When the world was young, I wrote a long post about single-payer health care. As it’s the new hot topic, I’ve reposted it under the fold. Enjoy, or don’t.
Andrew Sullivan deserves credit for addressing a problem that the Republicans generally ignore, and the Bush budget lies about: the rising cost of health care, and the ticking bomb that this represents in the federal budget. We’ve got 42 million or so Americans with no insurance. Then there’s the fact that employer-based insurance is a brake on labor mobility; when you lose coverage for pre-existing conditions every time you change jobs, you’ll try to avoid changing jobs at all costs if there’s a possiblity of illness in your family.
Unfortunately, the free market has shown no sign of sorting this out. Rather, we see medical costs increasing much faster than inflation, more and more costs being shifted to the insured, and doctors getting squeezed harder and harder. Libertarians complain that we don’t have a free market in health care, but I’ve never seen a coherent argument about how deregulation is supposed to improve access or quality. And I read a whole book about it.
I work in healthcare (note from 2005: this is no longer true), and I know a little bit about this. Our health care system is the most expensive in the world by a wide margin, but it’s ranked 37th in quality. As you probably know, the systems that are cheaper and work better are European single-payer systems. (You can see where I’m heading with this.)
I know that Euro-bashing is wildly popular in blogland, but isn’t it at least conceivable that, since the Europeans get a better quality system for less money, they’re doing something right? (Quick review: a single payer system is not the same thing as socialized medicine, in which doctors are government employees. That’s what they do in the UK, and I’ll be the first to tell you that it’s highly unsatisfactory. It’s also not what Clinton was trying to get. Rather, it’s the system by which all citizens are covered by a single publicly owned insurance system, which is paid for by taxes. Providers are still private institutions, just as doctors and hospitals who still take Medicare patients are.)
From Physicians for a National Health Program, which I’m indebted to for many quotes and facts:
“Research shows that people in other industrialized countries with national health insurance get more doctor visits, hospital care, and even more expensive, life-saving types of care like kidney transplants (for kidney failure), and bone marrow transplants (for leukemia) than Americans do. Waits for care in other countries are far less of a problem than believed (or that occur for many patients in this country), and there are NO waits for emergency care.
Because of national health insurance and other policies that reduce social inequality, residents of other industrialized countries have lower infant mortality, longer life expectancies, and fewer worries about whether the health care system will be there for them when they fall ill. They truly have “health security” and don’t want U.S.-style for-profit health care.”
From the Washington Monthly:
We should acknowledge the problems: waits for non-urgent types of care, and recent, damaging cuts (see Rachlis piece, this issue). But waits are not uncommon in the U.S. Sometimes it takes six weeks for a new patient to get a routine appointment with me (Dr. Himmelstein); in Canada, that would be called a “queue”, in the U.S. it’s not called anything. At Cook County Hospital in Chicago, there are 10,000 poor patients on the waiting list for primary health care. Cook County doesn’t have the capacity, so most of these patients will never get care for their hypertension and other problems. Canadians get more doctor’s visits, more hospital days, more procedures, and more bone-marrow transplants than Americans. Canadians do get fewer CABGs, but their death and reinfarction rates following acute MI are the same as ours.
It costs less, provides better quality of care, and everyone gets covered. So what’s the problem? Back to Physicians for a National Health Program:
Would you really turn 15% of our economy over to government with the efficiency of the post office, the compassion of the IRS, and the cost effectiveness of the defense department?
This is a real issue, not just a rhetorical challenge. Government is often repressive and inefficient. I distrust government, and have the FBI file to prove it. However, the only current alternative to a national health program is health care dominated by large for-profit corporations. At least we can watch Congress, and vote them out. We don’t even have the right to know where HMOs’ boards meet, much less elect their executives. On the issues of clinical freedom and efficiency, we know that government programs have a better track record. Canada’s insurance overhead is just 1% of health spending, and there is little intrusion into clinical practice. U.S. Healthcare takes 30% overhead and takes clinical decision-making out of doctors’ and patients’ hands. In Cambridge, my city taxes come to about $1,300 per person, about what I pay for car insurance. For my taxes I receive police and fire protection, trash collection, schools for my two children, care at a public hospital whether or not I am insured, and snow-plowing of the streets. For my car insurance I get. . . car insurance. So where did I get the better deal?
The scandals in government pale in comparison to those in corporate health care. No government official earns (or swindles) close to the $1 billion Leonard Abramson got from the Aetna-U.S. Healthcare merger, or the hundreds of millions NME made from kidnapping psychiatric patients, or what Caremark made paying kickbacks for referrals.
The U.S. government does many things right in health. The spectacular achievements of the NIH should not be underemphasized. All too often the credit goes to the drug companies who take the profits after publicly-funded scientists make the breakthroughs.
“But Europeans have to pay higher taxes for their single-payer systems, which is a drag on their economies.”
As it has been noted, U.S. government health expenditures alone are, per capita, greater than just about everyone else in the world. Of course, Medicare and Medicaid don’t cover everyone.
Between public and private coverage,Americans pay about 13.7% of our GNP for health care, whereas Germany pays 11%, Canada pays 9%, and other European countries pay less. The Danish system costs 6.7% of GDP. For which, of course, they get better results- more doctor visits, lower infant mortality, more pre-natal care. There is no reason to believe that a single-payer system would cost more than the mess we have now. If we could save 4% of our GDP, wouldn’t that be a tremendous boon to the economy? Wouldn’t you rather pay 9% to the government instead of splitting 13.7% between private businesses and the government?
“It’ll create a ton of bureaucratic waste.” Here’s the strongest argument, putting aside the 42 million with no health care. National health insurance costs less than 4% in administrative overhead (Canada only spends 1% on insurance administration; our Medicare program only spends 3%).
In contrast, our private insurers consume between 9% and 30% of health care dollars. The GAO says that health care bureaucracy costs $100 billion a year. There are well over 40,000 insurers in the country. Every one of them has a different set of forms, different rules for reimbursement, different sets of hoops for doctors and facilities to jump over. As a result, the average office-based American doctor employs 1.5 clerical and managerial staff, spends 44% of gross income on overhead, and devotes 134 hours of his/her own time annually to billing.
In contrast, Canadian physicians employ 0.7 clerical/administrative staff, spend 34% of their gross income for overhead, and trivial amounts of time on billing (there’s a single half page form for all patients, or a simple electronic system).
Blue Cross in Massachusetts employs more people to administer coverage for about 2.5 million New Englanders than are employed in all of Canada to administer single payer coverage for 27 million Canadians. In Massachusetts, hospitals spend 25.5% of their revenues on billing and administration. The average Canadian hospital spends less than half as much, because the single payer system obviates the need to determine patient eligibility for services, obtain prior approval, attribute costs and charges to individual patients, and battle with insurers over care and payment.
I maintain that the resistance to a single payer system cannot be explained by the success of the American system. It can’t be explained by the failure of the single payer system elsewhere. Rather, it’s largely a product of ideology and self-interest. I can understand why insurers don’t want to be put out of business. I can also understand that a lot of people feel bone-deep that adding capacities to the government can only cause problems. (Some of my favorite people, I might add.) But failing to consider that a single payer system could work better than what we have now, contrary to the evidence in the rest of the world, strikes me as a matter of quasi-religious faith.
Blast away.
{ 83 comments }
asg 04.12.05 at 4:15 pm
Libertarians complain that we don’t have a free market in health care, but I’ve never seen a coherent argument about how deregulation is supposed to improve access or quality
Do the examples of the airlines, overnight shipping, taxicabs, railroads, trucking, television, etc. not count as a coherent argument? I’m not trying to be snarky. Does your argument depend on an underlying conviction that improvements in access & quality in these varied deregulated areas are illusory or not due to deregulation, or that they are real but the health care market differs in some crucial way from *all* of them such that similar gains would not be observed?
Anyway, I’m generally sympathetic to your argument; as a libertarian I feel the current U.S. health care system has so much wrong with it that it might indeed be best to scrap the whole thing and try again; while we might end up with a more government-centric system we might also end up with market forces working more clearly and freely. Right now we have the worst of both worlds; surely we would do better with a system that had at least some of the strengths of both, too.
LizardBreath 04.12.05 at 4:22 pm
Do the examples of the airlines, overnight shipping, taxicabs, railroads, trucking, television, etc. not count as a coherent argument? I’m not trying to be snarky.
