New at Reason

Julian Sanchez | June 15, 2005

Ron Bailey explains why if only we'd had socialized healthcare in feudal times, we could enjoy free computer-aided leechings today.

Comments

nmg|6.15.05 @ 1:35PM|#

I think it's inevitable. And the version of it that finally gets passed into law will be a singular piece of lunacy even when compared to the worst of Congress' lunacies.

nmg

nmg|6.15.05 @ 1:37PM|#

Let me be the first to respond to Joe's comments on this topic. Joe, you're well-meaning I'm sure but dead wrong.

nmg

|6.15.05 @ 1:58PM|#

Actually, there was some interesting points being made until...

"what if the United States had nationalized its health care system in 1960? That would be the moral equivalent of freezing (or at least drastically slowing) medical innovation at 1960 levels."

One of the more ridiculous things I have ever heard, especially when the only thing that makes it close to sane is in parenthesis.

|6.15.05 @ 2:01PM|#

What about military technology? The military is 100% nationalized, and it has seen much technological change since 1960. I don't personally approve of our use or level of military expenditures, but advances definitely have been made in this sector, so I would guess that medical advances could also be expected. I don't think that nationalized health care is a good idea, but one has to be REASONable (at least at this site) in critiquing it and be willing to concede certain points.

|6.15.05 @ 2:03PM|#

I agree with differentphil. There are many reasons to oppose nationalized health care, but an asserted end to innovation is not one of them. Slower innovation? Quit possibly. But then you have to make that nuanced critique.

|6.15.05 @ 2:03PM|#

I was hoping Ron would write a little more about how to address the matter those 40 million who are uninsured in this country without resorting to socialized medicine, but the article was focused more on dismantling the failings of nationalized systems in other countries.

I would be interested in hearing Ron's take on how to maintain our profit-driven system of innovation while making basic health care more affordable to the aforementioned 40 million.

|6.15.05 @ 2:10PM|#

how to maintain our profit-driven system of innovation while making basic health care more affordable to the aforementioned 40 million

I'm sure some intelligent de-regulation would bring down prices.

|6.15.05 @ 2:19PM|#

A big difference between military technological advances and medicinal ones, though, is that, as Ron's articles discusses, other countries don't really leach off of our military advances as much. Ok, we sell a lot of military tech to other countries, but that's part of the difference.

Like, England doesn't have price fixes on fly-by-wire technology so that the US military-industrial complex does all the work and bears most of the cost while England has a falsely low price burden to bear. But if we come up with a better MRI, England does have a price fix there due to their nationalised health care, so the US health system bears the brunt of the cost.

Is that right? Half the time, I don't even know what I'm saying...

|6.15.05 @ 2:48PM|#

I would be interested in hearing Ron's take on how to maintain our profit-driven system of innovation while making basic health care more affordable to the aforementioned 40 million.

One of the first, and most important, things to do is to decouple medical insurance from employment. This leads to far too many stupidities, and I think is probably the most important factor in high health care costs.

Another thing to do is to, as Ron Bailey has often said, make people pay for everyday medical costs. Medical insurance should be for important, out-of-the-ordinary expenses. Perhaps the present model of medical insurance made sense when treating diseases was still pretty extraordinary; when, as at present, treatment is pretty routine for most health problems, paying for the routine treatments through insurance doesn't make sense.

And make people pay for their own drugs. It's the only way that costs will come down. If the pharmacy charges your insurance provider $250 for an anti-nauseant that'd be nice to have but not necessary, you're likely to take it, since you'll never realized how much it is. If you were charged the same price directly, you'd balk at paying for it (more than likely).

Those forty million without health insurance don't have it because the system is messed up. The solution is not to mess it up even more with massive government intervention. If it's important to people to make sure that everyone has health care, then make the changes I suggested above, then start a welfare program for people too poor to handle their own costs. Don't start another Social Security boondoggle, where everyone gets massively expensive "benefits" to ensure their support for the disguised welfare program.

|6.15.05 @ 2:57PM|#

The judge in the Canadian case that declared private healthcare legal said it best:

"Access to a waiting list is not access to healthcare."

