Why Everybody in America is Wrong About Healthcare ... Including Libertarians and Austrian Economists
This article is not an endorsement of "ObamaCare" or any of the healthcare reform schemes being debated in Congress. It argues for government intervention on the grounds that the American healthcare system is an "extortion racket" where free market capitalism can not function because the freewill of the consumer is compromised. by Andy Wilcoxson
(libertarian)
Tuesday, October 13, 2009
I am a believer in laissez faire capitalism and Austrian economic theory, with one exception. I do not believe the unchecked free market can reign in rising healthcare costs.
Healthcare is unique. It is unlike any other product or service sold on the open market. The free market is able to provide basic necessities like food, clothing, and shelter more efficiently than any other system known to man, but there are key differences between these goods and healthcare.
If you're hungry, the free market affords you limitless options. You can spend hundreds of dollars on a fillet mignon dinner prepared by a world class chef, or you can make some Top Ramen and eat for a few cents -- either way you won't starve. In fact, if you can catch a fish, kill a wild animal, or find some edible plants you can eat for free.
Clothing is another necessity the free market can provide. You can spend thousands of dollars on the latest designer clothes from Paris, or you can buy your clothes at a second hand store for practically nothing -- either way you won't go naked.
If you need shelter the free market again has the answer. You can spend millions of dollars on an opulent mansion, or you can spend a couple hundred dollars to rent a studio apartment -- either one will shelter you from the elements.
Healthcare is an entirely different matter. If you have cancer you can't substitute a box of band-aids for chemo therapy. You need specialized treatment or else you'll die. You can't choose the type of healthcare you consume any more than you can choose the diseases you get. If we had a choice nobody would ever get sick.
People don't choose to see a doctor; they go to avoid physical pain or death. Cancer patients don't get chemo because they enjoy throwing-up and having their hair fall out. People don't go in for kidney dialysis because it's a fun way to spend an afternoon. People go through the treatment because they'll die if they don't get it. They don't have a choice.
If you have a heart attack, or you get severely injured in an accident, you're not in a position to choose who treats you or to haggle over the cost of your medical treatment. When the paramedics have you strapped to a gurney you're in no position to argue. You're going to be treated at the closest hospital by whichever doctor happens to be on duty in the emergency room, and then you or your insurance is going to pay the bill. If you can't afford it your only option is to default and declare bankruptcy. It's that simple.
One could very well lose consciousness and wake-up in a hospital to find that they're on the hook for medical bills they can't afford and that they had no choice in incurring. It's beyond me how anybody can talk about a "free market" in this scenario.
This isn't to say the free market isn't effective in reducing the cost of certain medical procedures. Cosmetic surgery stands out as an example where competition and other free market forces have put downward pressure on prices.
The key difference between cosmetic surgery and other medical procedures is that nobody ever died because they couldn't get hair plugs or a facelift. With cosmetic surgery the patient is at their leisure to shop around for the best deal or to simply walk away if they feel the treatment is too costly, but this isn't so with other kinds of medical treatment.
The patient is frequently in a position where, if he doesn't acquire the healthcare provider's services, he will die or be subjected to severe physical pain. This is extortion, not capitalism. The mechanism that puts downward pressure on prices in every other free market transaction is the freewill of the buyer, this crucial element is often absent when it comes to healthcare.
Government intervention is a necessary evil in this particular circumstance because the free market can't function in an environment where the buyer has no free will. There has to be some mechanism to protect the patient from the unchecked greed of the healthcare provider.
In every other free market transaction the seller's greed is checked by the buyer's ability to walk away from the deal if he thinks the seller is trying to gouge him on the price. But for a patient in the ICU with an IV sticking out of his arm, walking away isn't an option regardless of his feelings about the bill.
There are countries all around the world that have substantially greater government control over their healthcare systems than the United States does, and they spend substantially less on healthcare than the United States does.
Nobody should mistake this article as an endorsement for "ObamaCare" or the various schemes being floated in Congress right now. Reforming health insurance is tantamount to rearranging the deck chairs on the Titanic. We need a major overhaul of our entire healthcare system. Our healthcare system is an extortion racket that's consuming 1/6th of our nation's economy, and it's the government's job to protect us from extortion.
As usual, we're having the wrong debate in this country. We're arguing about who should pay the bill, when we should be disputing the charges. Simply put, we're being ripped-off. Our healthcare providers are gouging us on the price of their services because they can, yet it's the insurance companies that are being blamed.
