inevitable bill padding. An individual has no ability to negotiate on equal terms with providers, insurance companies, or drug companies. It’s not a status item (we’d all rather be healthy than need healthcare), it’s not something we could use in infinite amounts (just the minimum that will make us healthy again, thank you very much). It’s just not a good good for markets to handle well for most people, as mainstream US economist Arrow wrote in 1963.

And if all that weren’t bad enough, stress causes illness, and worry about keeping your insurance, or whether insurance will actually pay, etc., cause everyone in the US enormous stress, keep people locked in corporate deadwood jobs, keep people from complaining too much about their corporate deadwood jobs, or taking risky actions like trying to form a union which might cause them to loose their job and insurance (after they run out of credit to keep their COBRA going, or if the insurance company finds some way to slip out of their COBRA obligation, such as your payment arriving a day late). And on top of all that, there’s the fear of bankruptcy, losing everything, etc.

I believe Marxists say that FEAR is the whole point of why US healthcare is the way it is, and why other countries were that way too before they won social democracy. If this isn’t serfdom I don’t know what is.

And then there’s the complexity of all the paperwork you may get strewn with obscure codes and astronomical prices, or, if you don’t like that, you can get an HMO (such as Medicare Advantage policies, which get extra subsidy from the government) where the providers and administrators (not just distant bureaucrats) have profit (or network membership) loss incentives to convince you that you don’t need or want the most costly care, or they will just deny it outright, which in my experience they will usually do or at least try. (I had to argue with administrators and doctors constantly during the last 3 years of my mother’s life, she wanted every possible treatment, and her Medicare Advantage providers never seemed to think that was a good idea, and I live in a Red State, so I see all this hollering about rationing to be completely hypocritical in this and other ways.)

Add to that the already astronomical and still exponentially growing costs, costs which seem to have been more or less contained in other countries, but in the US are projected to bankrupt existing public healthcare, and possibly everything else in the distant horizon.

147

Alex 09.02.09 at 9:35 am

On the other hand, I note that in Brittan if you go outside the gov’t healthcare plan you’re removed from it.

I don’t know what or where “Brittan” might be, but in the United Kingdom this is not so. It was true that until recently, you couldn’t pay the additional amount for a treatment that the NHS didn’t consider worthwhile privately and still get the rest of it free; you had to pay the whole whack. This didn’t, however, mean that you lost your entitlement to anything beyond that specific drug (essentially always) that you’d decided to pay for yourself. Anyway, this is no longer true.

I believe Marxists say that FEAR is the whole point of why US healthcare is the way it is

Bing!

148

Minos 09.02.09 at 9:37 am

This comment thread is the strongest argument, in a strong field, I have ever seen against progressive health-care reform. In theory, I (as a libertarian Democrat) have supported both universal health care and a public plan for reasons too long to detail here (not that they would receive a fair hearing). I have done so largely on the belief that over the 80′s, 90′s, and 00′s, that progressives have come to an understanding of economics, markets, and libertarian ideas such that the institutions they create in the coming decade will be both progressive and market-friendly. In other words, I took it for granted that progressives had come to take libertarian ideas seriously (not that they agreed with them all the time), rather than responding to them with straw persons, ignorance, and vitriol. But, no, in this, as in so many other things, Bush has poisoned the well. It seems many of you view politics as catharsis. It would be simpler to put up a digitized photo of McArdle for a daily Two Minutes Hate. Props to Holbo and the minority of commenters here who are actually trying to engage a differing point of view.

149

John Protevi 09.02.09 at 12:25 pm

Similarly, in the short term you can limit what doctors get paid. Their medical schooling is a sunk cost. In the long run, however, this is likely to result in a doctor shortage or a decline in the standards of medical personnel.

Because income potential is the only determining factor in choice of profession. Which is why I’m a philosopher, because that’s where the big bucks really are.

Honestly, how many times do we have to see this tripe passed off as a reasonable assumption?

150

Phil 09.02.09 at 12:44 pm

I note that in Brittan if you go outside the gov’t healthcare plan you’re removed from it

Alex has dealt with this already, but for anyone else planning to repeat what’s unhappily becoming a piece of received wisdom: could you give us a few cites? Two, maybe three examples of this happening to actual British human beings? Because if (as I suspect) you can only think of one case – which was highly unusual and led directly to a change in the policy in question – then I suggest you haven’t actually ‘noted’ anything of consequence.