That's the 100 ton elephant nobody who favors socialized medicine wants to tackle. It sure sounds good to say that "everyone gets healthcare" under a single-payer system, but the reality is otherwise.

You can't repeal the laws of economics. Subsidize something (as we do with healthcare now, in various ways) and people consume more of it. Give it away, and people will consume until the supply runs out.

|6.15.05 @ 3:00PM|#

grylliade,

The employer paid health insurance is a result of high WW2 era taxes. Essentially:

War -> High Taxes -> Tax avoidence through alternate compensation (health insurance) -> "broken" health system

Since this wasn't good enough, FDR's heir (LBJ) pushed through Medicare, essentially a socialized health insurance system for old people.

Medicare + employer health insurance = patients who demand lots of healthcare at whatever price.

Course then the loosers in this (the .gov that sees it hard-stolen $$$ go to doctors; the insurance companies) demands that docs become accountable for prices.

So docs have to hire lawyers, accountants, and buisness managers, if they want to continue to deal in Medicare and insurance $$$.

So we get HMOs, PMOs, and similar.

|6.15.05 @ 3:01PM|#

The U.S. blatantly rations health care, just using a different mechanism from countries with nationalize plans. People without insurance get vastly less health care in the U.S. We've created a Frankenstein of a health care system that seems to offer the worst and the best of all worlds.

And I'm not buying that a government-funded health care system would be a wrench in the wheel of innovation. The government already pays for half the health care in the nation, and medical innovation in the U.S. is government-funded to an extensive degree. Private businesses may be reaping the profits from bringing new medical technologies to market, but they aren't the only ones funding the research. Much of the science behind it comes out of our excellent research universities.

|6.15.05 @ 3:04PM|#

SPD;

For the Bailey "plan" to cover the 40 million uninsured see URL: http://www.reason.com/0411/fe.rb.mandatory.shtml

I hasten to point out that my "plan" is a "second best" to thorough deregulation, but it's what's politically feasible.

Nathan|6.15.05 @ 3:25PM|#

Check out David Henderson's chapter on health care in his book The Joy of Freedom. He makes the point that health care is collectively so expensive because we individually spend so little on it. I got rear ended on the freeway, nobody was hurt, but my rear bumper needed some work. The total bill was $2000 because they replaced not only the bumper, but other parts too. Now, I know that I didn't need $2000 worth of repair work, the auto shop CERTAINLY knows it, and my insurance company knows it, but nobody cares because other people's money was spent.

|6.15.05 @ 3:35PM|#

I like Ron's mandatory health insurance, although a serious issue to address is affordability for the first $4,000 worth of health care costs for low income people. In other words, if a person earning $18,000 would be expected to pay 10% of that for catastrophic coverage, then that leaves only $16,200 for everything else including all doctors' bills, medicine, etc. With the exception of premature babies and old people, I suspect that very few poor people run up over $4,000 per year in medical expenses.
But for most middle-class people, I think that such a method would greatly reduce usage and prices.

fyodor|6.15.05 @ 3:38PM|#

The U.S. blatantly rations health care, just using a different mechanism from countries with nationalize plans. People without insurance get vastly less health care in the U.S.

Sigh. So, Serafina, is intelligence likewise "rationed" because some have more than others? Or, to keep it in the economic realm, does the U.S. "ration" yachts because only rich people have them?

Rationing implies a conscious decision being made and enforced by an authority regarding who gets what. Disparity does not demonstrate rationing; to the contrary it is the perfectly natural course of things amongst humans. Decry such disparity if you like, but please use language that at least makes sense.

|6.15.05 @ 3:51PM|#

I know that when I had my first kidney stone, I was still covered under my Dad's military health insurance, and while the Army hospital where I stayed wasn't the greatest (few things are more icky than waking up to see a cockroach crawling up your IV tube), at least I got the necessary care I needed.