Imposing new regulations on health insurance companies or moving to a single payer system is pointless because the insurers don't determine the cost of the services they're insuring. The objectionable behavior of the health insurance companies (denial of claims, high premiums, etc...) isn't the problem -- it's the consequence of the problem. If healthcare cost less, the insurance companies could charge lower premiums and be more generous with their coverage.
Our problem is that our healthcare providers are charging too much for their services. 46% of our healthcare spending is already "single-payer" government spending. The American taxpayer spends more, per-capita, on Medicare and Medicaid then the British spend (public and private spending combined) on universal healthcare for their entire population.
The American Government spends more, per capita, on healthcare than the Canadian government or almost any Western European government. For the money the government is already spending they ought to be able to provide universal care for every man, woman, and child in the United States, but they're not.
If we were smart we would pick a country that had a more cost-effective healthcare system than ours and we would mimic their system. Normally I oppose government-control and socialism on the grounds that the free market and capitalism can do a better job, but in this particular instance the market can't function because it isn't free. Capitalism can't function in an environment where the buyer has no freewill, and that's the scenario we face with healthcare. The most viable healthcare systems on the planet today, even though they're imperfect, are socialist government-controlled systems, as evidenced by the fact that the rest of the Western industrialized world spends substantially less on healthcare than the United States does and gets comprable, if not better, results.
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Posted By: Walt Thiessen
Date: 2009-10-13 16:19:09
Your analysis lacks a crucial ingredient. You offer no explanation as to why health care costs have only shot to the moon since the government started to become massively involved in the industry, beginning roughly 55-60 years ago. How do you explain the fact that before the huge levels of government involvement, health care was much more affordable for a much wider segment of the population?
Posted By: Andy Wilcoxson
Date: 2009-10-13 16:41:59
Walt, I don't think the relationship between government involvement and costs is entirely clear. I'm not disputing that one exists, but I think to a large degree it depends on the nature of that relationship. There are countries (such as Canada) that have an even greater degree of government control over their healthcare system than the United States does, and they spend substantially less on healthcare than we do. If it was as simple as costs are tied to the degree of government involvement, then we should see higher healthcare costs in countries that have more government involvment, but we don't. The key is to find the right role for government. Further, we shouldn't lose sight of the fact that there are medical treatments avaliable today that did not exist 55-60 years ago. We have the added cost of ongoing treatment for people who wouldn't even be alive if this was still the 1950s.
In my opinion government could do some things that would help to make the free market work in health care: Government could require that all health care providers post their prices for basic services on the Internet and at their place of business. Let me expand on your example of a cancer patient. The patient could go online and see what various oncologists charge for chemo treatments. Maybe Dr. A charges $500 per treatment and Dr. B charges $350. The patient could realize a significant saving by using Dr. B. Maybe the doctors could also be rated for patient satisfaction and perhaps mortality rates of patients. The patient could factor that into the decision too. At least the patient would be making informed decisions based on cost and performance. That would put competitive pressure on doctors to keep their charges down and try not to kill their patients. :-)
In the case of an emergency your options are much more limited as you point out. But you could do a little advance planning and know ahead of time if one hospital is more reasonably priced than another. In that case you could make it known which one you want, perhaps by a card in your wallet or a pendant worn around your neck.
Another thing government could do is to require doctors and hospitals to provide the patient with a written cost estimate before any procedure is undertaken. That would not apply to emergencies, but would apply to planned surgeries. Additional charges would not be accepted unless there are extenuating circumstances.
Also patients must have a financial stake in the payment process for capitalism to work. If your insurance company is paying or government is paying then you have no interest in the cost, since you don't have to pay it. Insurance should cover the unexpected big-ticket items only, like heart by-pass, hip or knee replacement etc. Even then there should be a copay. Other costs should be out-of-pocket. That way the patient has a financial interest in looking for the best price.
BTW I don't think there is a constitutional basis for the federal government to be involved in health care, so the suggestions I made above should be implemented by the states.
Posted By: Jahfre Fire Eater
Date: 2009-10-13 17:28:16
Hi Andy,
Sorry, your argument just doesn't amount to anything but wishful thinking. You might as well have said you believe in gravity except where you choose not to.
