Kevin Drum is healthcare blogging:
Ezra Klein attended a healthcare presentation this morning by Alan Enthoven ("the godfather of managed competition") where Enthoven laid out the pros and cons of a single-payer system. Here's his list of cons:
1. Locks in fee-for-service medicine. Hard to change once implemented. Medicare's coverage of preventive services has been poor.
2. We need a lot of innovation in payment and delivery services, and single-payer blocks that.
3. Too much entanglement with politics. Think of how the earmarks will work
4. Government can't set every price correctly. There are too many of them!
5. Tax burden probably too high for the US.
6. Government isn't really designed for efficient program management.
7. There's little accountability for poorly run public programs.
8. There's poor customer service.
9. Legislators don't want efficiency.
10. Medicare's low administration isn't merely efficiency, it's also undermanagement.
Anybody else see the real con at work here? By my count, 7 out of 10 of these bullets (3-4 and 6-10) are essentially the same: government is inefficient and can't administer public programs well. But saying it seven times doesn't make it so. I suppose it's possible that American government is uniquely inefficient, but what makes Enthoven believe that? Other countries manage to operate national healthcare plans of varying degrees of centralization in a more efficient way than our weird public/private/corporate hybrid, so why couldn't we?
For obvious reasons, I'm skeptical of any argument against national healthcare that boils down to "government doesn't work." That's ideology, not argument, and this list is heavily padded to make the problems with single-payer look a lot worse than they are. I don't think you'd need to do that if you were making an honest case.
Obviously, I differ, but I'm not going to start up a debate right now on government efficiency. I do want to focus on one item, number four, and make a fairly uncontroversial point: government is much better as a price taker than a price maker. Government procurement is all kinds of tedious and cluttered with red tape, but in the end there's no gigantic problem with the government pencil supply. Defense procurement, on the other hand, is pretty well agreed to be godawful-expensive for what we get, the only excuse being that we can't think of another way to buy fighter planes.
That means that government procurement alongside a free market looks a lot different from government procurement when the government is the only buyer. Yes, the health care market is extremely screwed up, but the prices in it do tell you something about demand for various services, and provide some signals about cost/benefit. You may think that viagra is a prime example of wasted pharmaceutical R&D spending (though if you do, I am willing to bet that you are either under forty, or female), but the fact that a lot of people are willing to pay a fair amount of coin for it tells you that they probably feel it is improving their lives in some significant way. Governments can estimate cost-benefit when the benefit is limited to crude mortality improvements, but they are pretty much at sea when it comes to quality-of-life. America's price signals are wildly distorted by its insurance markets--but they're almost certainly better than no signal at all.
Europe's governments operate their health care systems in the context of an existing US market that provides information about demand for new treatments (and of course I would argue, also the new treatments). They don't use that price information to set what they pay for drugs, but it does filter through to their markets--for example, more widespread use of Herceptin for breast cancer in the US is putting pressure on the British government to provide it. I think an American shift to single-payer would be more problematic than the European example for a variety of reasons related to our government structure. But one important reason is that if we did, we'd have no where left to get prices from.
I think this is one more example of the main point Hayek made in "The Use of Knowledge in Society."
I don't understand Megan's many references to single-payer health systems. Except for Kucinich, none of the Democratic or Republican candidates for President proposed a single-payer system, and very few members of Congress favor it. You have to go back to the Truman era to find a proposal for anything resembling a single-payer system. What's the point of beating a dead horse?
Stan,
RTFA
Skullberg, Megan always writes about how much she hates single-payer. It doesn't make any difference what internet post or news item she's talking about. She has single-payer on the brain. What I'm curious about is what she and other libertarians think about the health plans currently on the table. I suspect she's against them, but I'd like to see her reasons.
"Other countries manage to operate national healthcare plans of varying degrees of centralization in a more efficient way than our weird public/private/corporate hybrid, so why couldn't we? "
Name one single-payer health care system that doesn't suffer from all the problems listed there.
One.
It's actually kind of hard because so few countries have single payer systems. Most of Europe has a hybrid system (think Massachussets with price caps and less AMA control of who gets to be a doctor, hence cheaper doctors).
"You may think that viagra is a prime example of wasted pharmaceutical R&D spending (though if you do, I am willing to bet that you are either under forty, or female), but the fact that a lot of people are willing to pay a fair amount of coin for it tells you that they probably feel it is improving their lives in some significant way."