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Charlie 09.02.09 at 1:13 pm

143:

Europe can use collective bargaining to get lower drug prices, but it is acting as a free rider on the innovation that the American market funds. … without the American market to drive innovation, there wouldn’t be nearly as many new drugs or innovations …

I’m not sure that “collective bargaining” quite captures what you’re thinking of. Pharmaceutical companies are not especially worried about differential pricing per se. What they worry about is the fact that once a company has made a drug and shown that it works, other companies can copy what the original company did, and they become free riders on the originator’s R&D. IP counters this by granting a company a (temporary) monopoly. However, patent law varies from country to country. This can open the door to pharmaceuticals arbitrage: drugs (either repackaged or generic copies) are imported via a third party to a country where a drug company would like to sell its original branded drug at a high price. Allow too much of this and you might discourage R&D. On the other hand, it might be very much a country’s interest to allow the distribution (at a low price) of a generic version of a drug. South Africa has done this with AIDS drugs. So there is a tension between encouraging R&D (for longer term benefit) and promoting access to something which might be of great benefit right now.

It seems to be already the case that the potential for pharmaceuticals arbitrage between EU nations has resulted in drug companies giving up on differential pricing in those markets. To the extent that this has happened, it’s a consequence of how the EU has implemented patent law. It’s not clear to me how healthcare reform in the US would affect things either way. Even if the US government were to become a larger purchaser of drugs than it is today, that doesn’t entail a commitment to altering US IP law, thus precipitating a flood of generic drugs imported from elsewhere. As a bulk buyer, it could decide to bargain hard; then again, it could decide that bargaining too hard will constrain the US pharma industry. Isn’t this what already happens with defence procurement?

The problem with some of the socialistic price controls is that they’re only functional when some other market exists where a profit can be made.

I think you’re on the edge of a category error. The US isn’t the world, and even if the US were to commit to broader state provision of healthcare it would remain a customer in a global marketplace. Just because I decide who gets the cookies in my house (I don’t, actually) doesn’t mean I get to set the price at the grocery store.

Similarly, in the short term you can limit what doctors get paid.

This already happens everywhere.

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Phil 09.02.09 at 1:34 pm

Megan has had some pretty serious medical problems, including severe asthma.

She has said this – and that she has in the past gone without health insurance and still opposed government healthcare – but for me that doesn’t really strengthen her case. As I commented earlier,

Anyone prepared to sacrifice their own health to their politics is out of the discussion, as far as I’m concerned.

“No, not the government lifebelt! Somebody else throw me a lifebelt! I’ll pay you later!”

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Alex 09.02.09 at 2:33 pm

“Trust me – I’m such an ideological fanatic that I’m indifferent to my own safety and that of others!” Perhaps not a battle cry you’d expect to inspire anyone, but its functional equivalents are surprisingly common in history.

Severe asthma is a condition which, if not adequately controlled, is very likely to result in emergency admission to hospital in extremis, probably involving an ambulance call-out. This is the absolutely most expensive way of providing healthcare anyone has ever invented, and in the US, the costs fall in the first instance on the taxpayer…the difference here is between a couple of hours of GP consulting room time and a few bucks’ worth of ventolin or a corticosteroid, and wheezing until you turn blue and have to be blued-and-twoed into the nearest casualty department for a night’s oxygen and powerful intravenous drugs and the valuable time of a consultant A&E physician.

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Chris 09.02.09 at 3:46 pm

@149: Some libertarians don’t seem to consider their lack of good arguments a reason to change their position, so they repeat the same bad arguments for lack of anything better to do. (See also #145, deliberately conflating taxation with *total destruction* of the taxed entity. And apparently not even realizing that a “patent” is something *given by the government*.)

Of course, they hotly deny that this behavior is in any way doctrinaire or unreasonable.

155

Doctor Science 09.02.09 at 4:08 pm

All public healthcare plans have ended up costing vastly more than they were expected to.

Spoken like a person who has not been exposed to medical insurance bills, which have been going up by 10-20% *per year*. Yes, public healthcare will probably cost more than expected; private for-profit healthcare will cost HUGELY more than expected.

We’re not comparing “government-based healthcare costs that are bad” with “no healthcare costs” but with “already-exploding health care costs”; we’re not comparing “government bureaucracy” with “no bureaucracy” but with “multiple overlapping corporate bureaucracies”.