The primary flaw in your reasoning is that you do not understand that the current system has no relationship to a "free" market. So long as doctors must be licensed and drugs regulated and insurance companies told who to insure and what to cover and on and on and on there is no validity in comparing the current state of health care in the USA to anything thing that would or could exist under a free market.
All your article has shown is that believing in a free market, and understanding what a free market is and being able to recognize a free market are three separate, distinct and oddly mutually exclusive concepts to you.
Where there is government intervention there are mis-allocated resources and skewed incentives that cause consumers to be victimized as those distortions are compensated for in other areas. The "free" market is simply one devoid of government manipulations. You have never seen one; nor have I. All we have ever witnessed in any sector is varying levels of nasty consequences caused by political intervention in markets.
Adding more government manipulation is akin to giving a drowning person a shot of water into his lungs.
Posted By: Andy Wilcoxson
Date: 2009-10-13 18:56:24
David, You're right. There is no constitutional basis for the federal government to be involved in this. We would have to amend the Constitution or leave this issue to the states. I would like to see the government take action to bring market foces to bear on prices where it can. That's why I raised the example of cosmetic surgery. Market forces definitely have a role to play, but the typical libertarian/Austrian attitude of "deregulate healthcare, get the government out of it, and the market will sort itself out" -- I don't think that will work and from your posting of suggested regulations I think you get my point.
Jahfre Fire Eater, I can't go along with there being no licensing for doctors and no approval process for drugs. People don't always get to choose their doctor, nor do they always get to choose which drugs they are given. There has to be some infrastructure in place to ensure that the doctors are qualified and the drugs are resonably safe -- no matter how you slice it that boils down to a licensing regime or a guild of some kind.
I have a valid point about capitalism. Capitalism can not function in an environment where the buyer has no freewill. It's like your analogy to gravity. Gravity won't work in the absence of an object of mass (like in outer space). Freewill is to capitalism, what the mass of the Earth is to gravity. You can't separate the two.
i don't agree with everything in your article, but I think it is foolish not to agree with your basic premise, when life and death is determined by a "purchase" or lack of one, it can't be compared to your average day at Target or the grocery store!
In your reply to Walt, it is sometimes difficult to sort out what effect the government has on a market because it often works more than one angle. in the case of health care, the government is controlling and regulating all facets, which drives up costs, and insuring monopolies with patents and gauranteed markets, which drives up costs and providing for a large share of the health market through medicare, etc., which creates greater demand and drives up costs. it also perpetuates the use of extreme technology by subsidizing or paying for research, etc.
if you could take out government as much as possible, which would lower prices and then provide some basic services for those who couldn't afford it, we might have something. but, how we get to there from here is a big question.
Andy, please stop writing as a libertarian. You are embarrassing to the rest of us.
Increased spending and regulation by the government is DIRECTLY related to skyrocketing healthcare costs. The less people spend on healthcare via things like co-pays the more it costs. This is basic economics. Insurance is supposed to be for catastrophic care NOT the common cold.
Please don\'t compare our system to Canada where you have to waits 9 months for an MRI and ALL health services are rationed. Where ours are effectively on demand.
You have no idea what you are talking about and have done ZERO research on the issue.
Walt and the others have mentioned one of the flaws in your argument, so I will not retread old ground. I won't assail your libertarianism at this point in time, either. What is more egregious is your use of semantics and logic, both of which collapse under any closer rationality?
Let me sample some of your more reckless statements: "Healthcare is an entirely different matter. If you have cancer you can't substitute a box of band-aids for chemo therapy. You need specialized treatment or else you'll die. You can't choose the type of healthcare you consume any more than you can choose the diseases you get." On the whole, the expansive analogy leading up to this was not very convincing. This is down right muddy. You automatically discount alternative or preventative medicines in exchange for reactive and adverse treatments.
On the surface, you are right that the current status quo has resulted in billions, a sixth of our GDP, being flushed down the toilet for inadequate care, as well contributing to limited treatment options. While others have already said you did not include the wage controls and HMO act responsible for creating the monster we have today, the real damning point against your argument is not understanding what the debate is about. I don't think it's clear to you at all. All the successes you brandy about depends on who you ask, what healthcare really is, and what health insurance does.
