John Holbo writes a long post asking me to clarify whether I'm against national health care as a matter of principle, or against national health care as a matter of pragmatics. To some extent, this is a meaningless question. Whatever practical objections I have must be judged on some principle. There's a fairly difficult philisophical question involved in whether we should permit a system that serves some current people badly in tangible ways, merely because it will probably save the lives of other unknown people in some unspecified way in the future.
I suspect that Holbo, and many of my interlocutors, are made intensely uncomfortable by the idea that their root assumption--that they are on the side of reducing human suffering and lengthening lifespans--might be wrong. There are a bunch of ways you can deal with this disturbing possibility. You can scream at me. You can posit a highly speculative world in which government and academia suddenly, and for no apparent reason, get a lot better a inventing devices and mass-market drugs than they have so far proven. You can claim, falsely, that government and academia already do all the work producing useful drugs. You can assume that slashing pharma profits 80% will have no impact on their behavior, or at least, only change the behavior you want to change.
Or you can bite the bullet and say, we should save lives now at the expense of lives later. There's philisophic justification for that choice. But that opens up a whole can of worms about things like global warming. It helps if you phrase it aggressively: "How dare you suggest that someone should suffer now when we can treat them, so that someone who's not even born yet can live?" and don't think much about the equally inflammatory alternative formulation: "How dare you suggest that billions and billions of people suffer and die for the sake of a few uninsured Americans right now?" Geometric progressions are a bitch. So is figuring out the right discount rate for the lives of future world citizens, as William Nordhaus and Nicholas Stern can attest.
As far as I can tell what Holbo means is, am I basing this on an ideological belief that he considers illegitimate, or at least fairly trivial, like respect for property rights. I suspect that what he is looking for out of this exchange is a reason to can dismiss my objections as so much rationalization of my unreasonable priors. It would be nice if our opponents were always wrong for the wrong reasons, weren't it?
I have no doubt that I place a much, much higher value on property rights than does John Holbo. But I am not one of those libertarians who takes the sanctity and inviolability of property rights as their most important first principle. Property rights exist only in the context of society, and not only are they far more contingent and flexible than I think many libertarians acknowledge, I believe they have to be. Property rights are an evolved institution that happens to work better than the alternatives for enhancing human welfare*.
My libertarianism is somewhere between 80-90% what Holbo calls practical objections. I think government programs, and regulations, usually cause more harm than good, and always have costs to liberty and "practical" considerations like national wealth. In some cases I think those costs are justified, as when there are massive free-rider problems or negative externalities--defense, environmental protections, crime, auto insurance, and arguably in rich cultures, mandated health insurance and forced retirement savings. In some cases, I don't think there are free-rider problems, but I'm nonetheless okay with creating government programs, because I can't think of another way to do something I consider morally necessary, while accepting ahead of time that they will be wasteful, inefficient, and nowhere near as good as their creators promise: care for children and the disabled, unemployment assistance. I also believe that, whatever its drawbacks, government enforcement of transparency has far greater benefits than costs. I'm broadly willing to use a negative income tax to top off the incomes of those whose labor is not sufficiently productive to support themselves in minimally decent style. My most "principled" libertarian stands are against paternalistic tinkering with the habits of the poor on the government dime, either from left or right, and a categorical unwillingness to give much of anything to able-bodied adults who won't work.
In principle, if it did everything the creators promise, would I support universal health care and generous national pensions? No. But that's because I don't think they add a lot of value. I would support an incomes policy for seniors who can't work, and subsidies for seniors who can't afford health insurance. I might sign on to some sort of reinsurance for excessive health costs. I might sign onto a proposal I made years ago, whereby the government covers all healthcare expenses that exceed 15% of your income. I expect that this would be very expensive, but also probably worth it.
Obviously, there's a lot of principle and practical packed in there. John Holbo, I imagine, gets a great deal of value of knowing that we're all in this together, getting the same thing at the same time. Unlike left or right, libertarians don't see great value in feeling like a cell. I part company with my libertarian brethren in many ways (and I'm sure that lots of them are even now once again disclaiming my libertarianism, on the grounds that I am willing to steal from other people in order to feed the poor). But I agree with them on that. Likewise, I think that taking someone's money is a real violation of property rights that shouldn't be done unless you're achieving major good. I think keeping people alive is a major good. I don't think keeping people equal merits the case--though I also recognize that this is not a pure principle, as a society's "decent minimum" rises along with its wealth.
I'll close by returning to the practical question. If my objection is just "practical", he says, then why don't I include the good that could be done by a national health care program if it worked? Well, I have. I've acknowledged that at least some people would have to be better off under such a system (and others worse off, and I can't begin to calculate which group is larger) But as I said at the beginning, geometric progressions are a bitch. If the innovation spurred by the private sector could save 1% of the people who currently die each year, the number of people we'd be killing along with the private sector would necessarily be hugely larger than the number of people we'd save by implementing such insurance, since the most grotesquely exaggerated estimates released by interest groups pin the latter figure at around 0.8% of deaths in America (a much smaller number than the number who are estimated to be killed by access to the system--nosocomial infections and treatment side effects). That's even before you consider the people in other countries who would be saved by these advances. When I talk about the utilitarian calculus of weighing the good of current uninsured against the good to people who are currently, and in the future, untreatable without further innovation.
Now, obviously, there's a possibility that I'm wrong. But how high a probability of that would I need to change my mind?
It's got to be pretty high. There are 45 million uninsured people in Americans. But there are 300 million people who are going to die of something we can't cure. The uninsured also benefit from health care innovation--many of them will be insured by the time they need care. The number of chronically uninsured American citizens with serious health problems is not large; chronic uninsurance is concentrated among immigrants and young adults. When you factor in the anti-immigration political pressure that national health systems create, the case becomes even more murky. Those immigrants, no matter how sick, would probably not be better off back in Chiapas.
I would probably need a better than 50% chance that I'm wrong. And I sort of definitionally don't think it's that high. I'm extrapolating from government behavior that's already happened in the other countries with single payer. From our own government's behavior in other utilities. And from the progressive advocates of a health care plan, most of whom lionize international drug pricing, and spend a significant amount of time complaining that they can't use Medicare's clout to force down pharmaceutical prices. I'm frankly a little stunned that they've all suddenly started demanding to know why I'm worried that the government's going to start slapping price controls on drugs.
So let me turn it around on John Holbo, et. al. Put aside your ideological committments, and seriously consider the possibility that I might be right. What P(less innovation) would it take for you to abandon the quest for single payer? How many billions of lives would you be willing to gamble on your speculation about alternative innovation mechanisms? I submit that as a practical matter, it shouldn't take a very large possibility that you're wrong to make you at least pause a moment, and reconsider.
Imagine, arguendo, that I am right, and the US is basically providing most of the incentive for innovation. Imagine further that Nixon had succeeded in passing a national health care plan. Would more, or fewer, people be suffering and dying today?
So let me offer another hypothetical. If liberals can build an alternative to the profit model that's at least as productive, in dollars spent, as the private sector, and looks reasonably likely to scale, I'll probably cave. (I reserve the right to worry about rationing, but I find that worry less pressing.) At the very least, my worries about the issue will move it to the back burner for me. But the thing is, you have to do it first. Use prizes, non-profits, the research agency Dean Baker's proposed, or any combination of the above. You just have to do it first. Right now, it's just too much of a gamble.
* No one is allowed to talk about how much more wonderful hunter gatherer life is unless they are speaking to an anthropologist from the doorway of their thatch hut
Copyright © 2010 by The Atlantic Monthly Group. All rights reserved.
Maybe you really are against national health care as a matter of principal (as opposed to principle) if you own some Aetna bonds you're planning to hold to maturity ;).