Second time I had a kidney stone I was an uninsured grad student, and while the people in the hopsital didn't actually come right out and TELL me "Your life is worthless to us," it was pretty obvious. I was projectile-vomiting; they gave me pain pills. The doctor they referred me to said he would be able to give me an appointment three weeks from next Tuesday; I pointed out that by then I'd either pass the stone myself or be dead.

As it turns out, I was able to treat myself with a combination of lots of fruit juice, and a mixture of prescription and--ahem--non-prescription painkillers. For this wonderful medical care, I was charged a thousand dollars. I'd've saved alot of time and money if I'd told my friend to forget about the hospital and drive me straight to the part of town where you can find powerful narcotics for sale.

|6.15.05 @ 4:01PM|#

Don at June 15, 2005 03:00 PM

The other factor in the rise of employer provided medical insurance was wage controls. Without the ability to offer higher pay to retain or attract employees in a tight labor market employers resorted to offering fringe benefits. Medical was just one.

Actually high taxes may have been a less important factor, since for a little while nobody was really sure if premiums were tax free. I seem to recall Milton Friedman had something to say about it but can't recall where.

A wb of unintended consequences anyone?

|6.15.05 @ 4:06PM|#

Silly examples, fyodor. Intelligence isn't a puchased good and yachts are a luxury item. Health care is a basic human need. That's one justification for compelling hospitals to treat anyone who comes into their emergency rooms. We as a society consciously decide that some people can have their health care costs paid for them through the state; other people with similar incomes and situations can't. We decide that some people can get services for $20, other people have to pay $500 for the same services, even through what's ostensibly the same government program. It's arbitrary and byzantine. You're welcome to call it something other than rationing if you prefer.

|6.15.05 @ 4:22PM|#

One problem with the health care system is that it's for profit. Why are insurance companies for profit? They figure out the per member per month cost of every conceivable treatment, add in administrative costs, then add in profit margin, and that's their premium to you. Since the profit is anywhere from 5 to 10 percent of your premium (maybe more?) we could drop costs 5 to 10 percent immediately by making insurance not for profit.

Also, I've heard how great Medicare is, and how the government should run all heath care like Medicare. Medicare is so bad that only two insurers in all of New York City will take Medicare members, the other (all for profits, of course) can't make money on those folks and just dropped them in the last few years. Except Staten Island. Staten Island has a bigger reimbursement rate for procedures than the other boroughs and so it's profitable to take Medicare there.

Medicare only pays 80% of the bills, and runs out after 90 days in a skilled nursing facility, at which point either you go home, pay the 3oo+ per day yourself, or write over all your accumulated wealth to the state. Yeah, that's awesome insurance.

|6.15.05 @ 4:46PM|#

Ron,

Thank you for the link. I wish I could give you an immediate assessment of your column, but I'd like some time to weigh the pros and cons. A very informative piece nonetheless.

fyodor|6.15.05 @ 4:46PM|#

Serafina,

We as a society consciously decide that some people can have their health care costs paid for them through the state; other people with similar incomes and situations can't. We decide that some people can get services for $20, other people have to pay $500 for the same services, even through what's ostensibly the same government program. It's arbitrary and byzantine.

I'm not sure where these details are coming from exactly, but if what you're saying is that government programs are arbitrary and byzantine, I won't argue, except to point that that's virtually inevitable with government programs.

|6.15.05 @ 5:00PM|#

some humans don't need any healthcare

Clark Kent, for example...

|6.15.05 @ 5:08PM|#

A comment about the differences in government-controlled medical purchases and government-controlled defense purchases: the first is all about price control; the second doesn't care about price control. Imagine if the government had said in 1960 "We will pay only $2 million for a fighter jet, no matter what." What type of jets would we have today? (The peanut gallery will answer "Soviet MiGs keeping the lid on the American insurgents!") We'd have fighters that are a lot like the 1960 jet. The improvements would be mostly confined to innovations made in other markets for other reasons. For example, the electronics of a 2005 jet would be better than a 1960 jet, because we've had improvements to electronics technology across the board, for market-driven reasons.