I will leave to the student to see how many of the libertarian arguments made here support my theory that libertarians don’t believe humans are social animals.

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chuck 09.03.09 at 12:45 am

I have a problem with the concept expressed above that there will suddenly be a demand for a huge number of new healthcare workers if there is universal coverage. What happens now is more like this: people without coverage just do not go for treatment until they have a real problem. But they still get the treatment, and not just emergency treatment but things like courses of chemotherapy or operations for breast tumors. Although there are stories, generally you do not get tossed out on the street no matter what.

Then the hospital tries to get compensation from Medicaid (not Medicare) for the services rendered–at a loss and not in all cases, but better than nothing. This I know from doctors who have treated me and deal with this daily. So the services performed under the current screwed up USA health insurance scenario are being performed generally for all. It is just that the costs are hidden in the foregone income to hospitals and the like. And preventative care is consequently a joke for the uninsured.

The problem of course is the waste and extra expense to treat people at later stages. So Megan McCardle, if she were between insurance coverages, could still have an sever medical problem. go to emergency, and be treated and she may never see even the bill. It’s the people with some insurance who have the problem here if their coverage is found retroactively to be deficient by their insurance companies.

157

Martin Bento 09.03.09 at 5:09 am

I missed out on some points in the previous thread on this, but hopefully the participants are still around,

Dan,

Yes, some Libertarians do attack limited liability ( although the Russell Long article you linked to just had a footnote stating LL was controversial among Libertarians, and then stipulating it as legitimate. It mostly is arguing that government is intrinsically responsible for the existence of big business, a completely different argument). They do not, however, from what I have seen, follow through with the consequences of that position. Limited liability is why the corporation exists. Without it, there is no corporation as we know it. There is no stock market. No ability to raise huge quantities of anonymous capital well beyond what a small group of owners could manage on their own. Vastly reduced liquidity. In short, no modern Capitalism. Without this huge mobilization of capital and the research and technology, as well as economies of scale, that can come from it (especially if you exclude the government from mobilizing capital or doing research as Libertarians are wont), most of the benefits of modern Capitalism would not be possible.

Yet Libertarians claim the successes of actually existing Capitalism as successes of their philosophy. Calls for cuts in regulation or taxes imposed on corporations seem never to mention that the corporation should be abolished. The limited liability position seems dragged out only to explain what Libertarians would advocate in place of regulation in cases where regulation seems necessary – in the wake of Exxon Valdez, or the recent financial debacle. But at no other time do Libertarians seem to suggest that Exxon and Citigroup have no right to exist; instead their interests seem to loom rather large as aspects of “liberty”.

Many of us on the Left accept limited liability for its practical advantages, but recognize that corporations, being not fully responsible entities (liability is just a legally-enforceable form of responsibility) are not entitled to full rights either. Therefore, we are untroubled by restrictions on corporations that are not legitimate to impose on individuals. Others reject limited liability, while embracing the logical consequences: opposition to the corporation as such, which is manifest in opposition to public recognition of the legitimacy of “corporate interests”. Both of these are more consistent than the Libertarian position.

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Karin 09.03.09 at 8:42 am

Disclaimer: I’m Canadian.

…there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

Why does this argument always miss the obvious? Libertarians must wear blinders when they encounter… well, science? facts? the real world?

Universal healthcare is a public good. This is fully demonstrated in the real world. The glaringly obvious example is an epidemic. Would you care to read some history of epidemic diseases? Check out J.N. Hays, a professor emeritus of history at Loyola. (Note: I make no claims as to whether his science is accurate, as I haven’t checked.)

If you really want an epidemic across North America, let those without the money go without any care. The official figure for illegal immigrants in the US is 12 million (correct me if I’m wrong). I blink a little when I read that people are seriously proposing to cut off all healthcare to illegal immigrants, and limit what is available to legal immigrants. Take that 12 million and add the homeless, and the vulnerable population that has no healthcare. Add to that the population of twits who think all vaccinations should be optional. (I’d like to crack the numbers, but not now. Feel free if you have the stats at hand.) That should add up to a fairly substantial slice of the population of the US — enough to be vulnerable to an epidemic. For those who want to argue about population density of this group, limit the numbers to New York or Chicago.