Megan,
I think you are wrong. The more serious problem with socialized health insurance or socialized health care is not that it stifles innovation but that it does a poor job of allocating resources. Even if the U.S. were to socialize all health care. Innovators would find a place to do business. Patients might initially need to go to Thailand or Dubai for the latest stent or cancer drug, but political pressure would lead to relatively fast approval in the U.S. and elsewhere. In addition, pharmas now cave on pricing to the health regulators in the E.U., Japan, etc., because they can make money in the U.S. If the free U.S. market goes away, the innovators will finally start to tell the socialist bureaucrats, "If you don't like our price, don't buy it."
I had read somewhere that the deal in Canada was "offer your drugs at the price we pay or we'll invalidate your patents." Not exactly a voluntary transaction. Not sure that's true though.
I don't recall hearing about Canada doing that - we're generally better with property rights than that. That said, I'm sure it's happened somewhere.
Property rights? Maybe thought monopoly rights granted by government fiat.
There's plenty of arguments out there about how intellectual property is just as real as physical property, and worthy of the same level of government protection. Many would argue that patent terms being finite implies government confiscation of assets. I don't hold to that view myself, but it's a reasonable enough one that just saying "by government fiat" is not entirely convincing.
That said, I did make a mistake in my post - it was supposed to read "intellectual property rights". Didn't catch that until now, sorry.
There isn't the very large insured middle class in those places. The US market is unusual and irreplaceable, at least until China and India grow their economies and middle classes.
As for 'socialist bureaucrats' being told anything, I wouldn't hold your breath. They will simply do without. Or better put, we will do without. The Laffer curve is real, and in Canada at least, limits the tax revenues you can raise to pay for medical care. There ain't any more money to be had through government.
That is why socialized medicine won't work in the US. You folks have a $2 trillion deficit already before any reforms. I don't think the gov't will be able to raise those revenues even if they increased taxes. And they won't be able to pay for reasonable or equivalent medical services. They won't be able to raise the money.
Derek
No there is not a large uninsured middle class, but there are lots of people around the world who can afford a trip to Dubai or Bangkok to get the best health care.
So you're arguing in favour of capital and top scientists fleeing the U.S., dtohmatsu? And while the innovators might indeed take a hard line with the bureaucrats for a product that they've already created, going forward they're bound to change their behavior to reflect the lesser profit potential from the American market. They'll probably respond by doing a lot less expensive research, no?
Well, no. I don't think it would a good thing. My point really was that I didn't think socialized insurance in the U.S. would stifle innovation, and I actually don't think it would cause science and capital to flee. There is no reason you can not fund and do the research in the U.S. and then sell in Dubai or Thailand or wherever.
"I would support an incomes policy for seniors who can't work, and subsidies for seniors who can't afford health insurance. I might sign on to some sort of reinsurance for excessive health costs. I might sign onto a proposal I made years ago, whereby the government covers all healthcare expenses that exceed 15% of your income. I expect that this would be very expensive, but also probably worth it."
This is the paragraph i have been waiting for. I've been reading your health posts for a while now and to be frank, i have come away with the idea that no matter what, you will not be for some type of reform to our current health care system, no matter how difficult it is for the uninsured. I've been wanting to ask: o.k. Megan if not this, than what? At least you have offered some alternative, which is a lot better than the constant "no way no how" I've been reading. And also there is an implicit admission above that the situation is pretty bad, so you might consider some reform on some level, and a recognition of the suffering that is involved here.
But this:
"There are 45 million uninsured people in Americans. But there are 300 million people who are going to die of something we can't cure"
---
This doesn't make a whole lot of sense. Of course, we will all die, but what is your point? I'll ask you this then: why have innovation at all because we are all going to die anyway? Pain and death is unavoidable, obviously. But there is a difference between unavoidable pain and suffering that we can do something about. We may disagree about how to go about alleviating this suffering, as evidenced in your above suggestions. But this argument is not about avoiding a difficult life. I don't buy the implication that pro-government reformers don't want to accept how hard life is. That statement is a little too simplistic and broad.
"pro-government reformers" think that they can have all the mandated benefits and insurance for everyone, and that nothing else will change. Somehow ("waste and fraud will be eliminated") we'll afford it, and somehow, research will continue to get done.
If you think the market is just some kind of scam, you don't worry about it going away.
Megan: "I might sign onto a proposal I made years ago, whereby the government covers all healthcare expenses that exceed 15% of your income."
This sentence implies that she is not above spending some public money, even if it is exhoribitantly expensive for the public good. Of course, that doesn 't mean she is going to sign on for what the liberals are suggesting, quite the contrary as what we have seen through the numerous blog posts she has dedicated to the recent proposals put forth, and she has given copious reasons and arguments why. I don't agree with Megan, but even I see the distinction she is making for what she considers acceptable reform and what the governments proper role is regarding healthcare. In fact, she has just had a previous blog post regarding her scepticism of outsourcing public services.
Please do not assign a broad, steroytypical beliefs to 'liberals' who don't "all" think the market is a "scam." And which liberals are you talking about? Who are you referring to? I don't know what that means when you write they they think "nothing will change." This is a strawman argument.
I would say that some maybe, believe that whatever cost is spent now is worth it. You may disagree with that, and you may have many arguments why, which is fine. That being said, the truth is more complex and nuanced than an imaginary liberal not worrying about the market "going away."
In fact many liberals such as Ezra Klein, don't think that capitalism will just "go away" or that the "market" will vanish because of health care reform.
...and I would add, many , if not most, wouldn't want the market to 'go away' in the first place.
Look. There is a proper role that the private sector plays and a proper role that the government plays. What those roles are in our society is up for debate, obviously we disagree with the distinction between those roles.
But this doesn't mean that some liberals don't see the importance and foundation of free-market capitalism in our society, so this whole "scam" accusation is disengenuous. Unless you want to talk about, I don't know, Noam Chomsky, maybe you'd have a point. But this "liberals" stuff is just way too broad.
I didn't use the word "liberal". I used your phrase, "pro-government reformers", which I think limits it to the group who think government would be better than a market at developing, delivering and rationing health care.
And you don't have to read many comments on health care reform before you run into someone who thinks that profit-driven doctors, hospitals, pharma and insurance companies are the problem.
There are a large group of people who think that markets in health care are some kind of "scam" and would be glad to see them go.
Obama has made a few blatantly incorrect statements about how much surgeons get paid for amputations. link
This certainly doesn't mean that all people (or all liberals) believe that insurance companies or doctors are evil and wasteful, but the sentiment has, at least, come up.
Personally, I'd like to see some better measures of the human costs of a tax dollar collected compared to the benefits of a dollar spent on medicine. The stuff I've seen seems horribly inaccurate; giving the US system a low ranking based on 'equality' even though care was, on average, fairly good. Assuming that all lifespan differences between countries are due to healthcare rather than lifestyle, etc. Ignoring that some countries have lower stillbirth rates than the US because they count stillbirths differently, etc. Ignoring the fact that other nations free-ride on US innovation and assuming, therefore, that US drug price controls will have no impact on innovation.
These flurry of arguments, taken as a whole, suggest a sort of blindness to the point of error on the part of some.
Megan: Perhaps you've addressed this before, but I don't understand the PRECISE mechanism by which expansion of health care coverage destroys innovation. What is the chain of causation that leads from the current proposals on the table to no new drugs being produced or no new research into current or future life-threatening diseases? I understand Virginia Postrel's argument about New Zealand and Herceptin, but as far as I can tell no one is proposing that the US adopt that type of system. With respect to the intuition that all these other countries are free-riding upon innovation the US produces, what about the fact that many of the names one associates with big Pharma (GlaxoSmithKline, Merck, Novartis, Bayer) aren't American companies? Are you saying research/innovation doesn't happen elsewhere in the world?
All the proposed regulations seem to be striking at insurance industry profits, not pharmaceutical company profits. And even still no one (not even proponents of the public option) is suggesting that we make the insurance industry go away. As long as a private insurance market does exist, ie, as long as there is someone out there willing to pay for experimental or new treatments, innovation will happen. Now if what you are against is rationing services under Medicare, on the theory that the government is Pharma's biggest customer and that the government should always fund experimental treatments, that's another story and not very libertarian of you. Moreover, Medicare rationing has absolutely nothing to do with expanding coverage, the Administration's attempts to link the two notwithstanding. So I respectfully ask that you explain (or someone else explain) what the link is between the current drafts of the health reform bill floating around and the destruction of innovation.