The answers you present are the same ones liberal politicians selectively choose to manipulate the landscape of the argument and frame it on their terms. Here are the true answers, determined by their original definitions: healthcare is any action that you take to preserve health. Here, health is defined as an absolute positive and not something you can be in a poor state of. We call that unhealthy or sickness. So this whole debate, first of all, is a misnomer. Now that we've addressed that, "healthcare", more appropriately defined, is not adequately taken care of by health insurance, whether government involved or not.
Furthermore, any way you slice it, a government-provided system stands in direct contrast to your arguments about lack of choice, as it would only create further lock-in. And assuming that no one is denied coverage for health insurance, this would not result in a cut in spending, much less - what you failed to address completely - quality.
Your blindest assumption is also where the term insurance is concerned. You tried to make a point regarding how we have choices of food and clothing. Do we have insurance for those too? What about all the homeless people? Do they have the luxury of choice? No. So would you create insurance for them? Insurance is there only for a rainy day - it was only meant to supplement your ability to pay in the event you couldn't work after your accident/surgery. It was NOT meant to be disproportionate chunk of it.
Disagree? Again, I'm using original and not revisionist definitions of these terms. Let's take a look in the past, and what do we see? That's precisely how insurance providers like the "Blues" were established. Not, if we were to follow your theory, to replace your ability to pay in an accident.
The rest of my issues with your article are nothing as substantial, but gentle nitpicks. The honorable mention of these goes to your distortion of statistical data, including how much the U.S. spends against Britain and other government-mandated systems. The US has more people than both Canada and Britain combined so I don't know what you would expect. I hope your using percentages of real GDP in your equation, and if so, I'd love to see them. Furthermore, perhaps it would behoove you to research how Canada is moving away from a singlepayer system. Thanks. Best of luck to your re-evaluations.
Having experienced a two-tier system of health care in Canada for many years, I would, for now, opt for that as the best choice. Several years ago, "private" health care providers were legal in Canada, NOW they are not. With ONLY government healthcare, I agree that, overall, people are less satisfied in Canada with the quality and performance of the government provided (taxpayer paid) healthcare. Under the former system, if your employer opted- or you had sufficient income, you could in Canada opt for having private health care coverage. Private health care was of course, of higher quality across the board. But, keeping a Federal healthcare system in place made sure that the remaining majority would be covered. This, as imperfect as it is, seemed to me, during those years, as satisfying most of the people most of the time.
Another factor relating to the costs of American health care is that Americans bear most of the cost of the enormous research and development for medicine and medical technology. There is no nation, or even group of nations, which come close to the amount of medical patents and medicines developed in America. This is "hundreds" of billions of dollars in research and development that is then paid back via the heart pills you pay $100 a pop for, or-... $20 per viagra !! and the 25 million dollar gamma ray imaging machine. Other countries get a free ride from Americans by buying our most successful medicines- for example- at huge discounts (pharmaceutical companies sell the same medicines for much lower prices to other countries who use national health care in order to keep and dominate market share). So, Americans are "subsidizing" medicine costs for MOST of the world, as our medicines are the most effective and utilized- from Russia, Serbia, to here in China.
Posted By: Walt Thiessen
Date: 2009-10-14 07:23:45
The connection between government and health care cost is not entirely clear? Well, it's at least 99.9% clear. Any government regulation of any kind will always drive costs up. How can it affect costs otherwise? Political spin by the Obamas of the world to the contrary, there is no form of government regulation that drives prices down or keeps them the same. Claiming that there's no clear connection between the two is just plain blind denial.
I'm not going to get into the overall premise of your commentary. I will note that your argument seems only to apply to major health care services. Your comparison with cosmetic surgery, which you state benefits from the free market, can apply to vast array of medical services. We don't go to the doctor when we have the flu or a broken finger or poison ivy specifcally because we require the expertise of an M.D. to diagnose and treat these ailments. We go because only doctors are allowed to treat them, prescribe medications, bill insurance providers, etc. This is directly because of the government. Your statement - "The patient is frequently in a position where, if he doesn't acquire the healthcare provider's services, he will die or be subjected to severe physical pain." - is flatly false. Government, in collusion with the AMA, conspires to cap enrollment in medical schools, limiting the supply of doctors, while the few doctors that remain spend much of their time treating ailments that often do not require the expertise of an M.D. The correlation between government intrusion into health care (and pharmaceuticals) and high prices of health care is painfully evident.