For a real world example of frozen innovation, look at our space program. The shuttle is 1970s technology. Because of cost controls, there has been no advancement in our manned earth-to-orbit capability in over 30 years. Simply put, the government doesn't want to pay for it. There have been improvements in some of the shuttle's components (such as electronics). However, things like the tile system, which doesn't have any similar applications, is stuck in the past. No one else needs to protect a vehicle from extreme heat, therefore no market, therefore no better solution has been developed. Perhaps the Columbia would not have been lost if a different technology had been developed.

If medicine is cost-controlled, we can expect a similar result. Things that have application beyond medicine will continue to improve. For example, if veterinary medicine is left to the market, some drugs, surgical techniques, and diagnostic technologies will improve there and later applied to people. But many other things will be stuck in the past, simply because the only application is in human medicine, and that market has ceased to function.

Whenever price caps are in place, there is a brake on innovation. Not necessarily a complete end to innovation, but certainly a slowing. If you think that today's level of medicine is the most you'll ever need, then a price control makes some sense. But I'll bet many of us in our dying days will wish someone had invented a fix for our situation. The people who opposed the price controls will be forgiven for making that wish. The people who supported price controls will not be.

|6.15.05 @ 5:10PM|#

It's arbitrary and byzantine.

It is the result of government actions to ensure that no one lacks medical care. Things like Medicare, which result in greater demand for healthcare, and consequently higher prices, and then the resulting government price/fraud controls, and the resulting mitigation by the medical community. In a nutshell, well meaning people (LBJ?!) created laws to prevent people from falling through cracks, resulting in unintended consequences impacting us all.

|6.15.05 @ 5:11PM|#

Clark Kent, for example...

He's Kryptonian. Bruce Wayne, on the other hand, needs lots of health care.

|6.15.05 @ 5:20PM|#

Maybe it wouldn't bother you as much, if I said that the U.S. rations health care coverage. I think that it amounts to the same thing in the end, but it's a legitimate quibble. The specific examples I had in mind do involve state-sponsored health insurance, which ration coverage based on age, family status, and other factors not involving income. But both government insurance and private insurance in the U.S. are arbitrary and byzantine, and consumers have few opportunities to have true choice in their health care. The state and federal governments, insurance companies, and pharmaceutical companies have built a pretty solid wall between health care consumers and providers that makes it nearly impossible to make rational choices based on quality and cost.

If I'm uninsured and know I need surgery in the near future, it's excruciatingly difficult to comparison shop for it. If my doctor recommends a test, she can't tell me how much it costs so I can make an informed decision about whether or not it's worth it. And people with private insurance don't always have it much better. They may not know upfront whether or not a particular service is covered by their plan, and it might take someone in the doctor's office quite some digging to find out. Or they may have to get it approved in advance. Three consumers, all with no choice in their health coverage plan because they get it through their employer, may pick up the exact same prescription at the exact same pharmacy and be charged wildly different out-of-pocket rates for their drugs. That's a screwy system. Competition ends up being driven more by the health plans than by the individual consumers.

fyodor|6.15.05 @ 5:31PM|#

Serafina, your writing is sometimes arbitrary and byzantine, but I think we may agree! :-)

Jerry Aldini|6.15.05 @ 5:57PM|#

Ron, love your stuff, but your summary of the SCOC ruling is incorrect. They said that the government IS constitutionally permitted to discourage (i.e. ban) private insurance; they're just not allowed to execute their monopoly so poorly that people die waiting.

The practical implications are identical as far as I can see, but there you go.

|6.15.05 @ 7:10PM|#

By all means separate health-care coverage from jobs; even if it doesn't improve our health-care situation one bit it will at least improve the country's business outlook, and maybe reduce unemployment.

I've been at my new job for a month, and I love it, and the pay is by far the best of any postgraduate job I've held. However, it's a small, fairly new company, and they don't offer health insurance, though they're hoping to do so later.