I think the argument is that if you add a British NHS style review of procedures (I think it's called NICE there), you add another hurdle to a drug developer.
First, they have to come up with a product they think is effective and would sell for an acceptable price. That's ordinary product development risk. Then they have to satisfy the FDA that it's safe and effective. A lot of drugs fail at that stage, and increase the costs of development. But right now, that's the end of it. Get FDA approval and you can market the hell out of your drug and hope to pay your costs.
With a NICE-style cost-effectiveness review, there's a third hurdle. You have to convince the government that your new drug is worth the price. If they don't think so, there's almost no market.
The first two risks you can assess, and they are somewhat objective. The last risk is much more political and harder to satisfy.
So with increased, unpredictable approval risk, there's less incentive to develop anything new.
This is a good point. But isn't "comparative effectiveness" review about deciding what drugs the government will pay for through Medicare or Medicaid, not about imposing new regulatory hurdles to general research and development? I didn't think comparative effectiveness had anything to do with getting drugs to market, but rather it was about rationing what the government reimbursed.
That's true, but even in the US, if the government won't reimburse for a particular drug, that shoots a huge hole in the drug company's chances of making a profit on it. In the UK its basically a death sentence.
tmana - the larger the government's market share, the more critical its decisions are about getting drugs to market.
Actually NICE isn't political. Its an independent government agency like the FDA or the Bank of England. If there were any sign of political interference in its deliberations, there'd be a public outcry the likes of which you wouldn't believe. Such institutions are much, much more common in the UK than they are in the US. Its a huge difference in the polical system - in the US almost everything is part of the spoils system and thereby open to political influence. In the UK only those roles that are explicitly political are - everything else is done by professional public servants whose career paths are completely seperated from those of politicians. I think this is very hard for Americans to understand.
Like the FDA there's a very explicit, published standard that NICE uses to evaluate new treatments. Its just that unlike the FDA's, theirs include cost-effectiveness as well as simple effectiveness.
Don't manufacturing costs for a given drug fall with time? If so, there would be bad consequences for a world dominated by cost-effectiveness requirements.
Today, the US market could carry a pricey drug until it's cheap enough for NICE approval (and then when the patent expires the whole future benefits). If the US adopts a NICE-style system, how would such a drug make it to market? It seems like more than just another hurdle.
Plenty of government roles in the US are not explicitly political, but since the politicians write the checks...
The British institutions that are independent remain so by the will of the political class. Their parliamentary system is much better able to enforce a policy of non-interference - a vote of no confidence can bring down a PM in an afternoon, whereas a president is in place for four years no matter what.
Devilbunny - I basically agree. I also think non-interference is a useful rhetorical position for politicians when the public accepts it - they use it to get the public to accept decisions that would be suspect if they were suspected of political motives. This does happen in the US too, of course - base closures are the best example, I think. But the American public is more suspicious of claims of technocratic independence.
It has a downside though - these institutions are often very vulnerable to institutional capture. The agrictulture ministry, for example, finds it extremely hard to do anything that would go down badly with farmers. In the US, such pressures tend to be channeled through congress instead.
I'm pretty sure that the precise mechanism has been explained before, but I'm happy to explain it again.
1. Drug companies seek profits in a free market by producing drugs for the conditions that the market as a whole is most eager to treat.
2. However, they have very high costs because drug development is very hit-or-miss and there is no way to know which compounds can be successfully turned into drugs except by trying. There is (McArdle and I, at least, believe) no way to make this process more efficient; you can put more money into it and get more drugs, or less money and get less drugs, but there's no way to get more for less by "cutting the fat" here.
3. This creates high drug prices, since the cost of a drug also has to pay for its share of all the failed alternatives the drug company tested.
4. Countries with socialized medical systems do not understand, or perhaps care about, the full extent of the costs imposed by #2. They therefore seek to use their monopsony (sole-consumer) power to lower drug prices by imposing price controls.
5. To compensate for this, drug companies must either raise prices in other markets, reduce the amount of drug development they do, or some combination of the two.
6. So far, the imposition of price controls on drugs by other markets has mainly resulted in price increases in the US market, so drug companies have mostly been able to sustain their drug development operations at current levels.
7. However, if the US joins the other large health care markets in imposing price controls on drugs, drug companies will have no alternative except to reduce their drug development operations, resulting in fewer new drugs being developed in the future.
"if the US joins the other large health care markets in imposing price controls on drugs"
I think this is the part of "the mechanism" that people are unclear about. It's fine to sketch out a scenario where if the government takes certain actions this happens. The question is to what extent price controls are there -- and by what mechanism.
Megan at this point writes every post as though she's already convinced the world that if a bill passes, drug research is over. The extent of the effect is certainly still unknown.
"what about the fact that many of the names one associates with big Pharma (GlaxoSmithKline, Merck, Novartis, Bayer) aren't American companies? Are you saying research/innovation doesn't happen elsewhere in the world?"
It doesn't matter where the company headquarters are located - what counts is where and how they make their profits. If the only profits sufficient to cover development costs are from selling to the US market, then taking away those profits will affect innovation around the world.
You make a mistake that is common among the "Pharma Innovation" people.
Profit not what matters. Revenue is what matters. Profit is the money that is returned to the owners. By definition it is not invested in R&D. R&D is a cost.
Y'all are talking as if Pharma invests all their revenues in excess of operating expenses into R&D. Their incentive is to spend the *minimum* on R&D so that they might bank the rest(as shareholder compensation).
I tend to think that it is this confusion between profits, revenues, costs that leads people to view Pharma as some sort of benevolent engine of innovation. If we want more innovation, we should spend money on R&D directly; Not overpay for drugs and cushy executive benefit packages with the hope that this convoluted path will increase R&D spending.
You can claim, falsely, that government and academia already do all the work producing useful drugs. You can assume that slashing pharma profits 80% will have no impact on their behavior, or at least, only change the behavior you want to change.
Megan: where do you come up with this "80%" figure?
I think I read you write on a recent post that the US market accounts for something like 80% of pharma's global profits. But you're not suggesting that a slide to French-style national healthcare would entirely erase the profitability of the US market, are you?
I personally suspect that, given the difficulties in curve-bending likely to be encountered via the addition of 50 odd million new healthcare consumers (see Krauthammer's column today), the profitability of the US market for pharma and healthcare devices won't be reduced in absolute terms at all. (Though eventual success in curbing the growth of US healthcare spending -- should such success be attained -- would mean these profits would grow less rapidly than otherwise).
I guess what I'm saying is to my eyes it seems you're arguing in favor of the really crappy status quo (doesn't the trillion dollar public sector subsidy to healthcare -- and all that attendant deadweight loss -- offend your libertarian sensibilities by the way?) because Big Pharma profits might only be Midas-like instead of Croesus-like in 2042.
You are all very reasonable and patient with Megan, which is commendable. There's no there there, the best she can do is tell people to go Google things. Watching this series of posts is like witnessing a trainwreck in slow motion, it's as if she has no self-awareness about how shoddy and unsupported her chain of almost non-reasoning is.
I would also like to know where this 80% figure comes from. The big pharma companies which publish break-downs of turnover by region show roughly comparable turnover in the EU and the US, the difference nowhere being greater than about 25%. Does anyone actually have statistics which support this claim?
You're comparing revenue with net profit. Net profit is higher in US than in Europe, even though Europe has more people. When you take out generics, the difference is even more pronounced.
Megan, I know that revenue and turnover are not the same as profit, but I can't find and probably don't have access to the profit figures - do you? Can you show them to us? Like I keep saying, I'm very willing to be convinced, I'm just yet to see the stats backing up your argument.
Wait...are you saying that pharma revenues in the EU, with a population of just under 500 million, are 25% less than in the US, with a population of just over 300 million? That's a pretty significant difference in per-capita terms.
