Typically I am in favor of having a larger part of the U.S. economy be market-based rather than centrally planned (right now the ratio is about 50/50). Central planning might work for some countries, but in the U.S. it seems that we aren’t very good at it. I’m wondering if health care is a legitimate exception at this point. In my 2009 health care reform piece I argued that taxpayers should fund a fixed amount per citizen per year and let the market take care of the rest. Instead we went in the opposite direction with Obamacare where (a) the cost could not be budgeted in advance, and (b) the government told insurers what to cover and how to cover. The current proposal in Congress (“Republicare”?) seems mostly ridiculous from an Econ 101 standpoint (and barely distinguishable from Obamacare), but maybe there is a rationale to the apparent madness? (New York Times offers a chart summarizing the changes; it does restore Americans’ freedom to decline to purchase the products of this massively distorted industry and, for example, fly or drive to a foreign country when they need non-emergency procedures that are expensive here)
What if we declare that, due to 50 years of heavy government intervention, there is in fact no market for health care services in the U.S. The government works with doctors to make it practically impossible for qualified foreign doctors to sell their services here and to limit the supply of U.S.-trained doctors. The government has been showering the industry with tax dollars to the point that no private individual has enough money to be a valued customer. The government helps pharma companies print money via (a) granting patent protection, (b) restricting approvals, and (c) blocking Americans from buying drugs on the world market.
An analogous situation is food stamps (SNAP). The government distorts the food market so that prices are higher than they otherwise would be. Then they have to give taxpayer-funded handouts to nearly 50 million Americans.
Americans would wet their pants in fear if either agriculture or health care were returned to the market sector of the economy. So there is really no way to get rid of food stamps or something that is the functional equivalent of Obamacare.
Congress is supposed to vote on this today? By when could the Republicare plan actually be a done deal?
The AMA is the crux of the racket. Unless you can do something about that, not much will happen. Congress will never touch it. Doctors are reliable campaign contributors.
“Physician demand continues to grow faster than supply leading to a projected total physician shortfall of between 61,700 and 94,700 physicians by 2025. As with the 2015 projections, under every combination of scenarios modeled, an overall physician shortage is projected.”
https://www.aamc.org/download/458082/data/2016_complexities_of_supply_and_demand_projections.pdf
Pharma makes as much as they do, despite insane development costs, because they influence the doctors to push their products. Most drugs are not nearly as effective in changing actual outcomes as consumers seem to think, or are led to believe. But the same can be said of supplements, which also print money despite being ineffective, and no patents are involved and there is minimal doctor involvement.
We overproduce in all sorts of professions. We overproduce lawyers, STEM majors and PhDs, MBAs and on and on. Why not overproduce medical doctors?
The Federal government could get around the AMA’s accreditation cartel and allay the shortage of doctors almost overnight, by increasing the enrollment at the Uniformed Services University of the Health Sciences. Graduates not required to serve in the armed forces could be required to go to underserved areas for 5 years in lieu of repaying their education. That’s what Japan did after the Meiji restoration.
Yes, it makes sense for government to be responsible for health care, but not for the reason given in the post. Buried in the notes from any Econ 101 class is a list of conditions required for “free markets” to work “efficiently”. Unfortunately, many of those conditions just do not apply to health care or health insurance. Two examples are symmetry of information and no public goods.
The physician/patient relationship is marked by extreme information asymmetry. The physician has spent years/decades dealing with the intricacies of health care while a patient with a new diagnoses arrives in the relationship with zero. Even third party payers who can afford to hire experts to review medical bills cannot fully overcome this asymmetry.
Society believes that, at least under some conditions, it is morally unacceptable to deny care based on ability to pay. This effectively turns health care in to a public good. One practical effect on the U.S. health care system is that health care providers pad their bills in order to shift these costs on to their paying customers. In response, payers require complex justification for the charges they are being asked to pay. The resulting arms race is one of the reasons that the U.S. health care system has by far the highest administrative costs in the world.
The fundamental incompatibility between the realities of the health care economy and an idealized Econ 101 “free market” (for these and other reasons) are what make what make it sensible for government to be responsible for health insurance.
While Obamacare and Republicare are largely on the same branch of the health care policy tree, that does not mean that the two are “barely distinguishable” from each other. Compared to Obamacare, Republicare would produce much lower taxes for the very wealthy while providing much lower benefits for the poor and middle class. It appears that the latest version of Republicare would largely eviscerate the ban on excluding individuals with pre-existing conditions which is (was) an important element of Obamacare.
I’m not sure that free market principles really apply to health care anyway. A free market, or Perfect Competition, requires rational buyers. If you were making a rational decision, you’d never buy something that costs more than it saves or generates. A company would never buy a $1M piece of equipment if it would only save them $1,000 a year. They might if it would save them $100,000 a year. They obviously would if it would save them $1M a year. And so on.
Health care isn’t like that. When the choice is between:
1) Buy this product, and
2) Die painfully,
You’ll buy the product, even if it costs you more than the earning power you have for the rest of your life. Living beats dying. Even if it weren’t your insurance company or the government paying for it, you’d still buy it if you had the means.