I'm not sure I can agree with you on this point. I would imagine in comparison to most products and services on offer, the price a particular person is willing to pay for medicine or services from a doctor does not tell us as much as we would hope. Compare the purchase of medicine with the purchase of a product like chocolate. When I buy some chocolate, I can make a pretty good judgement of how much I value one brand over another. Basically, one tastes much better then other piece, therefore I am willing to spend more money on it (Lindt chocolate vs. Hersheys for example). More importantly, if I don't like one particular brand, I can try another one. While there is the cost of wasting money on a product I didn't end up liking, the cost is such a relatively minor one that I don't worry about it too much. Basically, on my own I can differentiate what is the best product and make the best judgement. In this case, the price signal is probably an accurate signal of quality and people's desire to buy said product. With medical services, its MUCH harder for me to judge if a medicine is effective, or if a particular medical procedure is worth the cost. While I can do some research, I am not a trained physician. At the end of the day, I am much more at the mercy of the doctor or pharmacist in regards to whether or not I am getting good value for my money. And most importantly of all, the consequences of my decision or my doctor's decision are of course incredibly high.
To use perhaps a more salient example, take car service vs health care. This is perhaps one of the better comparisons you can make. Like health care, car service is a big enough expense to force most of us to budget for the costs, its a service that even with a decent amount of personal research is difficult to fully understand, and at the end of the day we are at the mercy of "expert" to get it right. The result of course is an enormous amount of anxiety regarding fraud. Who hasn't heard the horror stories of someone getting work done on their car that wasn't necessary. Or having the work done improperly because most of us are not knowledgable enough about car service to know otherwise. Again, we are at the mercy of the expert due to the complexity of information. But even then, there are mitigating circumstances in comparison to health care. Even if, a mechanic screws you over, you move on an just don't go back to that mechanic. Botched service is expensive, stressful and deeply problematic and yet it pales in comparison to the consequences of health care. So while we watch in anger special reports on Dateline regarding scams and sometimes wonder (perhaps rightly) if there is some action that should be taken by our government, the reality is our ire at car service still pales in comparison over our worry for health care. More importantly, the above example serves to show that perhaps the price of car repair is not as accurate a reflection of our willingness to pay as it should be; while we don't want to pay a lot of money, if a mechanic tells us we need a new radiator, most of us kind of have to trust that he is right or risk overheating an engine on the interstate.
While I have other thoughts regarding this issue, I have written enough of a rambling post already. Those of you who feel my thoughts on pricing to be off base, please let me know. I have some economics background, but I am sure many of you are more knowledgable on the subject then I am.
FWIW, Ezra misspelled Alain Enthoven's first name, and neither Drum nor Megan noticed. While this is an understandable first-time error (typo?), it leaps out to anyone who has worked in healthcare economics and policy. Isn't there some saying about how journalists are supposed to avoid these mistakes in order to be taken seriously (because it's their job)?
Also, Ted Kennedy and Wilbur Mills proposed a comprehensive federally-operated national healthcare system (in the Kennedy-Mills Bill) as late as 1974.
Besides Kennedy-Mills, John Dingell introduces a universal medical insurance proposal at the start of every congressional session, and Senator Wyden has introduced a plan and rounded up a good deal of bipartisan backing. The point of my post was that Megan ignores everything that's actually on the table, and concentrates instead on how much she hates single-payer, which has very little support by practicing politicians. She probably has some reason for this, and I wish she'd explain it.
Megan,
A quick note. No R&D money was spent on Viagra as an erectile dysfunction drug. It was developed intended to be a heart treatment (it was intended as a superior form of taking nitroglycerin for heart pain, IIRC). Only during human testing did it's side effect become clear and become the major focus of the drug.
One could argue that Viagra is more valuable than an alternate heart treatment, but it certainly isn't where 'Pharma' was spending its R&D money.
Single-payer has a whole bunch of advocates at the state level - at least here in Vermont.
Looking at Obama and Clinton's websites, they arne't advocating single-payer, they are advocating a massive increase in regulation to the existing system. They also propose that cost decreases will come from increases in efficiency and improvements in technology. Magically.
They both are proposing things like mandating reductions in the price of insurance and tracking of health care outcomes. The former may drive insurance companies out of buisness while the latter is a really difficult problem that, if done carelessly might lead to many more problems than it solves.
I'd almost rather they proposed a single-payer system than what they are proposing.
Our current hybrid system is a mess and needs to be cleaned up. Personally, I'd rather shift more to free market solutions with safety nets. Reduce the number of regulations (like the ban on catastrophic only insurance in some states) rather than increase them.
As far as our current system vs. single payer goes, if we really have developed a system worse than a government run system, that doesn't imply that we should go to a government run system... it implies that we should go to a different system that's better than both.
To echo Alan Gunn (and Megan), this also goes back to the points Mises makes over and over about the impossibility of economic calculation under socialism (see Human Action, Socialism, etc.).
Megan did, of course, say this, but it really needs to be stated more strongly and more categorically; it's not just medical services where this applies, it's everywhere. No market means no economic calculations are possible.
Of course, a single-payer healthcare system isn't the same as an (entirely) Socialist government, but the destruction of market information there has an identical effect; the central managers simply cannot have enough information to price things to meet consumer demand.
That Kevin Drum thinks that the economic necessity of the inability of such a scheme to work on that level is "ideology" reveals only that Kevin Drum isn't an economist. "Government doesn't work" in that area because it cannot possibly work, not because those saying so are ideologically blinded by icky Reaganite delusions or whatever Drum wants to believe.