The important stat. is not the population but the economy size, as you can only expect people to spend out of the money that they have. The EU includes poor former-communist countries like Poland, Romania, Hungary etc., so even though the EU and the US are comparably sized economies, right now the average US citizen has an income about 50% larger than the average EU citizen.
because Big Pharma profits might only be Midas-like instead of Croesus-like in 2042.
Pharma profits are not unusual as compared to other industries.
In fact, the tech industry generally has the highest profits. Should the gov't demand they give away technology cheaper?
I suspect only the leftiest of progressives would not see the problem if Europe was demanding Intel give them chips at half of U.S. prices, thus forcing us to bear the entire R&D burden and stifling innovation.
This is the same problem we see in education: progressives believe an industry is so important only the government can be allowed to run it, with the consequence that the industry performs worse, not better.
An iPod I can take or leave. A heart transplant is something I require.
Megan,
One other thing, countries that have both socialized insurance and pharma companies tend to have pretty generous reimbursement rates for drugs. As you said resources get allocated based not on the market but based on political clout. Witness Obama's secret deal with the drug companies.
One thing I've found amazingly consistent among the non-technically-trained left is a mental blind spot against understanding any sort of argument predicated on geometric growth.
Right now, you could go to the left wing blogs and find hundreds of examples of people complaining about particular inefficiencies in our health care delivery system: pharmaceutical marketing costs, malpractice costs, costs of using emergency rooms for primary care, costs of me-too drugs, etc., etc. ad infinitum. Let's posit that all of those costs are avoidable, that they could be fixed without imposing other costs, and that they add up to 30% of our total health spending. None of those things are true, but let's posit them. So we wave a magic wand, and get rid of those costs tomorrow.
The amazing thing about geometric growth is, that doing all of this does absolutely nothing to solve the problems that those advocating health-care reform are complaining about. All it does is kick it down the road by something like 4-5 years, and then we're right back where we are now, except with no allegedly low-hanging fruit to pick. One-off savings buy us essentially nothing. The problem is health care inflation, not health care costs, and nobody seems to be able to do much about that, no matter what the system.
To be fair to lefties, I've seen righties do similar things at times. It's not something most people get instinctively.
Also, please consider adopting Foo Bar's suggestion and spelling "principle" correctly in your post.
Megan, you really are just repeating yourself and you're not improving your argument as you do it. Look: You have presented no evidence that innovation benefits from the US's higher healthcare costs. And everything I've seen, from a survey of where those costs go, to the behaviour of the pharma companies to their financial statements speaks against this belief. You seem just implausibly reluctant to go and get some hard numbers to support what you're saying, and I can only suppose that you've looked and can't find any. 80% of pharma profits come from the US? Really? Because 80% of statistics are made up on the spot.
And everything I've seen, from a survey of where those costs go
If you're referring to the percentage of income spent on research, Megan already addressed that, showing that percentage of pharmaceutical income allocated towards research was far higher than other highly innovative companies in different sectors. 15%-of-income R&D budget is a LOT for an industry. And I don't believe that this even includes the numerous startups which tend to fail, but will be bought out by larger companies if they succeed. (The consistent failure of pundits to ignore the significance of this phenomenon when calculating profit for the industry giants gives a very skewed view of how the industry operates.)
I'm curious why you believe the US's tendency to pay more for new drugs and more rapidly adopt new technology WOULDN'T act as an incentive towards development.
. . . . and I am interested to know why you think this will disappear?
The US government is going to have an almost $2 trillion deficit this year. And next.
A friend works in a local hospital. Building maintenance. He can't get $55,000 to fix a leaking roof. That is how socialized medicine works.
I honestly think that the burden of proof is your responsibility. You want to change what is working now.
Derek
First and foremost, because I wouldn't invest in a biotech startup now, even if they sounded like they had an interesting drug in the pipeline. They're far too risky, with far too little possible return. There's too much of a chance the government might steal profits. In short, the claims of enormous pharmaceutical profits misrepresent the situation.
Don't get me wrong. If our companies have to compete with European companies, perhaps we shouldn't let them be free riders. Might high US medical costs stifle development in other areas? Perhaps doctors are over-incentivized to provide new drugs rather than well-tested generics, especially for poorer patients? But yes, limiting drug costs to US consumers would have a cost in terms of international development.
But I've presented the argument. I'm curious why you disagree.
Are you saying research/innovation doesn't happen elsewhere in the world?
I don't understand why this question keeps getting asked. The answer, repeated over and over and over, is: of course not. What our gracious hostess is saying (and what a number of people have disputed, with little to no data actually introduced that I have seen) is that innovation, regardless of who does it or where they do it, is driven by the ability to make a large profit in the US.
The problem is health care inflation, not health care costs, and nobody seems to be able to do much about that, no matter what the system.
Baumol's cost disease is a real bitch. Pity there isn't a pill for it.
"What our gracious hostess is saying (and what a number of people have disputed, with little to no data actually introduced that I have seen) is that innovation, regardless of who does it or where they do it, is driven by the ability to make a large profit in the US."
If she is indeed saying that, then she is wrong.
Innovation is driven by someone having a clever idea. In the absence of new ideas, drug companies' innovations will be along the lines of bring out butterscotch flavored viagra. If anyone is able to assign a probability to the rate of creation of new ideas, I would LOVE to see that argument.
And no where is it more true that past performance is no guarantee of future gains.
Post-war U.S. was ground zero for physics innovation, as the brilliant work done in Europe in the 1920's and 1930's led to the invention of the transistor and the laser, both at Bell Labs. A Bell Labs that was a highly regulated monopoly at the time, and unable to directly profit from these inventions the way a non-regulated company could. Physics as a discipline is more mature, and the growth area looks to be biology in the next century. As a betting man I would put some chips on this - but I would not bet all I had.
If innovation, that is, the development of new ideas, were indeed incentive driven, then drug companies should be looking fro a cure for death, as I hear that up to 300 million people (could all of them be Americans?) will suffer from this affliction. That's a pretty good size market, so innovation is assured, right?
Drug companies may make different decisions as to whether it is worth transferring a basic research breakthrough through the many steps necessary to bring a product to market based upon the profits they may expect to realize, but this is not the same as "innovation" and I think a lot of the back and forth on this is based on this misconception.
Oh my, is this what happens when someone with only an MBA, from a "School" whose eponymous economic theory has been so publically repudiated, plays at being a world-beating economic pundit?
Maybe instead of Obama's, Healthcare reform will be McArdle's Waterloo? (Though probably not, since her brand of wrongheadedness does seem to rake in the pageviews.)
Don't be jealous. You probably don't even have an MBA, let alone one from one of the top schools.
@nf
Hardly, but I do know that MBAs are even more worthless than my JD from a "top" school, and anyone who has actually gone to one would know that merely graduating is nothing to crow about.
"Oh my, is this what happens when someone with only an MBA, from a "School" whose eponymous economic theory has been so publically repudiated, plays at being a world-beating economic pundit?"
Is there an argument beneath all that snark?
Yes, if anyone had any ideas on how to cure death in one fell swoop, I'm sure they'd have worked on it for a while. Sadly, it's not a problem that lends itself to chemical solutions, so they're hitting it piecewise.
Also, what use is an innovation that nobody can ever use because it can't get FDA approval? Yeah, some of them have basic-research value, but a cure for the vaporizing flu that is never legal to sell won't actually cure anyone who has it, innovative or not.
Jim Kakalios - What do you mean by 'death?' Death from what? In the same way that a car's flat tire is different than a car's broken transmission, the causes of death are varied and need to be addressed one at a time. Though as an aside, many, when you peel back the layers, boil down to the battle between pathogens and their host. Many drugs end up treating the symptoms rather than the disease. Tyroxin for Hashimotos thyroiditis, for instance, rather than a cure for the underlying immune condition which is probably induced by pathogens such as Yersinia enterococcus. If you mean a cure for senescence or programmed cell death then iPOS research (adult stem cells that can do what Embryonic stem cells can, and also share the recipient's genes to prevent rejection) from a private Japanese school look promising though I'm not sure what the patentability of these or the business model for their use would be.