I am also not trying to be snarky, but in the case of the airlines, access (if defined as service to small markets) and quality declined after deregulation. Prices dropped like a rock, absolutely, but that cheaper fare doesn’t get someone in Dayton the same type of service they got in the 70’s.
Your other examples are a little opaque, or at least I just don’t have the historical knowledge to interpret them. What was the railroad deregulation that improved access and quality? US railroads suck on both axes now. Can you lay this out a little more explicitly?
Ted 04.12.05 at 4:25 pm
Asg,
That’s an excellent question, as I’d generally cheerfully agree that deregulation of said industries has been a success. (I’d probably quibble with television.)
I might write another post on the subject. If I do, the thesis will be that healthcare is fundamentally different from virtually any other industry. Very few would seriously argue that a pauper has the right to expensive shoes, televisions, or airline tickets. But there’s a general agreement that people who can’t afford health care ought to get it anyway. I don’t see any way to reconcile that philosophy (which I agree with) with a policy that I’d recognize as deregulation.
Re:tired 04.12.05 at 4:29 pm
“Unfortunately, the free market has shown no sign of sorting this out”. Interesting. Perhaps hermeneutically redundant. Has the free market ever shown signs of sorting anything out?
David 04.12.05 at 4:37 pm
“Do the examples of the airlines, overnight shipping, taxicabs, railroads, trucking, television, etc. not count as a coherent argument?”
Echoing Ted’s point: people are willing to forgo a first-class seat on a plane trip because it costs substantially more. Are they similarly willing to forgo more effective health care treatments because they cost more?
Sebastian Holsclaw 04.12.05 at 4:43 pm
“Very few would seriously argue that a pauper has the right to expensive shoes, televisions, or airline tickets.”
Does anyone seriously argue that everyone should have the right to all the most expensive health care techniques? Not even in the European countries with systems that you approve of is there unrestricted access to all health care without attention to cost on someone’s part. You can’t avoid rationing, you can only shift rationing from money based to some other basis.
Would it be possible to have a national health care insurance plan that limits itself to routine procedures? Would it be wise?
Nicholas Weininger 04.12.05 at 5:15 pm
I second asg’s question. And add: some portion of admin costs are due to regulatory compliance (in particular the need to comply not just with one set of regs but with 50 different sets), so deregulation or even just uniformization of regulations should produce some reduction in these costs.
Moreover, if you don’t want to have hospitals spend a bunch of time negotiating with different insurers, there’s a simple fix: let them post all their prices publicly and bill all patients directly according to the posted schedule, and let patients interact with their own insurers to get their own reimbursement. This would create its own set of transition problems, but it would certainly increase consumer agency and reduce providers’ admin costs!
Furthermore, there are other important factors besides the type of health care system that influence the % of GDP spent on health care. One of those is the general cultural level of demand for health services, and in particular the level of demand for the best new services regardless of cost-effectiveness. I think that this level of demand is probably much higher in the US than in other countries; as many commentators have said, Americans tend to believe that death is optional.
Socialist health care will do nothing to change this; it will just remove whatever vestiges of market restraint on this demand remain, by making the process of agitating for more coverage entirely political. Look how people screamed about the attempts to impose a sensible rationing process for state-paid health care in Oregon ten years ago, even though the population affected was relatively small. Look how politically difficult it’s going to be to make any sort of cutbacks in Medicare, even as Medicare’s costs grow further and further out of line with tax revenues.
At least now there is some connection between the level of service one demands and the premium one pays; under socialism you’d be able to demand more coverage and pay for it by taxing somebody else. This will not be good for the overall cost picture, and is a major reason I am skeptical of claims that socialism will reduce costs.
Jason Kuznicki 04.12.05 at 5:17 pm
Here is my question: If insurers eat 9-30% of healthcare dollars, isn’t this just a clear opportunity for a more efficient private insurer to come along, that eats a much smaller portion and that passes the savings on to the consumer?
If that’s the case, then perhaps the real problem with our healthcare industry is some high barrier to entry in the insurance industry. This isn’t my field of expertise–but does such a barrier exist?
Jaybird 04.12.05 at 5:22 pm
My problem is that “The right to health care” (which I’m willing to agree exists) can easily blur into “The right to not die” (which does not).
Nicholas Weininger 04.12.05 at 5:41 pm
Jason: supposedly Kaiser Permanente has been doing this for awhile, with some success. I recently had an extended conversation with a relative of mine who works in health care financial consulting and thinks that if we’re going to have a national system we should basically just replicate Kaiser nationwide. I tried to get at the question of why their success hadn’t led them to expand and be replicated more. It turns out to be a very difficult question, but apparently barriers to entry are at least part of the answer; if you’re an insurer in one state it’s very, very hard to expand your operations into another state (or sometimes even another county of the same state) because the regulatory bureaucracies impose such wildly varying requirements.
Randy Paul 04.12.05 at 5:43 pm
Not even in the European countries with systems that you approve of is there unrestricted access to all health care without attention to cost on someone’s part.
Now there’s a strawman. That’s not what Ted suggested.
Here’s a lesson worth learning. After 19 1/2 years with the same employer, which saw me through two promotions (no mean feat in an organization with a fairly flat management structure), some Exceptional Service Awards and numerous accolades, I was told on March 3 that my position was being eliminated. Want to know what my greatest fears were?
1.) How to pay the COBRA costs after the end of my severance if I didn’t have another job.
2.) That if the current bankruptcy bill goes through, I would probably have to exhaust every penny I had if my wife or I needed serious medical care.
Fortunately, I start a new job on Monday. There are many not so fortunate.
I don’t know if you’d ever had to face such decisions, Sebastian, but I can assure I wouldn’t wish this on anyone.
mpowell 04.12.05 at 5:49 pm
I have come to believe that libertarians are overlooking something important about health insurance that is fundamentally different from other forms of insurance. You buy car insurance in case you get in a car accident, and the terms are renegotiated from year to year. People who drive safely, even if they total their car once or twice over their lifetime can still afford the insurance. This is b/c insurers know that they’re not too much more risk than anyone else.
It would be great if we bought health insurance in the same way- in case I get sick this year, I might need some help paying the bills. But that’s not how it works. If you find out that you have cancer, the treatment might last more than a year. And even if you are healed, any insurance company that knows about it is going to charge you a fortune for insurance. The difference here is that as individuals we can pool the risk of driving by buying insurance on an annual basis. It is impossible to pool risk this way with health insurance. The time to negotiate insurance terms would be before anything is known about an individual’s particular risk factors. But you don’t get to choose your lifetime health insurance plan before you’re born.
Some libertarians would undoubtedly not care about this problem. But I only lean libertarian insofar as I think free markets work, not b/c I fundamentally agree w/ their claims about wealth redistribution. In this case, b/c we can’t really pool health care risk in the same way as car insurance, I don’t think that free market solutions are the answer.
lemuel pitkin 04.12.05 at 5:51 pm
If insurers eat 9-30% of healthcare dollars, isn’t this just a clear opportunity for a more efficient private insurer to come along, that eats a much smaller portion and that passes the savings on to the consumer?
No. These costs are not waste from the point of view of the individual insurance company.
Some of it is profit, which is a cost of captial for the insurance company. An insurance company taht cannot geenrate profits will not get capital for investment. This is a cost that would not exist under single-payer.
Some of it is marketing. Marketing doesn’t contribute to the quality of healthcare, but a company that fails to market will lose out in the market. Again, a cost that would not exist under single-payer.
Both these costs exist for otehr industries, of course, altho I would argue that marketing is not necessarily (or anyway less) socially wasteful for products where individual tastes vary widely, and where novelty is important.
The third and probably largest set of wasteful costs, tho, are unique to healthcare, and invovle cost-shifting. The entire healthcare indsutry is engaged ina gigantic multi-sided game of tug of war ebtween workers, employers, insurers, healthcare providers, and pharamaceutical companies and otehr vendors. The question of who pays for what services, and on what terms, is constantly contested in a way that just doesn;t have any parallel in any other industry. And this means enormous waste in billing and “utilization management” departments, constant efforts to prevent people from utilizing emdically valuable but less profitable services in favor of less valuable but more proftable ones, and a cosntant arms race on the part of all aprticipants to shift costs toward someone else. Rent seeking, pur ad simple, and on an enormous scale.
