Health Care Corporatism Arrives

Consumers will pay the price if government partners with the health care industry

In the past few months, Americans have seen their government essentially seize control of one sector of the economy after another. Federal authorities now tell the automobile, banking, credit card, and insurance industries what products and services to offer, all while hiring and firing industry executives in order to implement government orders.

Health care represents the latest frontier in this drive to centrally manage the American economy. Yesterday, the country's major health care producers, including insurance companies, hospital and physician organizations, pharmaceutical companies, and health care labor unions, promised President Barack Obama they would reduce the growth rate of their future incomes by 1.5 percent over the next ten years. If those cuts actually happened, it would mean that in 2019 health care costs (both government and patient) would be $700 billion lower than current projections, reducing health care spending by $2 trillion over the next ten years.

Why would the industry agree to this preemptive surrender? Because it means the end of competition. Under the proposed agreement, the government would guarantee a certain level of profit for each health care producer. From the industry's point of view, the goal is to get a seat at the table as politicians and government technocrats "reform" health care—which means it will decide who the winners and losers will be.

There's a word for when the government directs the production of goods and services and divides the economic pie: corporatism. The Concise Oxford Dictionary of Politics succinctly defines coporatism as "a system of interest intermediation linking producer interests and the state, in which explicitly recognized interest organizations are incorporated into the policy-making process, both in terms of the negotiation of policy and of securing compliance from their members with the agreed policy."

If the coporativist bargain works out as they plan, both insurers and hospitals expect to profit from the government mandating health insurance coverage for all Americans. Insurers look forward to millions of new customers who will have to buy insurance either individually, through their employers, or through government vouchers. In addition, since the government will set rates and benefits, health insurers won't have to bother with the vexing problem of competition. Of course, state and federal mandates and regulations have already taken us a ways down this road, but corporativist "health care reform" should eliminate any lingering vestiges of consumer choice. For their part, hospitals will have plenty of newly-insured patients to fill their wards and will no longer need to offer uncompensated care to the health care indigent.

As for the pharmaceutical companies, they have experienced rapidly increasing price controls over the years. For example, the Obama administration's 2010 budget lowers what Medicare will pay for drugs from 15 percent below average price to 22 percent below average. In agreeing to the corporativist bargain, those companies hope to get a better deal and to prevent the adoption of cost-benefit tests for the approval of new drugs.

Along similar lines, Medicare and Medicaid price controls have been squeezing doctors' fees for decades. As the federal government either converts private insurance companies into minutely regulated public utilities, creates a rival government health care payment system, or simply adopts a national single-payer (government entitlement) system, doctors rightfully worry that their fees will drop even further as government bureaucrats attempt to slash costs. But with a seat at the health care negotiating table, doctors hope to make the best out of a very bad situation. Interestingly, health care labor unions will probably emerge as the biggest winners in this corporatist arrangement, because they'll be able to extract higher than market wages from politicians dependent on union votes.

In his remarks welcoming the "historic" concessions by the health care industry, President Barack Obama noted that health care "costs are out of control." The goal of corporatist health care reform is to cut those costs. It's a noble aim. The only problem is that the one surefire way to cut costs is completely off the bargaining table: competition. Producers certainly won't reduce costs unless competitors force them to do so. And why would they? Reducing costs means reducing incomes.

Indeed, costs in our current health care system rise faster than the rate of inflation precisely because there is so little competition. The third party payment system, where employers or government agencies pay for insurance, gives consumers few incentives to shop around and bid down prices. On top of that, the federal and state governments have piled so many mandates on insurers that consumers are offered little more than one-size-fits-all policies with similar rates.

It's no secret the current health care system is rife with inefficiencies. But without effective competition, there will be no effective way to discover them and root them out. Competition incentivizes consumers and competitors to eliminate inefficiencies. The notion that wise government regulators can wring them out is beyond laughable.

Consider the recent announcement that a line-by-line review of the federal budget by the Obama administration found just $17 billion in savings from $3.6 trillion budget. That's far less than one half of 1 percent of the total budget. And the constituencies who benefit from that $17 billion are now mobilizing to oppose even those absurdly modest cuts. Just like producers who have no competition, federal agencies have no incentive to improve or to cut their budgets. History shows that the government agencies cut health care "costs" chiefly by imposing price controls on the private sector.

Corporatism represents an ugly deal between governments and producers. The hospitals, doctors, pharmaceutical companies, and health care labor unions hope that the corporativist bargain will guarantee future profits while eliminating competition. Perhaps it will, perhaps it won't. But there's absolutely no question that corporativist health care will increase inefficiencies, stifle innovation, and reduce consumer choice. That's a disastrous deal for the rest of us.