I don't know the incentive structure is for all procedures or pills, but the American market does tend to fund a lot of patentable drug research (and I'll leave other practices open for debate, though I note that a lot of Europeans come to the US for cancer care.) Germany, in contrast, seems to do more with natural medicine which is not necessarily a bad thing.
Admittedly, a whole host of morbidity and mortality could be prevented by combining phage therapy with antibiotic therapy, but I don't think there's a way to patent phages or to profit from R&D done on them. So only government research (like a few trials at the NIH) seem to get done. Intralytix, a private American firm, showed promise a few years ago working on a patentable injectible phage, but seem to have failed.
Stonetools - but I believe that government spending on basic research is the main driver.
Then why is it taking so darn long to get commercial phage treatment? Why do we have so much emphasis on statin drugs to cure heart disease rather than Menaquinone (whose effectiveness was demonstrated by the Rotterdam study?) Why draw that dividing line between what gets done and what doesn't, except that one is profitable to make and promote and another is not? The NIH has funded trials in phage therapy. Why is it taking so darn long for the stuff to get to market, and especially to be used on people?
(Some people have claimed it's because the stuff wasn't invented in the US. Not sure if I believe that or not. Though the fact that the US doesn't do more to fast track drugs approved in Europe suggests there may be something to that. )
I totally believe that drug research is market driven. The fact that the American healthcare setup is so geared towards the distribution of patentable drugs and patentable treatments is something I find frustrating. I prefer evidence based naturopathic medicine and currently have to pay for it myself on the rare occasions I've needed it.
Ryan: I was making a lame joke - referring to Ms. McArdle's reference: "There are 45 million uninsured people in Americans. But there are 300 million people who are going to die of something we can't cure."
But you raise an excellent point. What if the "cure for cancer" involved something that was not patentable? Private companies, with obligations to their shareholders, are by definition not interested in such solutions.
My point, again, is that true innovation, as opposed to coming up with an alternative drug delivery system, is so random that all one can do is provide many opportunities for it to flourish, sit back, and wait.
Few innovations have had a greater impact in the 20th century than the development of the transistor. Which was not developed at a "for profit" research lab. No transistor, no integrated circuits, no computers, to reason for the internet, and Ms. McArdle would have to find honest work that might not have associated health benefits.
As Ms. McArdle has conceded, her main argument against health care reform is that it might stifle innovation, and even that part is argued incorrectly. Thus the final very thin reed is severely bent.
The problem with these arguments is that the Comments on these threads are more thoughtful and better argued than the postings that they are responding to. Which is exactly backwards, as the commenters are not being paid, while the host is.
So, I'm off. Cheers.
Ummm . . . transistors were, last time I looked, invented at Bell Labs. Which was very much "for profit". It was patented by the folks at Bell Labs: http://www.pbs.org/transistor/background1/events/patbat.html
I actually agree that there's a big hole in non-patentable therapies that we should be addressing by prizes or some other mechanism. But that doesn't negate the role of the profit-driven sector.
Megan McArdle - I think I agree with what your saying. "X prizes" for medicine would be nice, but not sufficient. To flesh out my objections a bit more; Soviet Georgia offered and improved phage therapy for decades for topical and gastrointestinal problems. There's good evidence that it's use, in combination with antibiotic therapy, can drastically reduce morbidity and mortality for a fairly wide variety of procedures. "Complications of surgery" is fairly frequently a euphemism for "antibiotic resistant bacteria that damaged or killed the patient" but because of how statistics are tracked, that seems to often not be made explicit. So the technology to combat this problem exists, to some extent, outside of the US. But it is not used or promoted within the States. There have been a few cases of people with Diabetes and MRSA infections going to the Republic of Georgia to get successful treatment and avoid amputation of their limbs. But even with this technology in a viable state, it still isn't available in the United States. I assume this is because it wouldn't make enough profit to make its way through the FDA's bureaucratic barriers. There were a few clinics being set up in Central America last time I checked ( a few years ago) that hoped to service the American market.
The reason the question keeps getting asked is that Megan has provided NO evidence
"that innovation, regardless of who does it or where they do it, is driven by the ability to make a large profit in the US."
I'm sure that she believes it, but she has provided no evidence, zip, zilch, nada. Repeating an assertion is not providing evidence.
What's driving innovation? I believe that pharma profits are a driver, but I believe that government spending on basic research is the main driver. I'm willing to be persuaded, though-but by EVIDENCE, no repetition.
Indeed, the companies which do publish regional breakdowns of turnover don't show and massive difference overall between the US and Western Europe.
Don't look at turnover--look at net revenue.
Great, do you have those statistics? Could you share them with us? Until then I'll try the nearest available proxy.
Have to reply here due to formatting constraints. sorry.
I never said that the transistor was not patented. I did say that it was developed at Bell Labs, which was a non-profit research center, set up by a highly regulated monopoly at the time of its the transistors discovery.
http://www.linfo.org/bell_labs.html
At its peak, Bell Labs generated a patent a day. But profits from these patents were NOT what drove innovation. In fact, it was a desire to remain on the public and government's good side, and avoid burdensome regulation of their monopoly, that motivated Bell Labs research freedom.
It was the very fact the Bell was NOT dependent on income from the patents that enabled it to support such long range and high risk research that led to the solid state and semiconductor revolution. I saw a plaque in a conference room at Bell in Murray Hill in the 1980's that stated: You don't invent the transistor by trying to improve the vacuum tube. Since the break up of the phone company into the Baby Bells and opening it up to the power of the private sector - the pace of innovation at Bell has dropped to zero. I exaggerate of course, (though Bell Labs in its old configuration no longer exists) and my point isn't that public = good, private = bad, but if one states that the only route to innovation is through private profit driven industrial research is to completely ignore history, and relatively recent history at that. And that the greatest innovation of the 20th century was not at a for profit institution.
Just to be clear, to avoid nitpicking. AT&T was a for profit regulated monopoly that ran Bell Labs. Bell Labs generated tens of thousands of patents but AT&T's profits did not depned on these patents.
Bell Labs did indeed patent the transistor. They never exercised that patent, in regard to preventing anyone else from producing a transistor without paying a fee.
In fact, Bell Labs ran public seminars on the physics of the transistor for other companies, teaching them their proprietary information on solid state physics, in order to ensure that the device would be used by others.
Jim, your clear-thinking is much appreciated. I believe your PhD is from the same Uni as Megan's much maligned MBA. As I remember it, the MBA's sat together at lunch and dinner to discuss their future salaries and to protect themselves from all the wierdos who didn't have any ambition, to whit future salary wasn't their only way of ranking themselves. The physicists sat together and discussed ideas across a very wide spectrum. The business school was always happy to take failed physicists because for them the math was trivial. Booth sees itself as separate from and 'superior' to the Uni because it 'makes money.'
Re: pharma innovation. The calayst for biotech innovation is public funding of primary research at Berkeley and UCSF. Maintaining a culture of innovation and company formation is tricky however. I will say this much. When Roche bought out Genentech this year, they seemed to want to own something they could not build themselves. They are treating the labs as a sort of nestle milk cow. You would think the Swiss could generate primary research with commercial potential, but like CERN there are no real commercial spin-offs. Roche boxes up the vanilla-flavored viagra. I would worry for the US if I thought that Roche would really kill the innovation, but in fact, I think that Genentech will lose every innovator down the elevator and we will have 10 new biotech startups in South San Francisco within three years.
This is a really important subject, because whatever it is in the water near Berkeley, like BELL Labs, it leads to jobs jobs jobs. Can't say the same for Penn State or U of Florida. I think it has something to do with intellectual curiosity and tolerance for living and working with people not just from your tribe. It also has to do with access to good patent attorneys. (Bill Gates's dad comes to mind here.) It is commendable that Megan has raised the question but her problem is she shills for the MBA tribe.