Totally irrational for soceity, but totally rational for the individual healthcare business. Single payer would get rid of it, but competition won’t.
mpowell 04.12.05 at 5:53 pm
As a result, I am in favor of government-run insurance, but I think it would be great to have a few different plans available w/ different cost and benefit structures that are only subsidized, but not fully funded, through taxes.
Sebastian Holsclaw 04.12.05 at 6:14 pm
“Not even in the European countries with systems that you approve of is there unrestricted access to all health care without attention to cost on someone’s part.
Now there’s a strawman. That’s not what Ted suggested.”
It seems like what Ted suggested “Very few would seriously argue that a pauper has the right to expensive shoes, televisions, or airline tickets. But there’s a general agreement that people who can’t afford health care ought to get it anyway.” Note he is not asking for basic health care, he is asking for the king of health care that would parallel expensive shoes or airline tickets. (Of course in the modern US airline tickets are cheaper than traveling by car or train to most places so it isn’t a very good analogy a better one would be first class tickets on an airline.)
dipnut 04.12.05 at 6:15 pm
I wonder what percentage of America’s health-care costs are in R&D, and to what extent foreign systems free-ride on American discoveries. I note also that the money we waste on Medicare fraud alone would just about pay for all the health care in Belgium*.
My guess as to why the American system scores so low is, it’s focused on the elderly. We may not be doing much in the way of pre-natal care and marrow transplants, but we pamper grizzled frumps with six specialist visits a week, free prescription drugs, and no expense spared on end-of-life heroics.
I surmise the “right-to-die” movement so advanced in, for instance, the Netherlands, is largely motivated by the obvious need to trim sail on geriatrics. In America, geriatrics are an unassailable voting bloc. And, contrary to Sebastian’s hint, they do believe they are entitled to essentially unlimited health care. They’re retired, and they spend their days playing the system for more freebies.
Does France have baby boomers?
* Unsupported, careless claim.
Travis Thomas 04.12.05 at 6:16 pm
The fundamental problem with health care today is that we expect insurance to pay for treatment of an ingrown toenail. It is simply an ineffective model to not impose a direct monetary cost to less-essential health care. Without financial cost, other ways of rationing will necessarily arise, which inevitably shifts the quality of care down as government increases its intervention with endless band-aids.
Catastrophic insurance is a very plausible model and has existed for quite some time. The current system of insurance paying for everything, however, only arose during WWII-era wage fixing (to prevent private employers from pulling workers away from “essential” industry) as a reaction by private employers to provide nonmonetary (and thus unregulated) compensation.
This failed to cover the entire populace, so government intervened and began providing help in 1965 in the form of Medicare to those who were missed by this new system of health care. The value of the care given to the lowest rung of the employees receiving health care declined and is being increasingly cut, yielding increased need for government intervention… it’s a positive feedback situation.
Health care is a perfect example of government fixing the leak in the levy by poking its finger in one hold and water spurting out of a new hole a few feet away.
Many newspapers and institutions have noticed an increase in cash-only health care providers (http://tinyurl.com/62nck). Such services will be far more efficient, cutting out the leacherous effect of the insurance middle-man, better fill the needs of the population, and prevent unchecked demand for low-end services from “stealing” desparately scarce resources from more needy patients.
In terms of catastrophic insurance, I have no doubt that virtually everyone would be covered by private insurance and that the remainder can be picked up by charity. In the case that such remainder would not be fully covered by charity, I would support nationalized program, but only for catastrophic injury or illness.
Alan Schussman 04.12.05 at 6:25 pm
Jason: Atul Gawande recently wrote in a New Yorker essay about a New Hampshire insurance plan that seems to be an attempt at something like you describe (simple, low-cost, competetive): Started in 1971, it had fixed costs to patients and fixed salaries to physicians, and it successfully controlled costs, for a while. But echoing what Lemuel said above, the push-pull of all the counterveiling powers that have a stake in medicine eventually forced the plan basically to turn into a more conventional HMO, and Blue Cross bought it. (It’s a good short essay, by the way, about various issues of the cost of medicine and physician salaries: “Piecework: Medicine’s money problem,” by Atul Gawande, The New Yorker, April 4, 2005.)
Ted, I’d like to see that follow-up post on the differences between healthcare and other industries, when you get around to it.
Randy Paul 04.12.05 at 6:26 pm
It’s still a strawman Sebastian. The quote you cite doesn’t prove your point. He merely said “there’s a general agreement that people who can’t afford health care ought to get it anyway.” He’s not “asking for the king of health care that would parallel expensive shoes or airline tickets.” That’s your spin and absolutely nothing else.
One doesn’t need “expensive shoes, televisions, or airline tickets” to say alive. What do you propose people do? Check out Gray’s Anatomy from the library and examine themselves? Make their own diagnoses?
Society is better when people know that should they lose their jobs, they don’t have to choose between exhausting all of their assets to go on Medicaid or pray that they don’t need medical care.
I’ll blame your attitude on your callow youth, but as you get older and if you lose a couple of jobs while having to support a family, I’m sure your perspective will be different.
chuchundra 04.12.05 at 6:35 pm
The fundamental problem with health care today is that we expect insurance to pay for treatment of an ingrown toenail.
This is the kind of ridiculous argument that we get from the anti-national health care side. Just FYI, an ingrown toenail can be a serious issue. It can be painful, causing suffering and lost productivity. If it isn’t treated it can fester and become infected. Left untreated long enough it can become a very serious condition requiring hospitalization.
And if you’re poor, uninsured and living paycheck to paycheck, you’ll ignore that ingrown toenail because you’d rather spend the money on something more vital for your family. It’s just an ingrown toenail.
It’s a good metaphor for one of the main the problems with our crappy health care system. We’ll ignore the ingrown toenails until they become badly infected and a hundred dollar issue becomes a thousand dollar issue or a ten thousand dollar issue.
Randy Paul 04.12.05 at 6:51 pm
I read my last response to Sebastian and there’s a way for me to make this a little clearer.
I think that it’s safe to say that the items Ted mentioned (expensive shoes, televisions, or airline tickets) are luxuries. Do you really regard health care as a luxury?
Chuchundra,
When I was 17 I had an ingrown toenail (one of several until I had surgery to have the roots killed so they wouldn’t grow back) and was afraid my folks would be pissed at me, so I didn’t tell them. It eventually grew so deep into the toe that it was about to form a fistula. My constant limping clued my parents in.
The podiatrist chewed me out. He told me that if I hadn’t had it treated, I could have developed blood poisoning and could have lost the foot or part of the leg.
Sebastian Holsclaw 04.12.05 at 6:59 pm
“I think that it’s safe to say that the items Ted mentioned (expensive shoes, televisions, or airline tickets) are luxuries. Do you really regard health care as a luxury?”
The problem with health care is that no matter who is in control of it, it is still a limited resource. Calling it a luxury or a non-luxury doesn’t change that fact. Certain health care items or procedures are going to be very very expensive for someone–either individuals or governments. We can’t offer unlimited access to them because there are a limited number of specialized doctors with a limited amount of time and limited access to very difficult to produce (expensive) equipment. Can a nationalized health care system afford to provide liver tranplants to every serious drinker? No. Can a private system? Also no. You can argue that it would be fairer to avoid making those choices on personal wealth. But classifying health care as fundamentally different from expensive shoes because people want health care more does absolutely nothing to remedy the fact that unlimited access to the best health care in the world is not a possibility in any medium-to-large country.
Randy Paul 04.12.05 at 7:04 pm
Sebastian,
Show me exactly where Ted or anyone else here advocated “unlimited access to the best health care in the world.”
Now you’re writing fiction.
asg 04.12.05 at 7:49 pm
What was the railroad deregulation that improved access and quality? US railroads suck on both axes now. Can you lay this out a little more explicitly?
I think the comments thread has passed this by, but for the sake of completeness I’m hearkening back to the 19th century with this one, and inviting folks to compare the Union Pacific with the Great Northern. That’s all. The UP was funded heavily by subsidies and was heavily regulated; the Great Northern, because it was not seen as a serious transcontinental project, was not. The GN was far more efficient, cheaper for riders and shippers, and outlasted the UP by many years. I won’t address the airlines point for the sake of staying on the topic of health care.