Nothing is free. First of all, you have to recognize this in order to have any meaningful argument. You say, "if you can catch a fish, kill a wild animal, or find some edible plants you can eat for free." Obviously you have never hunted, fished., or foraged. Your TIME is as valuable as your dollar. Indeed, it is only your time that creates your wealth, i.e., money.
Second, health care is not a right. Neither is food, clothing, nor shelter. If a thing has value for an individual, whether it be an apartment, or groceries, or health care, the individual must prepare to earn it. That means save your nickels. Is it expensive? Indeed it is. Health care costs are VERY HIGH, and higher than they need to be because of government interference as others have commented.
Without an acknowledgement of these facts, Andy's argument is wrong.
Posted By: Andy Wilcoxson
Date: 2009-10-14 11:55:04
Walt, you can't compare the healthcare system we have today to the one we had in the 1950s. Just because healthcare cost less before the government got involved it does not prove that the government is the primary cause of the higher prices we see today. In the 1950s life expectancy for women was 71.1 and 65.6 for men -- we live an average of ten years longer today than we did then. I doubt that you're giving the government credit for those ten extra years.
Government plays a role, but that role isn't as clear as you and others here are making it out to be. People who would have been dead 50 or 60 years ago are alive to demand healthcare today. There is a greater demand for healthcare now than there was in the 1950s, and that puts upward pressure on prices. Second, there are treatments available today that did not exist in the 1950s. If you needed heart surgery in the 1950s you didn't get an operation you got a funeral. Treatments that people are paying thousands of dollars for today did not exist in the 1950s so of course those people paid less for healthcare because none was available to them.
If government involvement in and of itself were the determining factor in increased medical costs, then you would see higher costs in countries that have a greater degree of government involvement in their healthcare systems than we do, but we don't see that -- we see exactly the opposite.
For example, lets compare the United States to Sweden, which has a government-controlled universal "socialist" healthcare system. In Sweden they spend $3,323 per capita on healthcare. In the United States we spend $7,290. Healthcare expenditures account for 9.1% of Sweden's GDP. In the United States healthcare spending accounts for 16% of our GDP. In Sweden 81.7% of all healthcare costs are borne by the Government, in the United States the government pays for 45.6%. In Sweden the government spends 13.6% of its revenue on healthcare. In the United States our government spends 18.5% of its revenue on healthcare. In Sweden there are 10.8 nurses for every 1,000 people. In the United States there are 10.6 nurses for every 1,000 people. In Sweden they've got 3.6 physicians for every 1,000 people. In the United States we've got 2.4 physicians for every 1,000 people. The infant mortality rate is 2.5 in Sweden and 6.7 in the United States, and the Swedes have a live expectancy of 81 years, compared to 78.1 in the United States. In addition, the Swedes don't have the same problems with waiting lists that they have in Canada or the UK.
The Swedes have a better healthcare system than we do, and it costs them less than half of what ours costs us in spite of the fact that government is much more involved in healthcare in Sweden than it is in the United States. If Government involvement, in and of itself, was the reason we have high healthcare costs, then Sweden should be paying more than we are because they have more government involvement and control in their healthcare system.
Posted By: Andy Wilcoxson
Date: 2009-10-14 12:31:07
Maria, I'm not arguing that healthcare is a right or that it can be provided for free. I am arguing that medical care in this country has become an extortion racket and that the government has a responsibility to protect people from extortion. That's it.
"The Swedes have a better healthcare system than we do, and it costs them less than half of what ours costs us in spite of the fact that government is much more involved in healthcare in Sweden than it is in the United States."
Sweden has the same problem as all other government healthcare system, rationing....People in Sweden have wait list for surgeries, despite the promise of the Social Democrats that noone would wait more than 3 months for Surgery, most of the time they do. The Prime Minister, a Social Democrat, Gorann Persson, found that out when he had to wait 8 monthes for a hip replacement. 50% of all surgeries take place after 3 months from diagnosis despite the promises.
Of course, if your heart is about to explode, you get more favorable attention in Sweden, usually 55 day wait. 2 studies recently done on people waiting for heart surgery both showed around 77 people died in btw the interval. Finally, a study in the Swedish medical journal Lakartidningen found that reducing waiting times reduced the heart surgery mortality rate from seven percent to just under three percent.
Hip and knee replacement, however excruciated they may be before operation, usually wait significantly longer. Take a pain pill.