The middle class and above, defined as “those who can pay for their health-care”, do not live in a bubble. Your health is dependent upon the population you interact with. The CDC is funded by the government for a reason, no? And it is widely acknowledged that preventive medicine is much cheaper than emergency care.

So, pay for universal healthcare of people you don’t like, or suffer the consequences — in higher health care costs, in overwhelmed emergency medical care, in epidemics and the costs of treating a national health-care emergency. And, well, you’ll probably contract the epidemic disease, spend a small fortune getting the best of care — and you might die anyway. To me, this seems a high cost for hanging onto libertarian principles. (I’ve never met anyone who did practice those principles, other than principle number one of whinging about their taxes.)

And Canadians interact with the Americans enough to qualify as part of the geographic population. Take care of your problems, please.

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John Protevi 09.03.09 at 2:24 pm

Martin Bento @ 157: Thanks, that was very clear and helpful.

160

Martin Bento 09.03.09 at 4:09 pm

You’re welcome. I’m glad someone was reading.

161

Dan 09.03.09 at 7:14 pm

Martin,

Interesting, but (as you might expect) I disagree. I guess I simply am not convinced that the consequences of scrapping limited liability would be what you say they are. I don’t understand how it follows that there will be no functioning stock market or ability to raise capital. (Just to make sure we’re on the same page, I take limited liability to be the principle that shareholders are not liable, beyond the value of the shares they own, for the debts – be they contractual obligations or damages – of the corporation of which they are part-owners.) Now, if this were replaced overnight by some sort of principle of full liability, I have no doubt that some ventures would find it more difficult to raise capital and some would find it easier; those who have more trouble raising capital would naturally be the ones which involve more risk and a greater potential liability for their shareholders. In short, a nuclear power plant would have more trouble raising capital, and would have to pay a higher rate of return for it, than a supermarket would. But this seems to me to be a feature rather than a bug: it’s important to emphasise that in the current system that risk is still there, but merely externalized by the legal system. Holding shareholders responsible for the costs imposed by the company they own seems to me like it would be a great improvement.(question: if the owners of Lehman Brothers were ultimately responsible for all the debts incurred by the company, do you think it would have behaved the way it did?)

I think this also explains what you see as libertarian duplicity, or insincerity. In an ideal world, I suspect there would be organizations taking advantage of the same economies of scale that corporations currently do, just without the legal privileges that corporations are currently granted. I don’t know exactly what it would look like, and I take Kevin Carson’s arguments that many of these economies of scale are illusions created by state subsidies seriously without subscribing to them entirely. It could be worker-owned co-operatives filling the gaps, for all I know (I would have expected lefties like you to be more sensitive to the potential distorting influence of granting special privileges to one form of organization over another – it surprises me a little to be the one defending co-ops against a CT commenter, but there we are!) But the point is that some ‘corporate interests’ are plainly legitimate, and some are not; I don’t see any reason why libertarians should pretend that corporations do not have any legitimate interests whatsoever, and for me at least, the legitimate ones are roughly the interests which they (or their limited-liability-free counterparts) would plausibly have in a counterfactual ideal world.

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Chris 09.03.09 at 8:32 pm

if the owners of Lehman Brothers were ultimately responsible for all the debts incurred by the company, do you think it would have behaved the way it did?

I think that’s a difficult question to answer because the owners of Lehman Brothers weren’t actually making the decisions that caused Lehman Brothers to behave the way it did. So basically it hinges on whether or not professional business managers would be able to take over governance of non-limited-liability companies in the way that they actually have taken over limited-liability ones, which I don’t think I can predict with any reliability. If the officer qua officer isn’t on the hook for the excess liability, then his incentives haven’t changed; the owner has a stronger motive to scrutinize his actions more closely, but no enhanced capability to do so effectively, compared to the status quo.

And that’s even under the assumption that Lehman’s management’s risk-taking was intentional rather than delusional. I don’t have specific knowledge either way on that, but obviously both kinds of problems occur regularly with corporations.