Ronald Bailey is Reason magazine's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

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  • Heterosexist Every Body||

    How could someone openly question this?

  • JP||

    Kingly conclaves, stern and cold,

    Where blood with gold is bought and sold.

    Source

  • Clifford el gran coño peludo||

    Barack Obama, the Quintessential Liberal Fascist
    By Kyle-Anne Shiver

    Ronald Reagan had formed a coalition among the middle-class that threatened to bring greater prosperity without left-wing Statists calling the shots. Rathke put out the call to the ACORN troops to stop antagonizing those who would be allies, especially unions and church organizations, once shunned by ACORN as too placid for the real fight for power. For the next 25 years, the community organization network built, proliferated and formed a solid, nation-wide base of political strength, purely according to Alinsky's original vision, and all just waiting for the right candidate to tap into it and lead it.

    When folks from all corners of America proclaimed, seemingly with one voice, Barack is the "One we've been waiting for," they were speaking out of the vast Alinsky-originated network.

    Neither did Barack Obama invent the political "ideology of change," nor design its carefully crafted propaganda. While media folks talked of the tingles up their legs and the brilliant rhetoric of Barack Obama, they were heralding the speaker only, not the creator of the movement and its slogans. That would have been Saul Alinsky, the man who took fascism and cunningly made it appear to casual observers every bit as American as apple pie.

    Barack Obama is merely the movement's closer, the quintessential liberal fascist with a teleprompter.

    More at:

    http://www.americanthinker.com/2009/05/barack_obama_the_quintessentia_1.html

  • Chad||

    I love watching libertarians squirm. Health care in the US is an absolute cluster@#$@#, yet you cling to your right-wing fantasies.

    Let's be straightfoward.

    WE WILL NEVER HAVE A PRIVATE HEALTH CARE SYSTEM.

    Never, ever ever ever ever ever. There is no use worrying about it or arguing about it. It is absolutely irrelevant if it would work or not, because it will never happen.

    Instead, we will have:

    1: A single-payer system

    2: A hybrid public-private corporatist nightmare

    The better choice is obvious.

  • ||

    I remember when HMOs were supposed to make healtcare affordable.

    I also remember when ordering every test in the book would reduce diagnostic errors and lower malpractice costs.

    But before that I remember doctors being criticized for ordering too many tests and possible colluding with, if not outright owning, the labs.

    Yep, if I wanted someone to solve the healthcare "crisis" the government's the first place I'd look.

  • Heterosexist Every Body||

    Why is Obama monkeying* around with health care?

    *Thanks Nick!

  • JP||

    Well, on the bright side, maybe people will finally learn the differences between "corporatism," "corporate welfare," and "corporate apologetics."

  • sfb||

    The better choice is obvious.

    Ooh! ooh! ooh!. Number 2 right?

  • kinnath||

    By the way Chad, we have had many, many liberals explain to us the Universal Health Care does not equal Single Payer System. Were those people lying to us?

  • ||

    On Monday, lobbying organizations representing doctors, hospitals, health care labor unions, and pharmaceutical and medical device companies promised President Barack Obama to cut health care costs over the next 10 years.

    No fucking way. This is pure pandering, by corporate lobbyists who have seen that Obama has no compunctions whatsoever about bloodying his nightstick on the scalps of businesses who don't toe his line.

    I've read the proposals, and they are the same pie in the sky crap that has been kicked around in the industry for years and hasn't cut costs.

    To add to the humor, the current administration is doing everything it can to unionize health care. Never in the history of the universe has a union come into a business and cut its cost base. Unionizing health care will drive costs, and drive them enormously.

    What this is, is a ploy to allow Obama to take the projected savings off the cost of his socialized medicine plan. Then, when the costs don't materialize, well, its too late, the plan is in place, and the only thing to do is have the taxpayers bend over. Again.

  • ||

    Yep, if I wanted someone to solve the healthcare "crisis" the government's the first place I'd look.

    Were all you guys beaten with a stick that had the word "government" etched on it as young children? It's always the same unjustified Pavlovian reaction. Government isn't subject to the magical forces of the market but is instead run by experts with specific goals so therefore it can't do anything well! Without profit there can be no motivation to be efficient or productive!

    Worship the market if you must, but accepting sweeping stereotypes about government on faith is not a means to an informed opinion.

  • JP||

    This is pure pandering, by corporate lobbyists who have seen that Obama has no compunctions whatsoever about bloodying his nightstick on the scalps of businesses who don't toe his line.