Posted By: Andy Wilcoxson
Date: 2009-10-14 15:38:56
Randy, In Sweden, private healthcare can be purchased through private health insurance or directly by fee-for-service from private providers just like it is here. If you don’t like the public system in Sweden you don’t have to use it. If you want to spend a lot of money to get treatment “on demand” like we do in the United States there’s nothing stopping you from doing that in Sweden.
18 per cent of Sweden’s population is over the age of 65 – as opposed to 12 percent in the United States. The fact that the Swedes can successfully provide universal care to an older population than ours while spending less than half what we’re spending is remarkable. It can not be disputed that they’ve got a better system than we do.
The Swedes have managed to set-up a kind of managed competition, which I'd like to see implemented here. Patients face user fees for visits to the doctor (so they have an incentive not to go for frivolous reasons) and they have the option to choose private insurance and even private hospitals to get the care they need. Their healthcare system is highly decentralized with most of the control resting with local county councils.
Sweden’s system had serious problems in the 1990s, so a number of county councils, including Stockholm, it introduced competition for contracts between traditional public providers and private ones. They call it the 'Purchaser-Provider Split' and it resulted in a cost savings of 10 to 30 percent when private providers managed to underbid the existing public system for their services.
Wecome to Canada! Just wait 10 weeks forchemotherapy, 15 months for neurosurgery and if you have breast cancer just hang on there for 2 months to get your post-operation radiation treatments! But hey the socialist, I mean "libertarian" Andy Wilcoxson "knows" markets cannot work for health care because he thinks our almost 50% government controlled U.S. healthcare system is really completely market driven and not regulating prices into the stratosphere.
Government "competition"? Andy did you ever study free market economics in your life? Do you even comprehend the basics of economics? Why are you writing as a fake libertarian?
Posted By: Andy Wilcoxson
Date: 2009-10-15 00:15:10
Andrew, I don't give a damn if you think I'm a "socialist". I don't claim to be a libertarian, the Nolan Chart survey says I'm one. If you don't think I'm a libertarian then you ought to take up your grievance with the people who designed the survey. I frequently agree with the libertarian position, but it's not my religion. When empirical evidence contradicts the mainstream libertarian view I'm not going to cling to the conventional libertarian position like some kind of zelot, I'll adopt another position.
If you think the government is the only thing that can impair the beneficial functioning of the market, you're blind or choosing not to see it. Extortion can warp the market worse than the government can. If you were drowning in the ocean, I'll bet you'd give me your life savings in exchange for a $20 life preserver. That's a free market transaction which is free of any government interference, and guess what: you got screwed.
People buy healthcare under duress, they are compelled to consume it otherwise they'll suffer physical pain or death. The free market doesn't work in an environment where the buyer has no free will, and no option to walk-away from the transaction. That's what makes healthcare different than anything else.
"Our healthcare system is an extortion racket that's consuming 1/6th of our nation's economy, and it's the government's job to protect us from extortion."
this is the key message in the article and is OnDot. When your pocket is picked in a shopping mall, you don't wait for the free market to get you compensation. You report the matter to the Police (a Govt institution) to stop this meyhem. The pvt insurance model of distribution does not work. It begets a inverse free market. The "insurance" provider is the one 'negotiating' the price of the service with the service provider and has every incentive to negotiate a rate high enough that will maximize his insurance premium. In regular insurance (fire, theft, marine,...) the insurer has no control over the valuation of the lossful event, so a free market can flourish there. Health "Insurance" in America is distributorship cloaked in insurance package giving consumer the worst - a pricing of health services that is pure fiction which maximizes the premium. A usable insurance policy costs upwards of $1200 per month, and even this payment is not all. If you actually consume any health service you are slapped with Big deductible, copay and coinsurance, not to speak of lifetime maximums! The insurance premiums we are paying are really like protection money paid to the mafia for not harming us - 'pay this monthly premium so that at consumption time you will have to pay out of pocket what you can barely afford, else you'll get a "full bill" that's pure fantasy and will send you into bankrutcy.'
who else but the public force via the institution of the Government can liberate from the clutch of an extortion racket. Whether the solution implemented is real, direct free market in healthcare OR Govt hospitals, the status quo is tyranny that cannot be supported on grounds of free markets - the current state just isn't free market - unless you consider murders, extortions and similar activities as free market operations. As the author has well said freemarkets imply both buyer and seller have free will and neither is trapped between the devil (ridiculous paper pricing of medical services: Normal delivery of a baby is priced at $30,000+, cessarian @ $70K!) and the deep sea (what we pay in health insurance premiums every month + out of pocket at consumption time)
In my previous post please read:
"....The insurance premiums we are paying are really like protection money paid to the mafia for harming us less than those that are not paying for that 'protection' (discounted but still exhorbitant out of pockets when we actually go to the doctor)..."