I see below that people just can't accept that this industry is kept going exactly as you say it is -- i.e. that if you reduced the profit (or to be more precise, cost-covering) incentive out of the drug market, money spent voluntarily in the private sector on research would research would decline. This seems so intutitive as to be crazy to deny. (What is less crazy to question is the extent to which the legislation proposed would do this.)
But what I don't think is crazy to wonder is why Americans should particularly care about that consequence, or why they should continue to accept an arrangement that is fairly described as being taken to the cleaners ("driven by the ability to make a large profit in the US," ie as opposed to the rest of the world where prices are controlled, but where patients free ride on our funding of innovation). It's a distinctly unpalatable argument to present to Americans.
First of all, all existing therapies stay on the market even if research stops entirely. We have a first-rate established regime of medical care in this country. The more we continue to direct outsize quantities of dollars to continuing that advancement at the cost of providing access to basic care to millions of citizens, the further we'll move toward a stratified medical market in which those with the ability to pay have access to an ever-expanding menu of treatments, while increasing numbers don't have access to basic care. The salience of the argument that some attempt to reign in medical cost growth will lead to the stifling of innovation is dependent on the extent to which Americans wouldn't view that as an acceptable, even desirable trade-off. It does remain a valid reason for Megan personally to oppose such a reform, but not necessarily a potent argument in terms of determining public policy.
Then additionally, as Megan herself clearly concedes (even invites), the loss of innovation in the private sector can be addressed to some significant extent by public and/or non-governmental investment in research. That Megan is open to such a solution is a telling concession; while I understand her desire to see the proposal before accepting reform, I think a fair rejoinder would be to say that the extent of the effect she asserts will take place is not yet clear, and public decisions about redress of the resulting need is better done in response to an assessment of the real shortfall in innovation produced. Which is to say, a proposal could certainly be put forward, but its exact extent and form would certainly be largely determined by need. Megan lists a number of possible approaches; she says the proposed solution needs to be decided upon before she'll go along. But certainly the final form will be determined when the need is apparent. Does she mean that she wants a structure built in to the actual legislation being contemplated now? Isn't that in violation of her commitment against government planning in the absence of accurate information?
So what is driving the large profits in the US? Is it Medicare? Or is it the private insurance industry? And again, how do the current proposed reforms reduce Pharma profits so as to destroy innovation?
The truth is, we don't really have "market discovery for drug prices" (something our gracious hostess is very concerned about) now. We have Medicare, and Medicare prices tend to set the market (as they become the prices that private insurers pay as well). So it seems to me what Megan is worried about is all the "bending of the cost curve" language--if the government rations services under Medicare, or sets lower prices such that Pharma makes less money, innovation will suffer because Pharma won't put money into innovating. Ok, fine. But this still has nothing to do with creating an "insurance exchange" or public option or whatever--in other words, with expanding coverage.
But it's disingenuous to pretend that wanting Medicare to fund all drugs at any price into perpetuity is "libertarian", especially since this will bust the budget in the long run. So if you are a libertarian the right solution is to figure out a way to reduce the role Medicare plays in the private market and in setting drug prices, right?
It really should be like the computer industry. If you want the best desktop available, you pay $3000. If you want the best desktop from two years ago (or the equivalent now), you pay $1000. And if you want the best desktop from four years ago, you pay $500.
Drugs should get cheaper and cheaper, as development costs are paid off. X-ray machines and other equipment should get cheaper and cheaper. So it should be the case that if you are on Medicare, you get the best stuff from a few years ago. If you want to top that off and get the best stuff from today, go ahead and pay extra for supplemental insurance (like MediGap policies.)
Yes, this is a two-tier system, but it doesn't put people in the second tier at much of a disadvantage.
Put another way, if we could offer 1990 standard of care at 1990 prices alongside the current system, would you feel cheated at having to use the older stuff?
Yes, and this is what happens in countries with government-run healthcare and private top-ups. It doesn't happen in the US because its legally almost impossible for insurers to not cover things because they're too expensive, even if there are perfectly acceptable nearly as good alternatives. If you doctor says its medically necessary, and its not explicitly excluded by some part of your policy, they have to cover it. This is the key problem wth healthcare in the US - its why costs are so high, which in turn is why so many people are not covered.
Now given their behaviour in other matters, I don't trust insurers for one minute to determine what's medically cost effective. The problem is then who does?
So it's the doctors who are driving costs, then? After all, they are the ones who determine whether a particular drug or service is medically necessary, and whether its cheaper nearly as good alternative is not.
tmana - That's the implication of everything I've read about what's driving costs. When doctors are salaried employees of integrated practices, costs are lower, and health outcomes better. When they're paid per-test, per-procedure or whatever, costs are higher. The New Yorker did a good article, focused on McAllan in Texas, which has some of the highest healthcare costs in the country. This makes economic sense, in terms of incentives, too, which is why I'm inclined to believe it. .
For what its worth, I believe many costs are driven by doctors prescribing unnecessary tests that insurance must pay for (and that are usually conducted in their own labs, for their own profit.) The major problem with our system is that it gives an incentive to self-interested agents (doctors) to rob the system since their patients do not see the costs directly.
I am no healthcare expert. But I can't understand why is no one proposing a HSA style system. Give all people a deposit into a health care bank account. Set a minimum deductible below which all costs are out of pocket. If you don't spend your health care money, you keep it. Once you exceed the deductible, insurance kicks in. Thus, catastrophic insurance is provided, but people are incentivized to restrain their spending, do independent research, and create a real market for healthcare services. A bonus would be mandated up-front transparancy of health care costs (I challenge anyone to find out the price of a procedure before it's conducted.)
This is a real solution to the problem of health care inflation. Government could then fill in the void for those who can't afford the deductible with vouchers to lessen or eliminate the financial impact for the elderly/poor.
Times Current - Yes, I agree. Health savings accounts would make a lot more sense since they align incentives correctly for insurers and insurees. There'd have to be sufficient coverage for those without the savings for essential care, to avoid the emergency room tooth cleanings, pregnancy tests and indigestion cases we see with the current system, but other than that its the right idea. Relying on "insurance" for whats actually predictable routine care creates too many conflicts of interest.
*sighs* McAllen's costs are so high because of the large amount of ex-pat seniors who skip back over the border to get themselves health care that is both cheap and not completely crap.
ravenshrike - Do you have any evidence for that assertion? Because it doesn't fit the data I'm aware of. You'd expect to see the same pattern in other border towns and you don't - El Paso has below-average healthcare costs.
What "large profits" are you talking about? ROI for pharma companies in the US is no higher than that of other sorts of companies.
I would reject the assertion that "we'd all be in it together" in a universal system. I think under that sort of system, rich and powerful patients like Ted Kennedy would still get their experimental brain cancer treatments. I think the big difference would be that these sorts of cutting edge treatments would be less available to middle class patients than they are now.
I think under that sort of system, rich and powerful patients like Ted Kennedy would still get their experimental brain cancer treatments. I think the big difference would be that these sorts of cutting edge treatments would be less available to middle class patients than they are now.
And you believe this why? Do you really think they are available to the middle class now? Do you know what rescission is?
Recission is very nasty, and frankly its probably illegal and fraudulent and I'm amazed no-one has tested that, but its not *that* common. Most people are covered under group policies where their pre-existing conditions are not excluded, so the carrier can't rescind. They can try to wiggle out in other ways (and do) but not that one.
My father, who was a retired social worker and not a rich man, got experimental (at the time) drugs at one of the top two cancer centers in America. So could any other middle class patient with the same Blue Cross/Blue Shield insurance. Middle class patients get cutting edge treatments all the time.
Not really, actually, at least in the UK. Once you take money out of the equation, there aren't many levers the rich and powerful can use. Candidates for truly experimental procedures are selected based on purely medical criteria, usually out of the local population living near the center that's developing them. I happen to know about this because I was involved in one such study. For stuff that's merely "cutting edge" NICE (think of the FDA but with cost-effectiveness as a criterion for approval) says whether something's available on the NHS or not. If it is, you go on the wait list, if its not, you're probably hosed, since such things don't happen in private hospitals - those are for cosmetic surgery and chronic care, but if anything really goes wrong with you in one, you find yourself right back in the NHS.