    Now that's what I call interesting writing. (Seriously.)

  • kinnath||

    Were all you guys beaten with a stick that had the word "government" etched on it as young children? It's always the same unjustified Pavlovian reaction.

    Tony, refer to the ealier posting where the govenmnet (via the federal reserve) has put trillions of dollars into loans that they have no fukcking clue where they are.

    Anyone that is sentinent and has been around alive for more than a decade knows the federal government excels at only one thing -- dropping lots of ordinance in far off places.

  • Heterosexist Every Body||

    JP,

    What was so good about blowing tow the lion at the end?

  • Heterosexist Every Body||

    Seems the 3:39pm bait worked.

  • ||

    Please explain to me why increasing government's already ridiculously huge role in healthcare will make things better. More paperwork? More interference in medical opinions? Reduced incentives to people entering the field? These are good things?

  • Clifford el gran coño peludo||

    "WE WILL NEVER HAVE A PRIVATE HEALTH CARE SYSTEM."

    I do, but then I'm rich. I can go to any Doctor anywhere. Get any test I want. Being rich is awesome! You should try it, Chad.

  • ||

    "Worship the market if you must, but accepting sweeping stereotypes about government on faith is not a means to an informed opinion."

    Tony, can you name a single government entity that has done a better job than the same type of entity in the private sector that operates on a profit and loss system?

  • Morris||

    Isn't it possible that the recession will do you right-wing neaderthals in? I mean, your revenues must be in the toilet. Can you keep this nonsense going on donations? So many idiotic dogmas, so few brains. Just fucking die.

  • ||

    Aren't pissed off liberals cute--can I take one home with me? Pleeeeeeeease??

  • ||

    Tony

    I cited three examples of government managed interventions in the healthcare market.

    Oh, I get it. One day the right man will get it right, Right?

    Oh, and now the idea of reducing costs by getting doctors to not order as many tests is back in vogue.

    Cool, huh?

  • Clifford el gran coño peludo||

    "Isn't it possible that the recession will do you right-wing neaderthals in? I mean, your revenues must be in the toilet. Can you keep this nonsense going on donations? So many idiotic dogmas, so few brains. Just fucking die."

    Next time, do a little research before you start licking my asshole.

    http://thehill.com/leading-the-news/rnc-beats-dnc-in-march-fundraising-2009-04-20.html

  • Clifford el gran coño peludo||

    "Oh, and now the idea of reducing costs by getting doctors to not order as many tests is back in vogue.

    Cool, huh?"

    The wheels on the bus go 'round and 'round,
    'Round and round,
    'Round and 'round.

  • ||

    You know what's great? Being associated with the one political group that prefers to avoid using force on individuals to the greatest extent possible and that doesn't wish death upon those who think differently.

  • Morris||

    Clifford,

    You guys are the RNC??? And I thught you were some sort of right-wing libertarian cult.

  • Clifford el gran coño peludo||

    Deficit Since January Is 89 Percent of Entire Total From Last Year

    People talk about the deficit that Obama inherited, but it's nonsense. The accumulated deficit for the past three months amounts to 89 percent of the entire total for the last fiscal year. This includes April of this year, which is the month the government collects all those income tax checks.

    http://www.fms.treas.gov/mts/mts0409.pdf

  • ||

    What was so good about blowing tow the lion at the end?

    I was tempted. So very tempted . . . .

  • creech||

    And when the savings "promised" by these fools doesn't show up, the Obamanites will be able to further demonize "big corporate interests" as the reason his universal health care program is costing far, far more than was expected. If you are going down anyway, then stand on your hind legs and oppose this big stick president. Be carried out of your offices in your chairs (see Avery) rather than submit to this b.s.

  • Hammered Head||

    My parents are both doctors and warned me about this in the 70s. I was only a child then, but the idea to avoid medicine sank in.

    I see doctors salaries falling drastically after this passes, with the money going to the corporations and unions. In the future, expect the quality of medical school applicants to drop significantly.

    I am very thankful that I am a programmer. I can work in any industry and avoid the ones that the government is "helping"

  • Clifford el gran coño peludo||

    Given that you wrote ""Isn't it possible that the recession will do you right-wing neaderthals (sic) in?" I figured you meant the Republican Party.

    See here is the deal, us Libertarians are not right-wing. Personally, I support abortion, I support gay marriage, I support the legalization of all drugs. I believe that anyone should be able to sell anything to anyone who wants to buy it. I support legalizing prostitution. If you consider those positions to be "right-wing neaderthal (sic) (esque)", then I simply cannot help you.