On that topic, it’s been awhile since I read anything from e.g. Cato on health care, but as I recall, their 1994 proposal basically involved a number of reforms including severing the connection between employment and health insurance and moving to an insurance scheme that insures against catastrophic events rather than day-to-day ones. (I don’t remember how they wanted to implement that second bit.) It didn’t make a huge splash in 1994 because the GOP was interested in defending, not reforming, the current system.
Ted 04.12.05 at 7:53 pm
Sebastian,
I certainly don’t think that it’s wrong that a health care insurer, public or private, would take steps to control costs, or provide something other than unrestricted access. Blue Cross controls costs, Medicare aggressively controls costs, France controls costs. It’s entirely right and necessary, and my fantasy single-provider would do it, too.
Let me try restating. Providers in a free market will offer a range of prices and qualities; there will probably be luxury options and budget options. For some products or services, even the cheapest option will be too expensive for some people. For most products and services, that’s OK. If someone can’t afford a luxury car- in fact, if someone can’t afford a car at all- very few of us consider that a problem that requires government intervention to solve.
I don’t think that health care works the same way. While I’m ready to that some low-wage households won’t be able to afford (and so won’t recieve) airfare, cars, or televisions, I don’t accept that they don’t need health care.
Furthermore, a car doesn’t cost more because you’re over 50, or because you have diabetes. But a private health care insurer in a free market would have to take those things into consideration in a rational consideration of a potential client. Without risk pooling, a person over 70 ought to pay tens of thousands of dollars for coverage. Few can afford that, so a real deregulation would leave a lot of people to die. I’m not ready to accept that.
A national program for basic care is not a bad idea at all. It’s a hell of a lot better than nothing. More on that later, maybe.
asg 04.12.05 at 8:04 pm
I don’t think Sebastian’s point is that people don’t really need health care. The question is whether they get the third liver transplant, or the super-experimental brain tumor treatment, or the $120,000 cyber-exoskeleton instead of a wheelchair, etc. The paraplegic obviously needs some way to move around, but are you maintaining that he doesn’t really NEED the exoskeleton, and poof, that means Uncle Sam doesn’t pony up?
Nicholas Weininger 04.12.05 at 9:21 pm
ted: your fantasy program would control costs, sure. But in our actual political culture– not France’s, not Canada’s, but ours– there is zero popular will to make the hard choices necessary to determine how much, and what kind, of health care should be provided regardless of ability to pay. We’re living in a reality where the new Medicare prescription drug benefit, the one passed by the supposed small-government individual-responsibility party, is going to cover Viagra.
Nicholas Weininger 04.12.05 at 9:38 pm
A concrete example, as a thought experiment. Suppose our fantasy “basic” socialist health care plan decided up front that it would cover only those devices, procedures, and drugs that had been available for at least 20 years. No coverage for the latest and greatest machines or cutting-edge surgery; only the tried and true. No coverage for on-patent drugs, only generics. You want your care paid for by the government? You get a 1985 standard of care (or a 1986 standard next year, etc).
Surely this would be an effective across-the-board cost control measure. Stuff that’s been around 20 years or longer tends to be relatively cheap, and also easy to evaluate for cost-effectiveness since you’ve got a lot of data on its use. It’d address Sebastian’s objections about innovation, too: any developer of a new drug or device would have 20 years to sell it on the private market, charging whatever that market would bear, before the government took a price-distorting hand in it.
1. Would such a restriction violate your intuitions about individuals’ positive rights to be provided with health care regardless of ability to pay? Why or why not?
2. Do you think the advocates of any realistic US single-payer plan would have a chance in hell of getting the electorate to accept such a restriction?
Randolph Fritz 04.12.05 at 9:39 pm
Airlines? Those are heavily subsidized–they had to be bailed out after 9/11. Rails? Outside of the Northeast, passenger rail is barely operating, even in places where it would be valuable. Television has been regulated from the start. Trucking I don’t know about. Taxicabs are heavily regulated and competitive. Overnight delivery services are competitive.
For heaven’s sake, ASG–what are you smoking?
As for health care–remember health care?–I think the basic reason there is little political will to change the US system is that very few USers have contact with the European systems; those who do often come to prefer them.
Jonathan Dursi 04.12.05 at 9:45 pm
For what it’s worth, my own attempts to discuss why the market for health care is not the same as a market for widgets is here, although I don’t doubt that Ted will do a much better-informed, better-written job.
Travis Thomas 04.12.05 at 9:46 pm
I think it was clear that the ingrown toenail comment was tongue-in-cheek, but okay.
The specifics of the example are meaningless. The point I was driving at is that medical resources are scarce, and if costs are not imposed on the less significant and more common, resources that should be used for more serious conditions are driven down the proverbial scale.
Many doctors will very willingly tell you about patients who waste their time with insignificant complaints, which translates to less time and fewer resources for more serious conditions.
Moreover, relaxation of regulation of the medical industry and a return to cash will vastly reduce the entry costs and barriers to opening private clinics that can take care of things such as ingrown toenails before they become serious.
hope 04.12.05 at 10:05 pm
In Health Affairs (Vol 20, No 2), Berk and Monheit updated their research on trends in health spending. They examined the distribution of health spending in the US population for selected years between 1928 and 1996. Some of their findings for 1996 (percentages were quite stable across years):
* The top one percent of utilizers accounted for 27% of all health spending.
* The top five percent of utilizers accounted for 55% of all health spending.
* The top 50 percent of utilizers accounted for 97% of all health spending.
What does this tell us? Most efforts to control costs (managed care, reduced benefit packages, drug formularies) are focused on the majority of us who account for a very small percentage of total health spending and thus will make no great impact on overall costs.
They also found that while the distribution of spending for the insured and the uninsured was similar, the average spending for each group was vastly different. The top 1% of insured accounted for an average of $17,871 but the top 1% of uninsured accounted for an average of $6651. The authors conclude that this undermines arguments that the “safety net” ensures care for anyone who needs it, even if they are uninsured.
Finally, they found that age and self-reported health status were not as correlated with cost as we typically expect. Of the top one percent, only 46% were elderly and just under 49% reported fair or poor health. That means over half of the top one percent of utilizers are not elderly and self-report good or excellent health. The authors conclude more research is needed to identify the needs of these high utilizers.
Just thought anyone reading this far in the comments might find this interestng.
luci phyrr 04.12.05 at 10:08 pm
“The question of who pays for what services, and on what terms, is constantly contested in a way that just doesn’t have any parallel in any other industry. And this means enormous waste in billing and “utilization management†departments”
As someone who worked years in claims departments and utilization management for some of the major insurers in the US, this comment is absolutely correct. Automated claims processing systems were set up to deny claims, systematically, for any breach of the byzantine billing rules. This puts the onus (of straightening out the billing) back on the Dr’s offices, who try to shift it back to the insurer or onto the patient.
R.Porrofatto 04.13.05 at 12:05 am
With all due respect, it sometimes seems that crossing the threshold into the libertarian mindset requires leaving reality at the door.
The comments here are filled with much hand-wringing argument over whether or not universal health insurance can contain costs, how might services possibly be rationed since health care is a limited resource, how would it possibly manage the predisposition of people to demand health services even for minor complaints… etc. etc. The conclusion on the part of some here seems to be that universal health insurance is simply a dubious (read:socialistic) experiment replete with complex problems, insurmountable obstacles, unpredictable consequences, ad nauseum.
All this antagonism might make sense if we were trying to invent the thing in a vacuum. But lo and behold, it exists, in one form or another, in every single country in THE REST OF THE INDUSTRIALIZED WORLD.
This isn’t 1957. We don’t have to hash out whether it works or not. It do.
Jason McCullough 04.13.05 at 12:05 am
“2. Do you think the advocates of any realistic US single-payer plan would have a chance in hell of getting the electorate to accept such a restriction?”
This seems to be the common libertarian “everyone will take my money without end” objection I see to this and other programs, regardless of cost or benefit. Here’s the things I don’t understand about it:
* It assumes that health care costs will grow indefinitely.
* It assumes that taxes will also grow indefinitely to pay for it.
* It also assumes that citizens will at no point ever revolt and demand a limit to tax increases, and as an implication, paid benefits. And this for a country famous for tax revolts.