andy, don't take these comments too personally, as libertarians tend to attack any "pragmatic" solution whether it is a good one or bad one.
what you say about health care is definately fact, we have one of the worst systems in the world. if you are rich, you will be fine, if you are very poor, your minimum needs are taken care, anything in between and you will be "taxed" not only by the government but by the monopoly industry.
it IS the government that enables the corporate and monopoly capital health system we have. everything that the professionals and the insurers do is "approved" and "allowed" and "fostered" by the State.
but that doesn't mean resisting socialism will fix the problem or that instituting more socialism will. the solution will need to be radical in either direction and I am afraid we will NOT move toward the free market. there is too much at stake for the monopoly industry and for their enabling cohorts, the State.
that leaves us a choice, a socialized solution or less care at higher prices and larger State insured profits. in other words, it is late in the game.
it may be possible to build a healthy system within the corrupt one, but the odds are against it.
"Patients face user fees for visits to the doctor (so they have an incentive not to go for frivolous reasons) and they have the option to choose private insurance and even private hospitals to get the care they need."
The user fees you speak of basically amount to what we know as copayments and usually amount to less than we are use to paying.
And actually the private hospitals once didn't exist in Sweden until the populace started complaining of the long waits which the government had instituted to cut back on rising health costs a decade or two ago. Since then the government has sent the most of the healthcare decisions down to lower level municipalities to deal with. A few of them have managed to privatise hospitals very successfully which have ran on a profit and have even been able to cut costs. But again this is all at the local government's discretion.
Overall, Sweden certainly is nothing to gloat about. Tort Reform and opening State lines to Insurance competition would do much to lower the high costs.
Posted By: Andy Wilcoxson
Date: 2009-10-15 14:38:14
Gene, I agree that our government has played a destructive role and that it deserves a great deal of blame for mess we find ourself in today. This is attributable to the wrongheaded policies that it has pursued, not to the mere fact that it was involved. Other governments have regulated healthcare in a manner that has benefited their economy and their population, while our government has done the opposite. It's not "government" that's the problem here -- it's the policies pursued by the government that are the problem.
Randy, compared to the American healthcare system Sweden has a lot to gloat about. They've had their problems and their system isn't perfect, but its a far sight better than ours is. Eventhough their system is government controlled, they are using market forces to their advantage more successfully than we are in this country, private healthcare providers have to underbid public providers as well as eachother in order to get government healthcare contracts.
people misunderstand the role of government in an area like health care.
On the one hand, the governement will use laws like patents, etc and entry barriers to insure that the health industry becomes non competitive. they will institute laws that "limit" rather than "free" competition in the insurance side of health care. these types of activities fund the "corporatist" profit side of the industry.
But they also make care very expensive. so, to keep the peace and insure that the corporate oligopoly system remains intact and thrives, they add "social" programs to keep the workers working and to put off any "movement" or revolt that might take place.
the "social" aspects of health care also subsidize other industries. for instance, medicare allows corporate industry to NOT have to compete in actually paying a wage that would allow a worker to be able to afford health care in his retirement or enough wage to afford it.
and that is exactly the reform that will come about, something that may appease the masses and continue or even increase the subsidy to the industry.
those who fear a complete "socialized" system have absolutely nothing to fear. it will be a cold day in hell when the State actually stands up to the corporate power structure. things are too good for both of them as it is. my guess is we will continue this hybrid monopolized socialized corporate system right down to the last patient.
I guarantee if this bill was passed, [link edited for length] , instead of the monstrosity floating through Congress we wouldn't even be having this debate again. This would actually bring down premiums in comparison to the current plan, which will certainly cause them to rise on account of taxes on business and insurance.
I think the fatal flaw in your arguement is the premise that people don't have a choice to purchase to health care, that they are somehow forced into emergencies that require them to purchase the health care product. And indeed, if that were the case, you would have an inelastic demand curve, and the social forces that limit supply would in fact lead to a lopsided market power that might lend creedence to the idea that intervention could restore the markets.