  • Morris||

    Clifford, for all your "progressive" social positions, you're still a market worshiper. Like communism, an unfettered market is a never-never land of fantasies embraced by fanatics and loonies. Unlike the commie, though, you loonies couldn't organize lunch, so you're relatively harmless.

  • ||

    So now the Times is running an article with the headline, "Insolvency Is Seen Closer for Social Security and Medicare."

    Correct me if I'm wrong, but didn't this paper jump into the leftwing pile-on when Bush suggested that Social Security would be in dire financial straits and needed immediate reform?

    Granted Bush sucked and was a pussy for backing down on this issue, but all of these reversals by the current ruling group are sickening. Deficits horrifically bad then; now wonderfully good. Social Security solvent forever then; now doomed. War bad then; war okay now. Corruption bad then; corruption great now.

  • ||

    "I love watching libertarians squirm. Health care in the US is an absolute cluster@#$@#, yet you cling to your right-wing fantasies."

    It's a clusterfuck because of all the government meddling in it. So more government meddling in it should make it better. Sure!

  • Xeones||

    Clifford, you are wasting your time attempting to communicate with ol' Ed here. Trying to hammer sense into him is like trying to slap the stink off of a shit: ineffective, and it just spreads the smell around.

  • Clifford el gran coño peludo||

    "Clifford, for all your "progressive" social positions, you're still a market worshiper." [citation needed]

  • Obama||

    Let me be straightfoward.

    WE WILL NEVER HAVE A PRIVATE HEALTH CARE SYSTEM.

    Never, ever ever ever ever ever.

    Instead, you have two choices:

    1: A single-payer system

    2: A single-payer system and I smack you in the head

    The choice is yours.

  • ||

    "Like communism, an unfettered market is a never-never land of fantasies embraced by fanatics and loonies."

    Anybody who thinks the government can make better health care decisions than doctors and patients working with each other in the competitive free market is a loonie.

  • Clifford el gran coño peludo||

    "Unlike the commie, though, you loonies couldn't organize lunch, so you're relatively harmless."

    Pssst...

    Running a corporation with US$11B in annual revenues, employing 8,000 people in multiple jurisdictions is a little more complex than a catering order, son.

  • JP||

    Damn you, Clifford! Some of us (1) are at work, (2) don't understand Spanish, and (3) occasionally click on people's screen names to see if they link to a blog.

    You do the math. Now my history has a perv blot on it.

  • ||

    One of the great intellectual failures of Edward and the angry left (and right, for that matter) is not understanding how much most libertarians think the way they do for utilitarian reasons. Why are politically based decisions better for individuals, singularly or collectively, than decisions we make independently? Quite simply, ignoring the fact that government consistently places its interests ahead of the country's is stupid.

  • JP||

    One of the great intellectual failures of Edward and the angry left (and right, for that matter) is not understanding how much most libertarians think the way they do for utilitarian reasons.

    Indeed. That is the thing that first drew me to libertarianism.

  • ||

    "1: A single-payer system

    2: A hybrid public-private corporatist nightmare

    The better choice is obvious."

    Both bad choices.

  • ||

    "Unlike the commie, though, you loonies couldn't organize lunch, so you're relatively harmless."

    Unfortunately, Morris here has a point. The problem with libertarians is they have nothing to bribe constituents with. There's just no political profit in liberty. Guess it's back to our caves until Morris and his friends show up to take and destroy those too.

  • Morris\' Straw Libertarian||

    One of the great intellectual failures of Edward and the angry left (and right, for that matter) is not understanding how much most libertarians think the way they do for utilitarian reasons

    Speak for yourself. I worship the Market.

    Now if you'll excuse me, three of us are going to screw in a light bulb.

  • Paul||

    WE WILL NEVER HAVE A PRIVATE HEALTH CARE SYSTEM.

    You are absolutely correct. And we haven't had one for a very long time.

  • ||

    Yep, if I wanted someone to solve the healthcare "crisis" the government's the first place I'd look.

    Don't you worry Issac, as soon as the Obamacy gets through with "fixing" insolvency of Medicare and Social Security, they'll get right on these health cost savings.

    Insolvency for Social Security and Medicare Is Seen Closer

    The money shot:

    "The Treasury secretary, Timothy F. Geithner, said in a statement on Tuesday that the new projections underscored the need for a bipartisan approach to shoring up the two programs, through what he said would be "difficult but achievable changes."

    "That is why even as this president has focused on pulling our nation out of economic recession, he has made clear his commitment to working in a bipartisan way to address the long-term health of Medicare and Social Security" and, he added, "not simply pass on our debts.""

    Double-plus funny stuff!