It doesn’t make any sense; if the program got too expensive for the median voter, the program would stop growing by political choice. What’s the reasoning that makes sense out of this? That democracy doesn’t work? That voters are unable to make the connections between services & taxes? Trying to come up with a rationalization about why everyone doesn’t mind taxes as much as the speaker?
Jason McCullough 04.13.05 at 12:06 am
“2. Do you think the advocates of any realistic US single-payer plan would have a chance in hell of getting the electorate to accept such a restriction?”
This seems to be the common libertarian “everyone will take my money without end” objection I see to this and other programs, regardless of cost or benefit. Here’s the things I don’t understand about it:
* It assumes that health care costs will grow indefinitely.
* It assumes that taxes will also grow indefinitely to pay for it.
* It also assumes that citizens will at no point ever revolt and demand a limit to tax increases, and as an implication, paid benefits. And this for a country famous for tax revolts.
It doesn’t make any sense; if the program got too expensive for the median voter, the program would stop growing by political choice. What’s the reasoning that makes sense out of this? That democracy doesn’t work? That voters are unable to make the connections between services & taxes? Trying to come up with a rationalization about why everyone doesn’t mind taxes as much as the speaker?
trotstky 04.13.05 at 12:52 am
On the 9-30% question, let me just add my anecdote:
The company I work for self-insures — i.e., pays all the actual medical costs itself — but pays a Blue Cross company to administer the claims, handle the paperwork, haggle with hospitals over reimbursements, etc. In the most recent quarter, which the girl from HR told me wasn’t unusual (like I said, just an anecdote), they paid more to Blue Cross than in actual medical costs. The split was something like 60-40.
That wasteful government bureaucracy sounds pretty good to me.
McDuff 04.13.05 at 1:42 am
Just a brief note in defense of the UK: we aren’t perfect, but we spend a ridiculously low amount of our GNP on healthcare, and in all honesty I’d rather fall ill in the UK than the USA.
I recently got quoted for health insurance. Because I spend a fair amount of time in the States, I looked at the possibility of coverage for treatment in the States, as opposed to the standard type which would pay for a flight back to the UK and treatment there. 40% increase in premiums. What’s all that about?
Isaac 04.13.05 at 3:35 am
The distinction someone up top was looking for was between casualty insurance and social insurance. Casualty insurance is what you buy on your house or car, you get it to smooth out your own spending and balance your own risks. Social insurance is where you buy insurance (or pay taxes) to subsidize (or have subsidized) other peoples, or your own risk. From its inception in 1930 (in Dallas, Texas!), to about 1960, hospital insurance followed the social insurance model. But since then it has moved to the casualty insurance model (or community rate to experience rating).
Kaiser Permanente works because it’s an integrated insurance company/health care provider and since people pay in a capitated amount on a community basis (the company supposedly employs only one actuary!) it has every incentive to keep down unnecessary utilization; also, such an arrangement reduces paperwork. And it is innovative in figuring out what treatment works well (it has fantastic amounts of data). It doesn’t expand as fast as might be desired because it’s a non-profit.
Andrew Boucher 04.13.05 at 6:16 am
“I note also that the money we waste on Medicare fraud alone would just about pay for all the health care in Belgium*.”
“But in our actual political culture—not France’s, not Canada’s, but ours—there is zero popular will to make the hard choices necessary to determine how much, and what kind, of health care should be provided regardless of ability to pay.”
I think these two comments go to the heart of the problem. I live in France and I think the French health system is great and certainly better than America’s. I think those in America who talk about America having the best health system in the world are simply proving their ignorance of the external world.
But America has a different culture and environment that Europe. Europeans, for instance, accept measures (like a national photo-ID) which go a long way to cutting down on fraud. They -the population at large but especially the politicians – are usually mature enough to know that there are trade-offs between spending and taxing. That doesn’t happen in America. American high-earners (and that includes many doctors) earn and expect to earn much more than their peers in Europe. So it’s not clear to me that the European (non-British) system can be transfered so easily to America, without costing significantly more.
Andrew Boucher 04.13.05 at 6:17 am
You really do need to bring back Preview ! The struck out lines were not intended to be struck out.
W. Kiernan 04.13.05 at 6:49 am
Sebastian Holsclaw sez: We can’t offer unlimited access to [health care]…
“Unlimited” is silly. It’s as though I were to suggest replacing our Model T with bad rings with a new Toyota Corolla, and taking your analysis “to infinity and beyond,” you reply that “but according to the Theory of Relativity, neither of these cars can travel at the speed of light, so there’s no reason not to stick with the T.” We’re not talking about replacing American health care with some ideal, untested gold-plated dream which offers million-dollar liver transplants to every wino. We’re comparing Canada’s and Europe’s various existing nationalized systems with the U.S.A.’s private system. These nationalized health care systems have run successfully for decades; why are you presenting theoretical objections now as to how they can’t possibly work?
The only downside I see to nationalizing health care in the U.S. is the transition cost. We spend 14% of the GDP on health care, and 30% of that is spent on administative costs, so medical administrative costs amount to four percent of the GDP. So installing a national health care system would eliminate three or four percent of American jobs.
Steve LaBonne 04.13.05 at 7:28 am
Here’s another aspect of health care that’s unavoidably non-libertarian: physicians are a guild whose entry requirements are rigorously enforced by the state. Anybody really want to go back to the days when any Tom, Dick or Harry could hang out a shingle, and it was left to patients to put their bodies on the line in order to find out the hard way which ones were actually competent? And if not, any libertarian-oriented economist want to try to explain how a system with even one severe and ineradicable market distortion of that kind can function happily if all its other components are left unregulated?
I especially love the libertarians’ political argument that a single payer system like those that function much better than ours in a number of countries could never happen here politically- while they do their best to make this a self-fulfilling prophecy by poisoning the well of public discourse on the subject with their strawman arguments, which make such a convenient cover story for the insurance cartel. Meanwhile, to reinforce W. Kiernan’s point, where are the real-world examples of libertarian systems so that we can compare their performance with that of, say, France? Sorry, if you’re asking me to jump off a cliff you better damn well give me empirical evidence that it’s safe, not just theory.
mw 04.13.05 at 7:58 am
Even though I’m someone who leans libertarian and normally favors market-based approaches, I’m in favor of a single-payer healthcare system because I’d don’t see any way to devise a system based on competition that wouldn’t feature problems with gaming the system and cherry-picking of low-risk customers. (Under a competitive system, my evil get-rich-quick plan would be to start an insurance company offering a plan that provided excellent sports medicine coverage and free gym memberships, but lousy birth-control and pregnancy coverage and lousy coverage for diseases of aging. Then I’d rake in the dough covering a pool of subscribers consisting mostly of healthy young males who almost never go to the doctor).
But advocates of a single-payer system really, really need to lose the idea that a major selling feature is getting rid of the ‘inefficiency’ of for profit enterprises what with all those wasteful marketing costs and such. If you believe that, you must also believe that it would not only be better if auto-insurance were also provided by a single, government-run company, but also that auto manufacturing would be better done by a single government run company. What do the car companies spend on TV advertising? Ridiculous! Think how good and cheap cars would be if we did away with all that waste. Which is, of course, why Soviet block cars were such a bargain.
No, a single-payer system will introduce its own inefficiencies, corruption (brace yourself for the high-stakes lobbying concerning what does and does not get covered in the standard plan!), and frustrations and horror stories on the part of both providers and patients alike–but as far as I can tell, it’s the only way to properly manage the risk-pool, so in this case I have to conclude we’re better off living with the bureacracy and centralized decision-making.
Shoeless Joe Stalin 04.13.05 at 7:59 am
Shoeless Joe Stalin sez: Here in Libertariantopia, we take Thomas Szasz to the extreme. All illness is a myth. No illness. No problem.
mw 04.13.05 at 8:03 am
Here’s another aspect of health care that’s unavoidably non-libertarian: physicians are a guild whose entry requirements are rigorously enforced by the state.
It’s not the entry requirements that are the problem, it’s the intentional limiting of med-school seats that constrains supply and keeps wages artificially high. The current situation is non-libertarian, but there’s nothing inherent about it.