With medical services, its MUCH harder for me to judge if a medicine is effective, or if a particular medical procedure is worth the cost. While I can do some research, I am not a trained physician. At the end of the day, I am much more at the mercy of the doctor or pharmacist in regards to whether or not I am getting good value for my money.
At the end of the day, you also have the option of suing the medical services provider a good six feet or so into the ground if they acted to harm you, something that will prove much more difficult with Hershey's or Honest Eddie's Autobody & Chop Shop (although an aggressive tort lawyer might want to help you with your Big Chocolate problems). And which will correspondingly limit the behavior of the medical services provider in a way that it will not limit, e.g., Eddie.
IOW, I don't disagree with all of your points, but I think you're framing them badly by portraying only the front half of those situations.
Hi Sigivald,
I'll grant you that no market means no pricing info. But I'll argue we are almost there anyway.
When you go to a doctor do you get price quotes for having an exam? Most people do not. I have never gone to a doctor who will quote his prices. It's not like having the brakes re-done on your car.
If you are uninsured, why do you wind up paying the highest rates?
If you are not part of a group, why do you wind up paying either excessive rates for insurance or getting inadequate insurance?
If you have a pre-existing condition, then you are pretty much locked into whatever medical insurance plan you currently have and you better hope it's a good one.
If you are part of an HMO then you should know their incentive is not to treat.
Have you ever looked at what a chiropractor will charge your insurance company assuming that your insurance covers chiropractic medicine? It's eye opening.
Have you never been asked to pay excessive fees over and above your insurance coverage? (It's not uncommon to see charges for 10 minutes of work translate into $1000 over insurance.)
So where's the pricing information in the current morass of the medical industry?
If you don't like single payer, what do you propose to fix this sick industry?
I bet you've got great insurance yourself and just have no interest in actually looking at what other people go through.
lxm
anony_mouse_ and the other freedom lovers posting in this thread should write the headquarters of the Massachusetts Republican party to express their condolences to the residents of the Commonwealth, forced to endure serfdom in the form of a Hillary Clinton type health plan, and to suggest repealing it as the lead plank in the party platform for the 2008 election. Copies of their message should be sent to Switzerland, the Netherlands, Germany, Singapore, Israel, and all the many other countries groaning under the yoke of universal medical insurance. Go on, guys, strike a blow for freedom.
For obvious reasons, I'm skeptical of any argument against national healthcare that boils down to "government doesn't work." That's ideology, not argument...
Actually it's neither, it's fact.
Stan wrote: anony_mouse_ and the other freedom lovers posting in this thread
Not that I have anything against freedom or what-not, but what do my positions on romantic involement with freedom have to do with the rest of your spouting? Moreover, where did you find those deep yearning expressed anywhere in this thread, since my only post was about tort liability?
Re: For obvious reasons, I'm skeptical of any argument against national healthcare that boils down to "government doesn't work." That's ideology, not argument...
Actually it's neither, it's fact.
Nothing works perfectly 100% of the time. that's life. But if government "didn't work" in the absolute sense I'd rather doubt we'd still have governments. People do tend to get rid of things that are totally dysfunctional.
Based on my experience with the Japanese NHS, the U.K., NHS, and the US health care system, I'll vote for a Japanese-style NHS thankyouverymuch.
Megan, have you actually ever experienced getting health care under any other system? Until you do, you might want to speak a little more humbly.
You may think that viagra is a prime example of wasted pharmaceutical R&D spending (though if you do, I am willing to bet that you are either under forty, or female)
In fact, under-fourty males should dislike viagra because it puts a substitute for them on the market: older dudes with money. And yes, there is some overlap in the "target market."
I would think that women of all ages would celebrate viagra. It increases the supply of potential partners, and will generally increase the average women's access to sturdy boners.
Europe's governments operate their health care systems in the context of an existing US market that provides information about demand for new treatments (and of course I would argue, also the new treatments).
This has got to be the silliest argument I have ever seen for ignoring the fact that every other advanced country (not just Europe) has a government-financed health care system that functions reasonably well.
If there must be a government program to ensure that everyone can get someone else to pay for their health care, I have a simple suggestion:
Extend Medicaid (the program that pays for health care for families with incomes and assets under certain limits) so that everyone may get into it if they choose to - by paying a percentage of their income. All collecting the money requires is another checkbox on the income tax form and one more tax table.
Or you may buy private insurance or go uninsured and just hope you don't get too sick for your savings to cover - but if you wind up having to get into the Medicaid program because you contracted an expensive ailment after choosing to go uninsured, then you owe two years of past Medicaid payments.
Stan, are you really saying that the biggest problem with Megan's blog entry is that you don't like the subject matter?
I'm sure you'd provide a great debate on the subject you wish to debate, but it's not the subject on the table. If you don't like the topic on the table, go find someone who's willing to debate your topic.
Or is there something that I don't understand.