  • ||

    Ah sorry ProL, didn't see your post first.

  • ||

    I see doctors salaries falling drastically after this passes, with the money going to the corporations and unions.

    Obama's going to be cutting reimbursement to hospitals and nursing homes, as well.

    "1: A single-payer system

    2: A hybrid public-private corporatist nightmare

    The better choice is obvious."


    Only to someone who has never been to the VA. Or the DMV.

  • ||

    Let me repeat:

    You can cut costs in health care. You can unionize health care. You can't do both.

  • classwarrior||

    To talk about competition in the context of providing health care is a little silly for four reasons:

    1)Treatment is often delivered under emergency circumstances, hardly the time to go shopping around.

    2) Much of medical technology enjoys monopoly patent protection, so direct competition doesn't exist.

    3)Health care professionals know way more about what they're doing than patients, so they are at a great disadvantage when evaluating alternatives. Looking for options involves extra costs and may harm the patient by delaying treatment.

    4) Health insurers make more money by refusing to cover people with chronic health problems- something that happens to most of us eventually.

    Libertarians should realize that health care is not like a market for regular consumer goods, but is in fact a classic market failure. No health care system is perfect, but every other industrialized country finds single payer prefereable.

  • Clifford el gran coño peludo||

    "Libertarians should realize that health care is not like a market for regular consumer goods, but is in fact a classic market failure. No health care system is perfect, but every other industrialized country finds single payer prefereable."

    A classic joke:

    Why did King Hussein of Jordan fly to the Mayo Clinic in Rochester, MN when he needed medical care?

    Because he could.

  • ||

    market failure is not the same as any outcome that classwarrior does not like.

  • Sean W. Malone||

    Why is it that everyone on the left seems to be unable to comprehend basic concepts of economics & positively refuses to open their eyes to history - or hell, even... the present?

    Every other industrialized country on the planet using a single-payer system is finding that not only are their systems bankrupt and the quality of medical care to be relatively crap in general... not to mention the months and months people spend waiting (and dying) in rationing lines for health care, but they also don't really produce jack-all for medical innovation!

    Watching our government strangle the US' productive capabilities is just getting painful.

  • JP||

    1)Treatment is often delivered under emergency circumstances

    But most of the time it's not.

    2) Much of medical technology enjoys monopoly patent protection

    But most of it does not.

    3)Health care professionals know way more about what they're doing than patients

    The same is true for legal and accounting professionals.

    4) Health insurers make more money by refusing to cover people with chronic health problems

    This is the only point that has any weight IMO. I don't have a problem with some sort of safety net for people with chronic illnesses that require expensive treatments.

  • Morris Day||

    Libertarians should realize that health care is not like a market for regular consumer goods, but is in fact a classic market failure. No health care system is perfect, but every other industrialized country finds single payer prefereable.

    Only a small fraction of the American people would be better served by these systems you advocate while the rest of us would be much worse off. Not only would we be worse off but so would these other nations who are dependent on what is left of the American free market for the technological advancements and manufacturing capacity of advanced medical goods that their systems cannot support given political restrictions.

    You don't have a viable alternative to the free market, and it is monstrous for you to pretend that you do, as it is monstrous for Obama to sell pie in the sky bullshit that will prove destructive as has all manipulations of the health care market that the government has already committed.

  • Clifford el gran coño peludo||

    "This is the only point that has any weight IMO. I don't have a problem with some sort of safety net for people with chronic illnesses that require expensive treatments."

    I do. Man-up and die already is my motto.

  • SIV||

    Quit your whining Ron,you voted for this stuff.

  • Chad||

    Hammered Head | May 12, 2009, 4:16pm | #

    I see doctors salaries falling drastically after this passes


    Ding ding ding ding!

    Health care, like any other business, has most of its costs locked up in payrolls. Salaries in medicine are almost always higher than other fields that require the same level of education. Honestly, there is no way to cut costs without addressing payrolls. I would expect reimbursements for specialists to get hit especially hard.

  • ||

    If profits are guaranteed, what incentive does the provider have to reduce costs? This was commonly seen in utility ratemaking, where an electric or gas utility was guaranteed a relatively low 8 or 10% profit by the state regulators. The understandable response by the utilities was to raise costs as much as possible.

  • Clifford el gran coño peludo||

    "Salaries in medicine are almost always higher than other fields that require the same level of education"

    What requires more schooling than an MD? And especially specialists who take an additional year of two on top of that?

    " I would expect reimbursements for specialists to get hit especially hard."

    And the number of specialists will see a commensurate drop. And that's good for medicine how?