RS 04.13.05 at 8:09 am
Bit of a naive question, but don’t market efficiencies depend on possession of the relevant information on the part of consumers. Now I guess with cars and other fairly transparent goods that is fair enough, but you’d need to be an actuary and doctor rolled into one to evaluate products in the healthcare market.
Perhaps this is the origin of some of the inefficiencies in the current US market, with direct marketing to patients and overprovision of unnecessary hightech services?
Steve LaBonne 04.13.05 at 8:34 am
MW, your analogies are not good ones- there really is a significant amount of socially inefficent rent-seeking behavior built into our current “system” that has no analogue in other industries. I refer you to Lemuel Pitkin’s comment above: The third and probably largest set of wasteful costs, tho, are unique to healthcare, and involve cost-shifting. The entire healthcare indsutry is engaged in a gigantic multi-sided game of tug of war between workers, employers, insurers, healthcare providers, and pharamaceutical companies and other vendors. The question of who pays for what services, and on what terms, is constantly contested in a way that just doesn;t have any parallel in any other industry. And this means enormous waste in billing and “utilization management†departments, constant efforts to prevent people from utilizing emdically valuable but less profitable services in favor of less valuable but more profitable ones, and a cosntant arms race on the part of all aprticipants to shift costs toward someone else. Rent seeking, pure and simple, and on an enormous scale.
What do you think accounts for the difference between the US expenditure of around 15% of GDP, and the French expenditure of around 10% for universal coverage of arguably higher average quality?
Steve LaBonne 04.13.05 at 8:39 am
It’s not the entry requirements that are the problem, it’s the intentional limiting of med-school seats that constrains supply and keeps wages artificially high. The current situation is non-libertarian, but there’s nothing inherent about it.
Sorry, bad argument. Medical education is expensive and elaborate- and heavily subsidized by governments (Ohio has, off the top of my head, six pulbic medical schools, one more than California!) A free market might well provide fewer seats. And you missed the point anyway- it’s not the market that requires a med school degree before you can practice medicine, it’s the state.
mw 04.13.05 at 8:57 am
What do you think accounts for the difference between the US expenditure of around 15% of GDP, and the French expenditure of around 10% for universal coverage of arguably higher average quality?
Price controls of various form? What is the average physician income in the U.S. vs european countries? What are the comparative prices and coverage of ‘on patent’ pharmaceuticals? One of the problems the U.S. faces is that it is subsidizing R&D for the rest of the world indirectly by paying ‘full retail’ for newer prescription drugs that other countries either don’t cover or buy at a very substantial discounts (see Canadian re-importation of prescription drugs).
Steve LaBonne 04.13.05 at 8:59 am
I dealt with that drug R%D argument in the “cough” comment thread. It’s a weak argument at best. See also Kieran’s latest post.
mw 04.13.05 at 9:05 am
Sorry, bad argument. Medical education is expensive and elaborate- and heavily subsidized by governments (Ohio has, off the top of my head, six pulbic medical schools, one more than California!) A free market might well provide fewer seats.
Well, all higher education at state universities is subsidized, so that has nothing whatever to do with medical education. But there are many more willing applicants for medical school admissions than there are places. The response of the system is NOT to open more places. Some frustrated students end up resorting to this sort of thing:
http://www.escapeartist.com/studying_abroad/Foreign_Medical_Schools.html
Steve LaBonne 04.13.05 at 9:13 am
Again a non-sequitur. What makes you tink that in a free-market system of medical education, if such a thing could even exist, there won’t continue to be an excess of applicants over places? And by the way just who is supposed to pay for increasing the number of available places, the providing of which sure as hell isn’t a profitable enterprise? We almost certainly have too many M.D.’s doing work that could be done more cost-efficiently by other health professionals (who are prevented from doing so by the M.D. cartel’s influence over laws and regualtions, not by market forces), so it is likely that we actual have too many available medical school places compared to the real need for M.D’s. This line of argument is getting you nowhere fast.
mw 04.13.05 at 9:15 am
I dealt with that drug R%D argument in the “cough†comment thread. It’s a weak argument at best. See also Kieran’s latest post.
Yes, I saw the Kieran is not including R&D expenses in his chart, but that’s not what I’m talking about. What I’m talking about are the drug development expenses that Americans are subsidizing for Canadians because the Canadian government pays a discounted price for the same drugs.
Put it this way, suppose there was a single-payer system for the U.S. that, by fiat, priced prescription drugs at Canadian levels. You think that wouldn’t both save money in the U.S. AND reduce incentives for R&D by pharmaceutical companies?
Steve LaBonne 04.13.05 at 9:20 am
You alleged that US subdsidy of R & D utilized by other countries accounts for a significant portion of the huge difference in national expenditures, so yes that is what you were talking about and Koeran refuted it.
For the rest, I won’t repeat my comments under “(cough)”, but no I don’t believe for a moment that the current role of the pharma companies is irreplaceable. What would get reduced in any rational system is the enormously wasteful expenditure for development and elaborate marketing of me-too drugs, developed purely in order to capture rents from the highly un-libertarian patent system.
mw 04.13.05 at 9:29 am
Again a non-sequitur. What makes you tink that in a free-market system of medical education, if such a thing could even exist, there won’t continue to be an excess of applicants over places?
Sorry to be pedantic, but I think that because in a free market, when there is more demand for a service (medical education) than supply (slots in med school classes), the suppliers expand their capacities (or new suppliers crop up). The fact that public universities are taxpayer subsidized isn’t really the issue. Offshore medical schools are clearly NOT subsidized and yet students are willing to pay the fees, just as they’d be willing to pay the fees for additional U.S. med school slots (even paying full price).
And by the way just who is supposed to pay for increasing the number of available places, the providing of which sure as hell isn’t a profitable enterprise?
Do you think offshore medical schools are providing medical education to American students at a loss, then?
We almost certainly have too many M.D.’s doing work that could be done more cost-efficiently by other health professionals (who are prevented from doing so by the M.D. cartel’s influence over laws and regualtions, not by market forces)
Yes and no. Yes, there are unnecessary restrictions on other health-care professionals that do drive up costs, and these reform is needed (though expect a massive counterattack from the AMA). But also, M.D.s are not cost-efficient because the supply of M.D.s is artificially restricted.
so it is likely that we actual have too many available medical school places compared to the real need for M.D’s. This line of argument is getting you nowhere fast.
Yeah, tell that to all the small towns out there that used to have local M.D.s working in their communities but no longer do. It’s not that it isn’t possible to make a decent living practicing in these small towns–the problem is that it is possible to make a lot more elsewhere. An greater supply of physicians would, out of necessity, make the small-town practice look more attractive (compared to big city unemployment at least).
mw 04.13.05 at 9:39 am
You alleged that US subdsidy of R & D utilized by other countries accounts for a significant portion of the huge difference in national expenditures, so yes that is what you were talking about and Koeran refuted it.
Kieran was talking about direct R&D costs, not drug price differentials (that reflect R&D costs).
I don’t believe for a moment that the current role of the pharma companies is irreplaceable.
So you’re admitting that a single-payer system probably means the end of Pharma R&D as we know it? Thanks for being straightforward about that.
As for ‘me too’ drugs, the best thing I’ve seen written about that is this:
http://www.newyorker.com/critics/atlarge/?041025crat_atlarge
Steve LaBonne 04.13.05 at 9:39 am
A free market would provide medical education only at a price that would allow a profit to be made. That would make medical education so astronomically expensive for students that the number of applicants, and graduates, would almost certainly be severely reduced. This is a typical example of the cloud-cuckoo-land nature of your arguments, and those of other health-care “libertarians”.
jlw 04.13.05 at 9:52 am
I think the libertarian health care system has been tried before. It involved snake oil, leaches, and barbers who doubled as dentists.
Why oh why were we so foolish to abandon that perfect system? Forgive us, Ayn Rand!
Nicholas Weininger 04.13.05 at 10:03 am
Steve, every one of your implicit premises is plain wrong. Libertarians understand quite well the market-distorting nature of the AMA guild, and would be quite happy to be rid of it. You have no evidence for your claim about the free-market affordability of medical education, and the experience of the market in every industry where it’s actually been allowed to operate says you’re wrong. You’re making utterly unsubstantiated assertions about the drug development system. You’re the one who’se in cloud-cuckoo-land.