However, that is patently false. As any ER room staff will tell you, hospitals are *full* of patients who have *elected* to utilize the ER room precisely because their health insurance allows them to: ear aches, twisted ankles, sore muscles, oyu name it: ER rooms are full of non-ER cases because patients can receive $1500 worth of care for a $50 co-pay. With prices artificially *low* for the consumer, quantity demanded of the service increases. Unfortunately, for the poor hospital, insurers pay "customary and usual charges" as reimbursement, when in fact the hospital incurs exhorbinant costs to handle the increase in demand.
Once inside the hospital, whether for emergency or non-emrgency care, there are a variety of treatments and procedures available. Unfortunately, the 'customer' rarely gets to make these choices, because the threat of litigation, the requirements of government approval of procedures and medications, and other factors external to consumer choice dictate much of what goes on.
The problem with health care is that there IS NO free market, and hasn't been one for a long time. I am one of the first persons to insist they we *do* need health care reform NOW (if not yesterday), but those reforms must come in the elimination of state-granted monopolies for insurance companies (the current situation a veritable Mercantilist Economy more reminiscent of the British West India Company than anything resembling 'free markets'), the elimination of govt prohibitions on pharmaceuticals manufactured elsewhere, and the elimination of IRS reg 501 (m), that prohibits non-profit coops and community groups from forming for the purpose of creating insurance pools.
The answer is not more insurance coverage: it's more *choices* of insurance coverage, and allowing doctors and patients to make the decisions, not HMOs, not Monopoly Insurers, and not Bureaucrats.
Posted By: Andy Wilcoxson
Date: 2009-10-18 15:50:55
Thom, Some of what you're saying is true, but I think my premise is on solid ground. Medical bills are the most common cause of bankruptcy in the country -- if people could choose to do without the medical care (and thereby avoid financial ruin), don't you think they would? Who wants to lose their house and all their money just to get some medical treatment that they don't really need? You're only going to make a sacrifice like that if you have no other option.
Posted By: MIchael Kennedy
Date: 2009-11-23 14:13:17
I'm not sure where you're gleaning your data to support a theory that providers are "price gouging" patients. The bottom line is that in over 90% of cases we are paid by contract from the insurance companies based on a percentage of what Medicare will pay for a visit/procedure/surgery; this has steadily droped in the last 20 years and insurance companies have followed suit. It does not matter what we "charge" we're only paid a smaller percentage. On a patient on whom I perform a total hip arthroplasty Medicare pays routinely the surgeon less than $900.00; this includes a 90 day post-operative "global period" when the patient is seen in the office as an outpatient between 5 and 8 times in follow up--if you break that down to an hourly wage after overhead it is less than most plumbers and electricians that I know, of course we don't have a union--too busy with 4 years of pre-med, 4 years of med school, 1 year internship, 4 years of residency and trying to figure out how to pay over $150,000 in educational bills and my malpractice insurance. You want to know how to fix medicine; let old people die gracefully, tort reform and insurance reform, period.
The biggest problem we face with healthcare and education are that these terms are open ended.
Of course health care costs more than it did in the 1960's. Heath care today is NOT the same as it was in the 60's. Your options are vastly improved and the outcomes vastly superior.
What would the cost of a health insurance policy be if it ONLY provided the same level of treatment as was available in the 60s?
An apple is an apple, a gallon of gas is a gallon of gas, but 1960's healthcare does noe equal 2011 healthcare.
We should quit acting as if it should cost the same.
Posted By: eric siverson
Date: 2011-07-25 13:28:09
I liked this artical . on healthcare I was hoping for medicare for evreyone and have to agree with Andy on his idea of goverenment intervention . Andy said it right the healthcare industry resembles a extortion racket more than anything . But its nothing that free enterprize and fair competition couldn't fix . Look at thier billing aperatus . A bill might be 500.00 dollars , we will do it for a insurance company for 300.00 dollars , we will do it for medicare for 200.00 and we will do it for medicaid for $150 . The doctors usually don't want to be bothered with billing so they hire a trained medical biller , They often say they just want to stay buzy practicing medicine . The truth is they are ashamed to pass out these extortion bills . We need knowledgeable people that do not represent any medical healthcare provider help create the qualifications to be a doctor or specialist . Only requrements neccessary for providing good service . This is not happending . the requirements are being continually expanded to restict competition and eliminate free enterprize .
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