  • Clifford el gran coño peludo||

    "The understandable response by the utilities was to raise costs as much as possible." [citation needed]

  • ||

    Medicine takes a ton of time in education--four years of med school, a year as an intern, and years (up to nearly a decade for some specialties) as a resident--and involves, for most specialties, lots of hard work and long hours. Why bother if you won't make great money?

  • kinnath||

    Chad, you need to work harder. You have been nothing but tiresome and boring. We expect our trolls to provide us with entertainment. Epic Fail so far.

  • Chad||

    What requires more schooling than an MD? And especially specialists who take an additional year of two on top of that?

    Scientists with Ph.Ds have a similar career timeline. Four years of med school typical 1-2 years of internship/residency for a general practitioner, and 4 years for most specialities. Ph.Ds typically take five years, and 1-2 years of post-doctoral research is now every common before getting an independant career. The Ph.Ds will graduate with less debt typically, but even the general practitioners will make up this difference within a decade. The specialists are very far ahead, often making double what senior scientists would make. This difference is enough to pay off the medical school debts, with interest, with just a few years' worth of the salary differential.

    Or go take a look at the salaries of nurse anesthetists, who have masters degrees, and note how they blow away those which PhD scientists make (www.acs.org has some good data on that).

    Or go check out what various associate degrees pay. Almost everything near the top of the list is health related, including many which soundly beat out four-year engineering degrees.

  • Chad||

    And the number of specialists will see a commensurate drop. And that's good for medicine how?

    It would alleviate the chronic shortage of general practioners that has been caused by the excessive reimbursement of specialists.

  • ||

    Well, it seems to me that they'll bail out and pursue more lucrative careers. Why not just cap salaries for everyone at, say, $150,000?

  • Sean W. Malone||

    Chad, you do realize that research scientists toiling away in a lab and MDs, especially, say, surgeons and ER doctors kind of have a different level of immediate value to society right? I mean... A job is not a job is not a job.

    I have a masters degree... yet I make much less than my brother who has only a bachelors degree. And still... I know exactly why, given the differences in our careers, and I am not complaining - much less demanding harmful government action to "correct" it.

  • Chad||

    Well, it seems to me that they'll bail out and pursue more lucrative careers.

    Except for banking, which has just taken a mighty blow, there aren't any. Of course, individuals who excel (or get lucky, or know the right people) can make a lot in almost any career path. But on average, no field pays as consistently as medicine. Additionally, medicine tends to have a great deal of stability. Not only are layoffs fairly uncommon, but if a doctor does have a need to move somewhere else, there are most certainly going to be jobs in the area to which he or she is moving. A lot of other professional careers do not have this level of flexibility.

  • Chad||

    Sean W. Malone | May 12, 2009, 7:06pm | #

    Chad, you do realize that research scientists toiling away in a lab and MDs, especially, say, surgeons and ER doctors kind of have a different level of immediate value to society right? I mean... A job is not a job is not a job.


    The key word in your statement is "immediate". The value that doctors create is generally right in front of them, and hence they are able to capture large portions of this value. This is not as true in other fields, and science may well be the worst in this matter. For example, one of the biggest successes in my career is a commercial product that has millions of dollars in sales. This product would not exist if I hadn't randomly helped someone out one day, which led to a collaboration between our university and a local company. I spent 1.5 years working half time on that project, for a total of at most $30,000 in renumeration (including benefits and tuition). Such things are common in science.

    In any case, salaries for medical practitioners is largely determined by government. It should be obvious that the government should be trying to drive costs down, and to adjust reimbursement rates to favor specialties where there are shortages and decrease them where there is strong supply. The problem is usually that interest groups will only accept the former.

  • ||

    Of course government run healthcare can control costs. It's called rationing. That's what all the other single payer systems do.

    Whether that's what we want to do, is a different question of course, lol.

    But really whether market, or government I guess that's what we are trying to do. Market people want indivduals to ration their own care, liberals want governments to decide. But either way some type of rationing is coming. Because we simply can't afford our current system, and the Chinese are getting tired of loaning us money.

  • Sean W. Malone||

    Or... perhaps government should try actually... you know, NOT controlling the market for medical practitioners...?

    Again, central planning FAILS and causes doctor shortages and the only thing people do in response is call for more central planning!

    Road to serfdom indeed... Of course Chad is fine with being a serf.

  • Your a sheep.||

    President Barrack Obama noted that health care "costs are out of control." -

    It's out of control BECAUSE we rely SO much on insurance and doctors. 85% of most health care problems DO NOT need an MD to treat much less care for.