Steve LaBonne 04.13.05 at 10:08 am
Go find out the true cost of a medical education and who pays how much of it in the US at the moment, and then get back to us. Meanwhile, have a look at Kieran’s graph. Whan it empirical data againsg airy-fairy theory that has never actually been put into practice (except maybe in the way jlw alluded to!), I know which side I’m on. I’m susceptible to arguments for libertarian-ish positions on some things, but I have yet to see ones worthy of anything but derision when it comes to health care.
Steve LaBonne 04.13.05 at 10:12 am
P.S. Re the supply of medical-school seats, and the argument for which you claim I have no basis, can you give an actual real-world example in which the withdrawal of a large subsidy to the suppliers of a good led to an increase in the supply of that good?
Nicholas Weininger 04.13.05 at 10:14 am
Jason M: why not project that health costs will continue to grow, maybe not indefinitely, but for a very long time and to a very great extent? The history of the recent developments in medical science, and the prospect for near-to-medium term improvements therein (tailored drugs, longevity treatments, etc), strongly suggest that growth will happen.
And why not assume that taxes will continue to rise to pay for them, given that
(a) Medicare and Social Security, the two major entitlement programs in the US, have been subject to steady, periodic tax increases that show no sign of ending
(b) long-term costs for these programs have consistently been underestimated, when they’re not outright lied about (as in the recent Medicare bill), by the agencies administering them?
Yes, I certainly am claiming there’s a problem with democracy. The problem is that, when you have a good for which popular demand is extremely high and inelastic, and people who want it get to pay for it by raising other people’s taxes, the incentive for cost control is quite weak.
And yes, I am also claiming that voters don’t get the connection between services and taxes. Where is the evidence that they do?
(Finally, once again, to all those people saying “but it works everywhere else!”: the US is not everywhere else. We differ from everywhere else in several very important respects that bear directly on the ability to control government health care costs. If you’re not addressing those differences, you’re not being realistic.)
Steve LaBonne 04.13.05 at 10:17 am
(Finally, once again, to all those people saying “but it works everywhere else!â€: the US is not everywhere else. We differ from everywhere else in several very important respects that bear directly on the ability to control government health care costs. If you’re not addressing those differences, you’re not being realistic.)
And yet you’re the same guy arguing that we could have a nifty libertarian system if only we could get rid of the AMA cartel? Like that’s going to happen. Be careful of arguments that prove
too much…
Nicholas Weininger 04.13.05 at 10:20 am
Steve: as mw has already pointed out, the subsidies are a red herring. The issue is the guild-enforced supply constraint, which is independent of the level of subsidies.
Nicholas Weininger 04.13.05 at 10:21 am
And I’m not claiming that we’d have a nifty libertarian system “if only” we could get rid of the AMA cartel; removing the AMA cartel would be good but not sufficient. Be careful of strawmen.
Steve LaBonne 04.13.05 at 10:23 am
Demonstrate that there are guild-enforced constraints on the supply of medical-school seats. Is that why we have six public and two private medical schools (one recently opened) in Ohio?
mw 04.13.05 at 11:13 am
Demonstrate that there are guild-enforced constraints on the supply of medical-school seats.
The best I can do with a quick Google search is this indicating that med schools must get permission from the accreditation organizations to increase entering class sizes:
http://www.lcme.org/classsizeguidelines.htm
Is that why we have six public and two private medical schools (one recently opened) in Ohio?
Well the number of schools really isn’t very interesting vs the number of slots. And the relevant question there is how does the number of slots compare to the number of qualified applicants? Are you suggesting that Ohio’s medical schools are now having trouble attracting enough qualified applicants?
Steve LaBonne 04.13.05 at 11:17 am
Are you suggesting that Ohio’s medical schools are now having trouble attracting enough qualified applicants?
I reject that as a rational measure of whether there are “enough” seats, because as I said, to establish that we’d have to see what the demand would be if students had to pay the full freight (which they don’t come close to doign even in “private” schools.)
JRoth 04.13.05 at 11:55 am
First, I’m a bit baffled that we’re bickering over med schools when it’s visas for foreign doctors that have been most effectively limited by the AMA – talk about enforcing the guild!
Second, I absolutely agree that, any time there are more applicants than seats, there should be more seats. Like, why won’t the Pittsburgh Pirates let me play for them? Clearly, there are more applicants for Starting Second Baseman than here are positions. The Free Market demands more Major League Baseball! (And don’t talk to me about the minor leagues – that’s like becoming a nurse; not good enough for my undeniable skills!)
Third, as long as nicholas insists on referring to Ted’s specifically non-socialist idea as socialist, it seems only fair to refer to our current system as anarcho-capitalist.
Fourth, did the people up above supporting catastrophic care vote for Kerry? If not, then you’re fools. That was his plan – gov’t-run catastrophic insurance for all, thus eliminating the most expensive care from private insurance, reducing cherry-picking, and radically reducing the personal bankruptcy rate. But people were too worried about his windsurfing to pay attention to a truly effective, small-effort/big-impact proposal.
Fifth, since when is raising Social Security “raising someone else’s taxes”?! We ALL pay them, and we ALL benefit. That’s the point. Cripes, is this why libertarians knee-jerk object to gov’t programs? Because they’re physically incapable of recognizing when they receive benefits from them? I mean, a check comes in the mail, signed by the gov’t – surely even a libertarian can look at that check and think, “huh, I seem to have received a benefit from a gov’t program.” But no, someone else is benefitting, and they’re just paying taxes. Amazing.
Oh, and last – thank you, nicholas, for your brilliant suggestion about health care menus in hospitals. There’s nothing someone coping with cancer needs more than sole responsibility for negotiating with his insurer. After all, if he doesn’t get the service he wants, he can just take his business elsewhere.
Seriously, where do these libertarians live? Cos it ain’t this planet….
mw 04.13.05 at 12:01 pm
“Are you suggesting that Ohio’s medical schools are now having trouble attracting enough qualified applicants?”
I reject that as a rational measure of whether there are “enough†seats, because as I said, to establish that we’d have to see what the demand would be if students had to pay the full freight (which they don’t come close to doign even in “private†schools.)
Well, but that is NO DIFFERENT than the state of things in ALL FORMS OF HIGHER EDUCATION IN THE U.S.–students in EVERY field are subsidized by some combination of state taxpayers, private donations, income from endowments, private or federal grants, etc. This issue is not at all specific to medical education and, therefore, has nothing to do with this debate.
W. Kiernan 04.13.05 at 12:02 pm
Nicholas Weininger sez: …We differ from everywhere else in several very important respects that bear directly on the ability to control government health care costs.
We in the U.S.A. differ from, let’s say, Canada in such a way as to make our health care necessairly thirty percent more expensive?
Sure Americans eat a lot of McDonalds, take plenty of illegal and legal recreational drugs, and have the highest rate of gun violence in the so-called civilized world, but all that together couldn’t add up to thirty percent. They’ve got plenty of dope and fast-food, if not quite so much loose ordinance, up there in Canada too.
The biggest inherent difference between the U.S.A. and Canada I see is that here we let tens of millions of citizens go without preventative health care altogether until they’re so sick the emergency rooms can’t legally turn them away. This would tend to raise the per-capita cost of U.S. health care relative to other countries, but of course single-payer would eradicate that difference.
Steve LaBonne 04.13.05 at 12:14 pm
No doubt true, MW, but doesn’t help your argument one bit. Who doubts that the supply of degree-holders of all kinds would decline if higher education were unsubsidized? Your problem is that I specifically predict that one of those kinds would be M.D.’s and neither you nor Nicholas has been able to argue effectively against that prediction. As I noted myself, the supply of any good would be expected to decline if a subsidy, previously applied to its cost of production, were eliminated. People who want to argue from economic first principles don’t get to cherrypick just the principles that are convenient for their desired conclusions.
Michael Blowhard 04.13.05 at 4:16 pm
One factor that does make our situation differ dramatically from, say, Canada is our border with Mexico. Millions of people come across that border every year. Seems safe to assume that these people (and whichever groups and outfits align themselves with them) are going to be pretty eager to take advantage of our nationalized health coverage.