The lever a truly wealthy Brit could pull would be to come to America for treatment. There are patients from all over the world getting treated at Memorial Sloan Kettering, M.D. Anderson, the Mayo Clinic, etc.
Aye. You need really serious money though - most Americans have no clue what their care really costs. A colleage and I were recently discussing this, and he basically said "I have enough savings. I'd be okay with a $5000 deductible. That would pay for most things". $5k is one night in hospital under light observation, without any real care.
This is the point behind national health care, behind public power, behind any use of government power to regulate sectors of the economy or expand services. At a certain point it becomes morally unjustifiable to overlook present suffering in the name of potential future gains. At a certain point in time an industry, or an institution becomes to big, too integral to public life to function without proper government regulation. This was the philosophy behind the push to regulate the railroads, to create OSHA, to establish the FCC, the FPC, the FDA, or any number of other government agencies.
Unregulated industry doesn't work, a person merely has to take a trip to the Berkley Pit in Butte Montana to figure that out. Over-regulated industry doesn't work either, one merely has to read Robert Conquest in order to find out about the failures of the planned ecconomy. The point is that government regulation properly balanced with a successfuly run private industry allows for a higher standard of living for everyone. It's really simple how easy this is to understand. At a certain point in time people make the greatest gains collectively when they are allowed to work in their own self interest. However there comes a point in time when something be it gets so big that it can't get any bigger without making something else much smaller. Freedom for the snake is death for the mice. in other words unrestrained freedom without any coresponding responsibility is freedom for the powerful, the clever, or the priveleged to take advantage of the weak, the un-educated, or the poor in the name of progress.
Inherent in this sentence is a belief in progress. Qualitatively there is an underlying assumption that things will be better in the future than they are today. I would have thought that the lessons of the 20th century would have disabused most people of the idea of progress. No number of possible future advances in medicine however beneficial can ever justify the lack of basic services for people today, because there is no guaruntee that if the system is not reformed those in need will be able to recieve those hypothetical future services. The idea that reforming health care is somehow analogous to the debate over global warming is also a non-sequiter. Global climate change is a pressing present problem. The red trees outside my window dying from pine beetles speak to that if nothing else does.
In short the whole premise upon which your argument is founded, that we should tighten our belts today in hopes of a future reward, is completely flawed. There is no guaruntee that if the system is not reformed that either those future rewards will manifest themselves, or that those hypothetical future benefits will be certain to get to the people in need. Qualitatively health care reform needs to happen because the industry is sacrificing long-term health for short term gains. If prices continue to rise as they have been doing in recent years no one in this country will be able to afford health care. Government is trying to step in because the industry is about to kill the goose that lays the golden eggs.
Health insurance premiums have increased 119 percent for employers since 1999 and employee spending for health insurance coverage has increased 117 percent between 1999 and 2008. Currently there are 46 million uninsured americans, approximately 18 percent of the population under 65 nationwide. Approximately one-third of the population under age 65 spent a portion of 2007-2008 without health insurance. This is simply the human cost. It does not count the cost in terms of revenue to business both small and large. Imagine for a moment if even a portion of the money that business owners had to spend on health insurance for employees was eliminated. Do you have any idea what that would do to the ecconomy? It would seriously be the biggest government provided corporate subsidy since the building of the railroads. Bigger than the interstate highway system. If employers didn't have to worry about paying excessive amounts of money for health insurance premiums they could afford to hire new employees. Imagine that. Yet, despite the arguments for universal health care there are still some who are willing to be decieved by the arguments of people in the insurance business who care more about present profits than they do about future ecconomic growth.
The idea that reforming health care is somehow analogous to the debate over global warming is also a non-sequiter. Global climate change is a pressing present problem. The red trees outside my window dying from pine beetles speak to that if nothing else does.
How is that different? Right now there are millions of people who are predisposed to or in the early stages of cancer or Alzheimer's or other diseases, and their fate depends on whether we develop effective treatments in the future.
There is no guaruntee that if the system is not reformed that either those future rewards will manifest themselves, or that those hypothetical future benefits will be certain to get to the people in need.
Also true regarding global warming.
It does not count the cost in terms of revenue to business both small and large.
Just about everyone who's even briefly studied the issue agrees that having employers pay for health insurance is idiotic. The major questions are what it should be replaced it with, and how to transition away from it without major complications. The latter is made more difficult by opportunistic politicians who will demagogue any such attempts for short-term political gain.
I don't see the conection between global warming and megan's argument about health care, unless you mean to say that climate change is just as immediate a problem as health care.
Which seems to be the opposite of what our host is saying.
If I understood her argument corectly it was that Global warming is about curtailing our present lifestyle in order to save future lives which is exactly what her position on health care is. That some of us should go without health insurance because future generations might benefit from inovations made in technology.
The problem with that belief is that it denies the immediacy of global climate change. Millions of acres of trees are dying from pine beetles as I write this because it doesn't get cold enough for the beetles to die anymore. That's a big deal, it goes far beyond any cost to human life. Climate change isn't about making sure future generations will be ok. It's about protecting present resources from being used up by threats created by climate change. The effects of the pine beetle on western timber is an example of the immediacy of global warming. It's not something that is about future generations unfortunately it's all too real and too immediate.
In this respect immediacy Health Care reform is like global warming. Both show the limits of policy that cannot continue without government regulation. Eventually the current health care system, will crush itself under it's own weight. We can either act now as responsible adults, or we can do nothing and leave our children with the problem. Only the problem will be much worse in 10, 20, or 30 years than it will be today.
The idea that progress from worse to better is inevitable doesn't seem to work in this instance. It looks from where I sit like things will only get worse.
If I understood her argument corectly it was that Global warming is about curtailing our present lifestyle in order to save future lives which is exactly what her position on health care is. That some of us should go without health insurance because future generations might benefit from inovations made in technology.
Pretty much. Likewise, in the hugely simplified model of global warming the choice is whether to sacrifice economic growth now in order to avoid potentially huge costs in the future. (Which is complicated by the fact that lowering economic growth now also has large effects in the future, but we can ignore that for now). In both cases the benefits (of action on global warming and "inaction" on health care) are potentially large but uncertain, while the costs are immediate and visible.
And of course this isn't the whole story, since Megan and others have promoted alternate plans to address the actual problems of the uninsured, without government interference of the sort that we believe is more likely to threaten innovation. (And likewise I believe there are environmental solutions that would lessen global warming without a large economic impact. Prong 1: lots of nukes).
Millions of acres of trees are dying from pine beetles as I write this because it doesn't get cold enough for the beetles to die anymore. That's a big deal, it goes far beyond any cost to human life.
What does that mean? Hopefully not that a bunch of trees are inherently more valuable than human lives.
The connection is simple. Both are arguments asking for people to experience short-term pain - cutting carbon emissions, letting people stay uninsured - for long-term benefit - not boiling the oceans(literally, if Al Gore is to be believed), getting better treatments/drugs in future.
Oh, and as for pine beetles, how can you pin that on global warming? They're native to that area, and it's not like mild winters have never happened before. You're talking about a 2 year old outbreak, when temperatures have been flat for 10. And this is your proof for the immediacy of global warming?
Brian,
As with anything there is always the possibility that I misunderstood the point before I started typing. I would apreciate if you or anyone else would point out to me if that is so.
I understand that Pharma's location has no bearing on where their profits come from, but would you care to address Megan's assertion that Healthcare reform in the U.S. will somehow reduce the 80% of Pharma's profits that currently come from the U.S. market to ZERO?
If that is not, in fact, her assertion, then how would the prospect of reducing those profits, by even 30%, result in the end of medical innovation worldwide?