    We have the HIGHEST cost of Medical in the WORLD. Yet we have the LOWEST health problems.


    Umm and being a fat ass does not make you "handi-cap" We have an out of the control health problem in this country. 65% of ALL American Adults are too far over weight. 50-60+ lbs over weight!

    MSG is still legal, though it has been PROVEN to increase Cardiac problems, Obesity, Diabetes, Liver failure. The list is long.

    Alcohol is sold over the counter like chap stick. And it KILLS 400,000 AMERICAN every year. Tobacco is still allowed yet it kills nearly 750,000 a year.

    The only people that will gain from this forced rape of Medical professionalism is the pharmaceutical companies ( the ones like smith Glaxo and Kline who brought Tami-Flu to you!)

    The Insurance companies. Make more and more and more money. And the government?. They gain control over ALL of your life.

    Welcome to 1984 people.

    -Medic001

  • hmm||

    If they weren't subsidized a million ways from Sunday in the first place they would be cutting cost to survive the market. But that would just be too easy.

  • ||

    Tony sez Government isn't subject to the magical forces of the market but is instead run by experts with specific goals so therefore it can't do anything well! Without profit there can be no motivation to be efficient or productive!

    So Tony, you believe this also applies to the Defense Dept, right? You wouldn't go questioning all of those dedicated experts who know so much more than you.

    And you are right, there is no motivation in govt to be efficient or productive. In fact, if you don't spend all of your budget - even if you could do the job for less money - you have failed a key performance metric in govt. I think I understand something about the leftist infatuation with govt - they never bother to learn about how it actually works. [And then accuse libertarians of living in a dream world.]

  • ||

    Chad you dick. How dare you single out PhD's in science. A PhD is a PhD, and obviously a PhD in the humanities should be rewarded just as well as a PhD in math or science. You must go for comparable worth sensitivity training you geek elitist pig.

  • Finem Respice||

    To Chad and his ilk,

    I see through all your fancy talk of egalitarianism and government fixing market failures and the "immediate" benefit to society of PhDs. I see into your soul where you are nothing more than scared. You are afraid that someday you may not be in control, that someday you could be vulnerable, and you can't handle the fear of the unknown.

    Too bad.

    Life is unknown and the pursuit of happiness entails risk. Unfortunately you have been so blinded by your own irrational fear that you can't even see you are giving up what little control any of us could ever hope to have over our chaotic and unpredictable world.

    What was it Ben Franklin said? Those who would sacrifice liberty to gain security deserve neither.

  • Chad||

    Chad you dick. How dare you single out PhD's in science. A PhD is a PhD, and obviously a PhD in the humanities should be rewarded just as well as a PhD in math or science. You must go for comparable worth sensitivity training you geek elitist pig.

    I have no serious problem with markets setting rates of pay, though there are some compelling arguments that demonstrate that research is under-rewarded and under-supplied in a free market, even with patents. The problem is that the rates of pay for doctors is highly distorted by the restriction of supply and by government reimbursement rates. The reason that supply can't increase in order to compete away the over-payments is that the medical establishment keeps supply low. Of course, that establishment consists largely of people benefiting from the status quo.

  • Sean W. Malone||

    "I have no serious problem with markets setting rates of pay, though there are some compelling arguments that demonstrate that research is under-rewarded and under-supplied in a free market, even with possibly because of patents. The problem is that the rates of pay for doctors is highly distorted by the restriction of supply and by government reimbursement rates. The reason that supply can't increase in order to compete away the over-payments is that the medical establishment keeps supply low. Of course, that establishment consists largely of people benefiting from the status quo."

    FTFY

    But hey everybody, everybody! Chad sez government involvement in pay rates & licensing (supply restrictions) cause high cost of doctors in the US! Score one for the libertarian win!

  • Chad||

    But hey everybody, everybody! Chad sez government involvement in pay rates & licensing (supply restrictions) cause high cost of doctors in the US! Score one for the libertarian win!

    libertarians isn't always wrong and governments can often use room for improvement.

    I'd love to hear your theory as to how patents result in an under-supply of R&D, however. IP is king when you are a corporate scientist, and without it, a lot of research would simply not be done with private money. However, patents do not capture anywhere near the value of all the positive externalities that come from R&D, which is why R&D is under-supplied by the market.

  • hmm||

    Are you trying to say that IP laws facilitate more research or productivity? Have you actually surfed Youtube? It's a fester cess pool of IP infringements and there seems to be a metric ton of creativity(research) going on there.

    R&D is far from under supplied. The supply is just not where you think it should be.

    Lawrence Lessig has a good TED talk on IP and creativity.