I think your point about the externalities of corporate bankruptcy is a good one, but couldn’t it also be solved in practice by imposing a Pigovian tax on limited liability corporations and using it to establish a fund that fills the gap in bankruptcy so that all creditors are made whole? (Or possibly all non-bond creditors, declaring bonds junior to all other non-equity obligations in bankruptcy, and then bond buyers can decide how much their risk is worth.) This would allow the individual investor to still be protected from losing more than all of his investment, and thereby prevent Martin’s doomsday scenario in comment 157, while also protecting the counterparty/creditor/tort victim from losses imposed by a shortfall of assets in bankruptcy. Such an “insured corporation” (with the government acting as insurer) would provide the investor with the security of limited liability and the creditor with the security of guaranteed full satisfaction. Since TANSTAAFL, the tax is necessary to achieve this goal. But it seems obviously worth it compared to the status quo, if the capture of our political system by corporate managers didn’t make it politically impossible.

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Martin Bento 09.04.09 at 9:22 am

First of all, limited liability places a floor under your losses, but it does not place a ceiling on your profits. Removing it therefore increases downside potential, but does not increase upside potential. So the difficulty and cost of raising capital would be increased for all players, though, as you suggest, for some more than others.

We needn’t act like full liability corporation-like entities are mythical creatures. You want something that can function like a corporation save that it does not limit liability? It’s called a general partnership. Won’t find many of those in the Fortune 1000, unless they are general partnerships whose members are themselves corporations (you might find limited partnerships, but the “limited” there stands for “limited liability”, so those too are vehicles for constraining responsibility). Why aren’t General Electric and General Mills general partnerships? After all, the government provides a breathtaking tax advantage: general partnerships are not taxed, the owners only pay taxes on those profits they take as income, whereas, in regular corporations, both the corporate profit and the individual income are taxed (the infamous “double taxation”). Limited liability is so strong an advantage that big businesses and even many small ones routinely leave this money on the table. It also enables them to have millions of owners, with the access to capital that implies. Millions cannot be directly involved in management. Even through elected representatives, the amount of information fully liable investors would need to rationally invest would be much greater. Therefore, the transaction cost of investing would be much higher and people would do less of it. Transferring money from one investment to another would require a great deal of research and compensation for the increased risk.

Which, of course, gets us to why you couldn’t have a functioning stock market of general partnerships, each with potentially millions of members. The liquidity of having capital moving second to second from place to place is possible because each investor has perfect information about the maximum extent of his losses: it is expressed in the price. This makes the market a much more efficient information sieve than it would be otherwise. And, of course, the market itself confirms this. If a stock market of general partnerships were viable in comparison to what we have, why don’t we have one:? There is no legal obstacle I know of.

Chris,

What you’re proposing is basically to make the socialization of risk explicit and codified, with the government as the ultimate underwriter (as it would have to be). I think that would be better than the status quo, but would add that if society is going to undertake risk on behalf of private entities (which it does under limited liability anyway), it has the right to make demands in return, which are not necessarily limited to those necessary to minimize said risk. A corporation under society’s protection can be legitimately required to pay for that protection by serving the public interest in specified ways, even at the expense of its own.

But I don’t see any of that as consistent with Libertarian principles. It’s much more a social democratic kind of solution.

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engels 09.04.09 at 2:19 pm

Dan, as a True Libertarian who hates corporations every bit as much as Naomi Klein, could I ask if you have any opinons on the topic at hand, which happens to be American health care reform? I expect you’re highly critical of everything the corporate drug and insurance lobbies have to say but what kind of approach would a true anti-corporate crusader like yourself by in favour of?

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Chris 09.08.09 at 3:35 pm

@163: Limited liability corporations already aren’t consistent with libertarian principles, because of the way they externalize costs in bankruptcy. If a hypothetical libertarian believed that the benefits of mobile capital justified cost externalization, I don’t see why they wouldn’t justify my proposed tax-and-indemnify-counterparties scheme at least as much or even more so.

Otherwise we’re just back at “you can’t argue with a deontologist”.

@164: It’s hard for me to imagine a libertarian avoiding the conclusion that people who can’t produce value equivalent to the health care they need to survive have no right to survive at others’ expense. Most non-libertarians would put the right to survive above the right to own property, even when the former has to become a “positive” right rather than a “negative” liberty. It doesn’t seem like the kind of disagreement that can be resolved by argument.

OTOH, it’s also possible that some libertarians would agree that the current US health insurance industry’s practice of “we’ll sell you something that we convince you is insurance, even though in the fine print, it actually isn’t” is fraud and should be prosecuted as such, and repudiate the “fine print uber alles” doctrine of contracts.

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