The only other things that follow this sort of consumer behavior are luxury goods (things you buy just because you want them, in the absence of rational explanation), and necessities / requirements.
So, either healthcare is a luxury good, and thus should be completely unregulated and only available to the rich (not morally or politically palatable), or it’s something that’s a necessity or a requirement, and thus would be heavily government regulated and or provided by the government.
It’s the most convincing argument that I can come up with for single payer healthcare, at least up to the “basic” level, whatever we define that as. A hybrid can work here. Let “basic” healthcare be government provided, and “luxury” healthcare be completely unregulated and purchased by those who can afford it.
The real challenge is coming up with the line between what is “basic” and what is “luxury.”
Brian – The majority of doctors are not members of the AMA and do not support its political positions. I don’t know the current numbers, but the AMA represented as low as 15% of American physicians:
http://www.cmaj.ca/content/183/11/E713.full
When I was applying to medical school in the late 90’s there was supposed to be an upcoming physician oversupply. Now there is an undersupply. Part of the reason is doctors want to work less than they used to, which is heavily influenced by the much higher numbers of female doctors. A significant number of female doctors only want to work part time:
http://www.thegrindstone.com/2012/03/27/career-management/almost-half-of-all-female-doctors-work-part-time-are-they-betraying-their-profession-535/
The UK has a similar problem:
http://www.dailymail.co.uk/debate/article-2532461/Why-having-women-doctors-hurting-NHS-A-provovcative-powerful-argument-leading-surgeon.html
I’m a free market kind of guy but a proper fix in that direction is just never going to happen. We need to hurry up and get this over with and set up a public system. The government should buy Kaiser Permanente and some other HMOs, roll in the VA system, and shut down medicare and medicaid. If you go to the government hospitals and clinics and show ID you get to wait in line and get basic treatment for free, no billing or copay.
It would be an expensive mess but what we have now is a mess with the difference that it is more riddled with crooks and rackets than a directly government operated system could be. The basic care public system could produce massive downward pressure on prices in the rest of the system.
It’s similar with SNAP and EBT, which phil mentions. The government just needs to mail out boxes of government cheese and bread to those who need it, via the government run postal system. We have to stop pretending these racket riddled transfer payments and subsidies are some how better than handling functions directly with the government.
@bobbybobbob:
Mailing out bread and cheese to people who are hungry is not very efficient: rice and beans do much a better job. Because, well, we can take the cheese. 😉
Otherwise, I would agree with the idea of the federal government buying Kaiser Permanente. Or better yet:
http://www.expatica.com/de/healthcare/Your-guide-to-the-German-healthcare-system_103359.html
I would personally vouch for BKK Akzo Nobel Bayern: honest, highly-competent, hard-working people, who are impossible to coerce or to bribe. Seriously.
And while we are on the subject, may I recommend renting Singaporean government officials?
I dunno, it’s seldom that stark. If you get the treatment, will it be efficacious and if so, will you actually make a full recovery? Will you be able to lift yourself out of homeless pauperdom after getting discharged?
I might be fine with a generic morphine drip and dying peacefully, leaving all that money to my descendants rather than the medical industrial complex. Sooner or later, you have to go. Consider again the Greenspun Mexican plan.
When 5 out of 9 comments on this blog (plus our host) favor some form of single payer healthcare, you get an idea how far the political establishment and its overlords have removed themselves from public opinion.
The Donald will miss an opportunity to be remembered favorably if he does not act on this. He could appoint a blue ribbon commission to take the issue out of Congress except for an up- or down-vote.
I would totally oppose “single payer.” No to “medicaid for all.” That will massively accelerate our bankruptcy. I want an extremely basic level of care provided by government run hospitals and clinics with government employed doctors, and all the corrupted schemes like medicaid and medicare shut down.
@bobbybobbob:
I am sorry, this idea was implemented before: in the former USSR in the late 80s-early 90s. The level of state-run medical care was very basic and cheap (often nominally free), while everything beyond that was in free market.
I hope Russians on this board could cue us in on how that went. One thing is clear: corruption was rampant. And why would corruption disappear as you simply re-define the problem boundary?
What free market for doctoring was there in the USSR? Genuinely curious.
Well, what I know is mostly anecdotal: anyone who had an actual experience is welcome to correct me…
As the Soviets attempted to re-energize their economy, a limited form of private enterprise, known as a “co-op”, was blessed by the party. Medical co-ops were not initially allowed, as the party swore by the workers’ right for free healthcare, but they grew “organically” as the communist state weakened, so eventually the party gave in. A small fee for medical services in government-owned hospitals and clinics was also introduced at around that time.
The free market was totally unregulated, 100% cash-based, and dark grey (but not exactly black and not controlled by criminals).
USSR had “free” black market in medicine where presents – bribes to doctors and medical personnel were essential for good care and find your own drugs from abroad and later anything sterile for medical treatment first of rare conditions and later of most conditions was the way.