  • Sean W. Malone||

    Or read "Against Intellectual Monopoly" by Michel Boldrin.

    Or check out this short video and subsequent linkings: Michel Boldrin & David Levine


    Boldrin, by the way, is the Chair of the Economics Department at Washington University in St. Louis.


    ACTUALLY limited patents may be acceptable, but the idea that it is a boon for creativity is just not really well supported. As "hmm" points out, youtube is a lawless cornucopia of creativity and an outpouring of thought. A lot of it is crap, some of it is amazing, but just because it doesn't take the form you expect doesn't make it any less creative. But yeah, anyway, patents certainly inhibit development by granting relatively long-term monopolies over designs and ideas.

    Not that people shouldn't have the right to the fruits of their intellectual labor, obviously they should - but there's a world of difference between owning and collecting royalties from a recording of a song or a book, and patenting the language or the instruments used.

  • Chad||

    But yeah, anyway, patents certainly inhibit development by granting relatively long-term monopolies over designs and ideas

    If it weren't for the patent protection we have over our IP, we would all be trying to be "creative" at home. I don't think we would invent much except some nice new chili recipes.

    There are a lot of problems with the patent system, but without it, a lot of corporate-funded research (which makes up the majority) would fail the economic evaluations that are done early on in projects and get snuffed by management. If we had to include "In third year, CompetitorX releases cloned product and takes 25% of our market, increasing to...", you can be sure our NPV would go negative in a hurry.

  • Sean W. Malone||

    You clearly didn't read or watch or listen to a word Boldrin had to say.

    I tried to entice you with his high ranking position as chair of economics at an extremely reputable university but I guess that didn't do it for you.

    Boldrin disagrees with your assessment Chad, and considering that he actually *does* study this stuff in depth and is certainly no slouch - you might consider at least listening to what he has to say, before you just dismiss it as not fitting with your preconceived world-view.

    Here's an abstract that should get you started:

    "ABSTRACT. Intellectual property (IP) protection involves a trade-off between
    the undesirability of monopoly and the desirable encouragement
    of creation and innovation. Optimal policy depends on the relative strength
    of these two forces. We give a quantitative assessment of current IP policies.
    We focus particularly on the scale of the market, showing that as it
    increases, due either to growth or to the expansion of trade, IP protection
    should be reduced."

  • ||

    Brings to mind this Onion-style parody of the Administration's government-run health care plan. Check it out:

    http://optoons.blogspot.com/2009/05/joe-bama-smooth-character-ad-campaign.html

  • ||

    Does anyone else here see a golden opportunity for Mexico to become for the US what the US currently is for Canada: A source of readily-available healthcare?

    I see Mexican law becoming open to a whole array of clinics along the border, staffed by American doctors and local support staff.

  • ||

    Steps in the New USA National Medicare Program:

    1. Doctors see pay cuts.
    2. Doctors unionize.
    3. Doctors strike, do work slowdowns, leave the country.
    4. Doctors see pay increases.

    Well, it worked in Canada and the UK.

  • Board Member||

    The article's point is dead on. As a school board member dealing with unionized teachers, we were forced by law to provide insurance that was "managed" by the union, but was really just BC/BS insurance that had the price raised by the union so they could make a profit on the pass-through. That extra 15% paid for union lobbying efforts in the state legislature to ensure that we were not able to shop around for cheaper but equivalent (or better) coverage. This is your future: Higher premiums, worse care, and further government interference into your life.

  • Dana H.||

    "Corporatism" is the wrong term. The correct term is "fascism", which is the variant of socialism in which government does not have outright ownership of the means of production, but has de facto control. ("Corporatism" is also far too bland a term. You'll get a lot more people to man the barricades against fascism than against corporatism.)

  • GG||

    Jeffersonian | May 13, 2009, 11:52am |

    More strategies here
    .

  • mark||

    I have got to stop reading The Economist. In the same issue, they seem to approve of Obama's health care plans, and at the same time praise India's health care system, which coincidentally is much more free of government intervention. Maybe I missed the point.

  • strat||

    Well at least the unionization of health care isn't a slam-dunk.

    My mom, a Registered Nurse for some 40-odd years, came to me some years back before retiring and explained that the Service Employees International Union was haranguing her colleagues to unionize.

    I have tremendous respect for people who work in service jobs, no matter how humble, but I get the impression that in an industry where the backs of the magazines were filled with relocation bonuses for open nursing positions in all manner of balmy climes, the idea of joining a union primarily advocating for janitorial/custodial staff just didn't seem to resonate with the nurses.

  • nike shox||

    is good

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