Another factor is that, as far as I can tell, much of America simply doesn’t want nationalized single-payer health care. As far as I know, nationalized health-care is part of Canada’s identity. (Canada also isn’t remarkable for the amount of money they shell out for defence purposes.) As far as I can tell, Sweden, France, England, etc are all smallish countries with long traditions of social welfare that emanates from the center. America is huge, rangy, has many different regions and centers, is made up of many different populations, and has a lousy record of running nationwide social-welfare programs. National consensuses (consensi?) are hard to come by here. What are you gonna do? Impose a single-payer system on literally millions of people who don’t want one?
Kosh 04.13.05 at 6:16 pm
Blowhard sez:
Another factor is that, as far as I can tell, much of America simply doesn’t want nationalized single-payer health care.
And you base this on what?
http://cthealth.server101.com/the_case_for_universal_health_care_in_the_united_states.htm
“Repeated national and state polls have shown that between 60 and 75% of Americans would like a publicly financed, universal health care system.”
W. Kiernan 04.13.05 at 6:29 pm
America… has a lousy record of running nationwide social-welfare programs.
True, anybody can see what an awful failure Social Security is. That’s why President Bush’s campaign to privatize it out of existence has been so successful with the general public.
What are you gonna do? Impose a single-payer system on literally millions of people who don’t want one?
No, as the U.S.A. is a democracy, the idea isn’t to impose, Politburo-style, an efficient health care system upon Americans, it is to sell them on the idea.
Why don’t they want one? How many billions of dollars were spent in the last fifteen years by the health insurance lobby to convince ignorant voters that they don’t really want a health care system that costs four fifths of what they pay now and delivers superior results?
Selling the voters. In the early sixties, what were you going to do, impose integration upon literally millions of (white) people who don’t want it? No, you were going to sell those millions of white people on the virtues of it. Now that was inherently one Hell of a hard sell, because for most of those white people there was no immediate selfish reward to furthering desegregation. But the activists didn’t throw their hands in the air and say “What are you going to do?”, and eventually the vast majority of the public finally did come around.
Compare that with campaigning for single payer. The system we’ve got now is fairly good for doctors (not nurses or aides or orderlies, though) and of course it’s 365 days of Christmas for the executives and stockholders of the health care industry. For the other ninety-nine percent of the public our for-profit system is lousy, scary and grossly overpriced. And don’t forget that the executives of every other business are also getting thoroughly reamed by the private health-care system. If I ever want to set off the CEO of my company on a red-eyed rant, all I have to do is stroll up and ask “Yo, Bill, how are our health-insurance costs doing this year?”
Campaigning for single-payer doesn’t require appealing to anyone’s conscience, but only to their enlightened self-interest. Even voters who don’t give a damn about the forty million uninsured Americans do want secure and affordable health care for themselves and their families. By adopting one of the successful, time-tested systems used in Canada or Western Europe, Americans would get health care which won’t evaporate the instant their employers lay them off. And – this is the knockout selling point – they’d get that medical security at a twenty percent discount. I guarantee you, all working-class people would go for that.
The only disadvantage single-payer advocates suffer is the gross disparity on advertising budgets. If the majority of the general public were acquainted with the statistics all us CT readers have seen showing the proportion of GDP versus life expectancy for various nations, I’m confident we’d already have national health care in the U.S. But instead of hard numbers and honest argument, the public get grossly fraudulent Harry & Louise ads. The project, then, is not to impose on anyone’s consciences, but simply to get the word out there and refute the Harry & Louise lies. Once the public know the enormous advantages single-payer offers them it won’t be hard at all to convince them to support it.
Abby 04.13.05 at 6:36 pm
On the Guild aspect:
1.) Why do we regulate state by state? Why do we have to get different licenses all the time. It really cuts into mobility.
2.) A friend married an older Japanese woman who is a doctor. She trained in Japan and then did a different specialty by doing a residency in Australia. (Her English is excellent, BTW) If she passes her boards, she will have to do a new residency. I know that medical standards vary from country to country, but a third residency seems excessive.
Randy Paul 04.13.05 at 7:57 pm
What really annoyed me about Sebastian Holsclaw’s comments claiming that Ted was “asking for the king of health care that would parallel expensive shoes or airline tickets” (which he wasn’t anyway) is the fact that it displays an ignorance as to the sort of health plans people in the real world actually have.
Everyone I know who has a health plan is on one that is a HMO. I am still currently covered under my former employer’s plan and it is a HMO plan. I cannot choose whatever doctor I wish. I cannot have physical therapy wherever I wish. When I need to see a specialist, I have to have a referral.
Yet I was and am thrilled to have a healthcare plan. If Sebastian wants to crawl back to the real world, he would find that many, many people have this sort of plan. It’s hardly “the king of health care,” yet most of us would hate to be without it.
nick 04.14.05 at 6:48 am
1.) Why do we regulate state by state? Why do we have to get different licenses all the time. It really cuts into mobility.
States’ rights; but the lack of reciprocity and the silly turf wars of state licensing boards is infuriating. Imagine being licensed as a psychologist in Rhode Island, for instance, where any client visit to MA or CT counts against your severely-limited ‘out of state’ allowance.
Functional 04.14.05 at 11:23 am
From William Lewis’s book The Power of Productivity, recounting a study that he and others did at McKinsey:
The study goes on to show that administrative costs in the United States are about a third higher, but that the main difference is that the United States “pays its doctors twice as much as Germany and the United Kingdom.”
waldtest 04.14.05 at 2:39 pm
Health care is a special case, compared to other essentials. Consider the esentials: shelter, food/nutrition, clothing, education and health care. For each of these, there is deep social distress (libertarians notwithstanding) for people that fall below some floor, and public programs and private charity to prevent this. Ignore the “best,” and consider only the median in the population for each of these. How far below the median is the floor for each of these goods or services. For shelter, food, clothing, quite a lot. As a society we are willing to tolerate the poor living substantially worse than the average for each of these. For example, once minimum nutrition and safety is assured, we don’t feel any strong commitment to assuring quality or taste in the food the poor consume, or concern about whether they obtain the pleasure food can provide.
For health care, the floor is quite close to the median. This is the lesson in the US from every effort to construct a minimum acceptable benefit package and the benefits provided in the state/federal Medicaid program for the poor. Arguments about “Cadillac” medicine are red herrings. People are uncomfortable when the avaiable care falls below the level of a Corolla, while we’re quite comfortable with people living in the equivalent of 30 year old Yugos.
The closest service that mimics the situation in health care, is education, where we tolerate large discrepancies between poorer urban schools and typical suburban schools but have a substantial discomfort about it.
Perhaps the reason for the priority status of health care and education in this list is that they are most important in creating “capability” in the sense that Sen used the term, and that fairness demands access at levels comparable to the average.
jet 04.14.05 at 5:56 pm
Will GE still come out with those incredible new MRI machines every few years if they aren’t paid as much per unit do to a one payer system that controls prices? When we finally go socialist, and you turn 70, and you’re getting that chest pain checked out on last decades latest model, don’t think about what might have been.
Jason McCullough 04.14.05 at 11:48 pm
Jet, I can’t say I’d die happy that hey, *I* can’t afford get medical treatment, but hey, rich people can! would really be a peaceful parting gift.
Nicholas, what’s so bad about health care costs growing? People are getting valuable services for those increased costs. Yes, eventually if health care spending grows to some huge percentage of total GDP it’d be hard to pay for that out of taxes without economics disincentives, but that scenario is such a long chain of compounded hypotheticals I can’t imagine how it’s an argument about today. Europe seems to have productivity growth just fine with their public spending share 20 points above ours, for example; we can clearly go to that level without problems.
“Yes, I certainly am claiming there’s a problem with democracy. The problem is that, when you have a good for which popular demand is extremely high and inelastic, and people who want it get to pay for it by raising other people’s taxes, the incentive for cost control is quite weak.”
1) The tax incidence in the United States is pretty flat in actual terms. The amount of income transfer from the rich to the middle class (who do all the consuming) is small. The political incentives for endless tax increases paid for by everyone else is small, apparently, unless you have an alternate explanation for the last few GOP presidents who got elected on tax cutting.
2) What’s an actual real-world example of a US program this is occuring for? Oil demand is high & inelastic, yet the government doesn’t pay for that with taxes on the rich.
It just don’t get the tenuous hypothetical bad outcomes multiple generations in the future relying on worst-case analysis of democracy public spending thing. Didn’t people notice that Friedman’s public choice theory turned out to pretty much be wrong?
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