Luckily, I was able to get domestic-partner benefits through my boyfriend's company (we had to sign a legal document saying we were in an "exclusive, committed relationship of mutual caring") but if I couldn't get insurance. . . well, I'm wondering if other potential workers had to turn down other jobs with the agency because of that. Fortunately, in this case the insurance issue didn't prevent the company from getting the best candidate (she said modestly), but who knows how many other small businesses and small-business employees have to turn down perfect matches because of that one middling but important detail?

|6.15.05 @ 7:25PM|#

What about military technology? The military is 100% nationalized, and it has seen much technological change since 1960.

But if it wasn't nationalized, by now we'd have death-rays, and tanks that fly!

Actually, defense technology may be a special case, because the end consumer is the government. In other words, progress isn't driven by you and me waving dollars and demanding to buy force-field domes to protect our homes from nuclear attack. But it is driven by politicans, waving their money (that they took from us) and demanding the means to intimidate and, if necessary, grab real estate from politicians in other countries.

|6.15.05 @ 7:30PM|#

Health care is a basic human need.

Then how did the human race survive for hundreds of thousands of years without prescription drugs, surgery, vaccinations, etc?

|6.15.05 @ 8:35PM|#

"What about military technology? The military is 100% nationalized, and it has seen much technological change since 1960"


The military is nationalized, but very little military *research* is.

There are many companies that design new weapon systems, but this is mainly engineering work - the basic research comes from the private sector.

|6.15.05 @ 8:44PM|#

Serafina,

I pretty much agree. One advantage to Medicare: we can repeal it, with sufficient political will. Putting the insurance company genie back in the bottle will be more difficult.

But if it wasn't nationalized,

It's hard to imagine private industry developing, say, the USS Nimitz, but with respect to much of the internal workings, the tech came from the private sector. How much DoD programming is done in Ada, how much in C++? Do they still use fully mil spec computers, or are the guts COTS from Sun or IBM? Even when the origional tech was DoD, the advances are often civilian. For example, in our latest Desert "dust up", the story is that many troops perfered the civi GPS units designed for hunters, hikers, and off roaders. On a more basic level, the "heavy" target bullets designed by Sierra, Hornady, and Nosler have proven superior to the military M855 and M193, not just for long range accuracy, but for terminal effect as well. Also, a lot of the features on the new USMC M16s were developed in the civilian market.

|6.15.05 @ 9:06PM|#

This seems to have gone unmentioned ... a huge chunk of that 15% of GDP goes to providing health care for a small chunk of the US population. A deregulated market for health care can't accomodate the subset of people with $1 million diseases. ... Basic preventative health care that most people need isn't really that expensive.

|6.16.05 @ 4:44AM|#

If the goal of a welfare state is to prevent extreme poverty and it's consequences and guarantee minimum incomes of some amount we should just use a simple redistribution plan (handing out checks basically).

No such scheme would be without disadvantages. However, the endless profileration of government programs to handle every possible disadvantage of poverty (welfare, medicaid, HUD, food stamps etc.) seems to me to be the worst of all possible worlds. And it is most troubling indeed in things like health care, which already suffer from unintended consequences and will only be further damaged by red tape.

But then I guess, the real goal of beuracracy is beauracracy (probably misspelled the darn word), to maintain power and to control people.

dagny|6.16.05 @ 11:49AM|#

I don't know. Maybe I'm excessively healthy or lucky, but I think we're living in a country (world, more like it) of hypochondriacs. I'm 23 years old and I think I'm the only person I know who deosn't have 10 different disorders all being treated by some doctor with some prescription meds and the whole bit.

People insist on the best health insurance from their employers because they know they can (to do otherwise guarantees reports saying "This company wants their employees to die!") and then going to the doctor's office becomes their new hobby.

|6.16.05 @ 11:52AM|#

Because medical technology wasn't as developed in the past, that doesn't mean that medical care did not exist. It just wasn't as successful.

As a society we may be ambivalent about providing the wide range of health care options to everyone, but when push comes to shove, we generally side with the proposition that people have a right to health care. People are prosecuted for not seeking needed medical care for children or vulnerable adults. People with acute emergency needs are may be treated without anyone asking if they want to be or how they intend to pay for it. Companies that deliberately disregard the health effects of their products may be held accountable. We provide medical care to people in prisons, along with other basic necessities, etc., etc.