Also, for the record, this is an absurd statement:
"There are 45 million uninsured people in Americans. But there are 300 million people who are going to die of something we can't cure."
Why is that absurd? The strength of the US system is its innovation. The weakness is the inequality of care provided.
If the weakness is fixed by destroying it's strength, the consequences will be felt by the 300 million.
And if you don't believe that to be a possibility, you have no idea how good you have it.
Derek
Is absurd because it presupposes that all 300 million people are going to die from something we can't cure. There are some number of those 300 million who will die from old age, from complications from surgery, from automobile and other accidents, from crime, and from a host of other things we *can* treat (if not cure outright).
so it's absurd on its face, unless you're counting 300 million people in the future, in which case you could just say bazillions will die of things we can't cure, since it's a number that's pulled out of thin air.
Megan what makes you so sure that the current amount of pharm profits strikes exactly the correct balance of long term and short term benefits? If you're so terrified of government bargaining power cutting into pharm profits, why not advocate 100 year or longer patents, for example, so that generics can't slash the innovators' profits after a mere 15 years or so?
I'm not sure. Maybe patent terms should start rolling at approval. But blockbuster drugs are currently plenty profitable, and capital's as plentiful in that sector as in any other.
What I am sure of is that government's do a worse job of setting prices than markets--even horrid, inefficient markets like our health insurance market.
If we grant that a market is horrid and inefficient, and as a result sets a distorted price for a product, isn't it only by reference to a tautology (the market price is by definition the best price) that we can say that government('s) couldn't set a better price, or at least put a societally productive limitation on the price?
Megan, The government would not force big pharm to supply drugs at whatever price they choose. What is being advocated is not a communist dictatorship, no matter what the right wing talk show hosts say.
Gov't would simply potentially have strong negotiating power over price. Remember that the pharm companies would still have a monopoly on their products as long as their patents remained valid. In fact, the pharm companies, with a legal monopoly from their patent would continue to have more market power than any nearly monopsonistic single payer insurance plan (if such a plan eventually came about in the US).
It really should be like the computer industry. If you want the best desktop available, you pay $3000. If you want the best desktop from two years ago (or the equivalent now), you pay $1000. And if you want the best desktop from four years ago, you pay $500.
Drugs should get cheaper and cheaper, as development costs are paid off. X-ray machines and other equipment should get cheaper and cheaper. So it should be the case that if you are on Medicare, you get the best stuff from a few years ago. If you want to top that off and get the best stuff from today, go ahead and pay extra for supplemental insurance (like MediGap policies.)
This is really interesting.
Drugs and (most) medical equipment DO get cheaper as they go off patent/age. For example the original CT scanners were single detector, would take up to 20 minutes to perform a CT scan of the abdomen and could see lesions of about 1 cm and larger. You could buy one of those today for less than 100K. The oldest CT scanner we have in our hospital is 16-slice (incorporates 16 data streams to form the picture) and the cardiac CT is 64-slice which can form images with enough resolution to see millimeter size calcifications in the blood vessels of the heart and fast enough to obtain a complete image between heartbeats. These machines cost between 2-3 million dollars. But who the hell wants to use the older technology when it takes longer and sees less?
Similarly, hydrochlorothyazide (HCTZ) is a perfectly adequate blood pressure agent for many people. It costs pennies a pill BUT it makes you piss like a racehorse and often need to take potassium supplements and might not reduce risk of renal damage as much as newer more expensive drugs. If you tell a patient "Hey, there's a better drug but it's more expensive -- but don't worry, you don't have to pay for it." they'll take the newer drug. If you told them well, the newer drug costs $300/month and gives a absolute 1% drop in the incidence of kidney failure, well maybe a different story.
Here's the problem: absolutely every expert whose focus is medical economics I've read disagrees with you, and believes that increasing the number of people under medical coverage will increase profit for medical innovators and spur innovation. Every last one. Their argument is bolstered by the simple deductive logic of more customers equaling more money. I wish you would be more honest on this blog about the fact that you are a passionate and smart but ultimately very underqualified amateur when it comes to the facts of medical innovation. Yes, I'm sorry, but I simply am going to give more sway to people who do this for a living.
None of that even includes the moral dimension. You never, ever talk about the reality of the very many people who are suffering in this country for lack of health insurance. This post purports to be about considering real lives versus theoretical lives, but you don't even rise to that standard; you still, despite all my pleading and provocation, can't bring yourself to acknowledge the sad reality of the human suffering that goes on because of the status quo you prefer. A principled argument about health care reform has to begin by saying, yes, I am sentencing an awful lot of people to physical pain and far worse health in my opinion. But you haven't done that, ever, because I don't think you can. Not just on an emotional level, but on a logical one, because you are here speaking as if human suffering and health matter; and yet you apply that thinking only to the side that bolsters your personal preference.
Larger than this individual issue is what you've lost in the several years since you started here at the Atlantic. What the hell happened to the self-critical, probing thinker that used to write here? I can only imagine that the endless fleets of commenters who parrot your every post and sing hosannas to your genius have gradually worn down your self-critical process. Which is a shame, Megan. You aren't achieving anything when you are winning praise from your ideological fellow travelers. You just aren't. On this issue, you've been vague, smug, dismissive, illogical, unfair, and crude. There was a time when you'd ask yourself why.
""I would support an incomes policy for seniors who can't work, and subsidies for seniors who can't afford health insurance. I might sign on to some sort of reinsurance for excessive health costs. I might sign onto a proposal I made years ago, whereby the government covers all healthcare expenses that exceed 15% of your income. I expect that this would be very expensive, but also probably worth it."
That paragraph was as far as Megan got to acknowledging suffering in this health care system we have. Which isn't much I must admit.
This:
"you still, despite all my pleading and provocation, can't bring yourself to acknowledge the sad reality of the human suffering that goes on because of the status quo you prefer"
Like I said, there was a bare, implied, minimum admittance in that above paragraph. I don't think that was enough, I gave some kudos, but that's because my expectations were so low.
Also, I will say this: if you Megan, were as passionate about advocating for the reforms that you would most likely accept, i might give you more credence. But defending the status quo for a system that is unduly unfair and outrageously cruel seems to be what you are most interested in, not in providing alternatives. It's incredilby disheartening.
Hey, if you frequent this blog, you would know that there are only a handful of uninsured-five or six at the most-and that its a total liberal fabrication that there are tens of millions uninsured.
The debate at hand isn't about what the perfect system would be. It's about whether the proposed changes are good or bad. Arguing against a bad change that could happen is more urgent than arguing for a good one that couldn't.
"The debate at hand isn't about what the perfect system would be. It's about whether the proposed changes are good or bad. Arguing against a bad change that could happen is more urgent than arguing for a good one that couldn't"
To advocate for a system that is reasonably fair to the private sector and helps the millions who are uninsured is not necessarily arguing for the "perfect" system. This is Megan's blog, the "argument" is anything she wants it to be. I'm calling it how I see it: far more time dedicated to defending a system that is cruel as it is today, versus advocating for a change that even she concedes probaby needs to happen (i'm referring to the small sentence where she writes about the gov. possibly paying for medical care in the cases for people, whose bills run more than 15% of their income).
I am fully aware that Megan can write anything she wants but as a reader in a comments section, why not disagree with that choice? Then again, this reminds me a little bit about what Ezra Klein once write about Megan: "Megan's argument against national health insurance boils down to a visceral hatred of the government. Which is fine. Megan is a libertarian. That's, like, her journey, man."
Megan isn't the only one avoiding the moral dimension of the debate. It seems completely off the table. The shameful political reality is that you can't sell health care reform on the platform that it is the right thing to do even if it ends up costing a bit more.
Freddie: absolutely every expert on medical economics I've read grudgingly agrees that, in the short term, there will be little/no measurable effect on health regardless of what payment system you choose.
There is no moral dimension, because variations in health care just don't matter.
If you dispute this, can you provide any evidence whatsoever that variation in health care provided changes health outcomes?
There is no moral dimension, because variations in health care just don't matter.
If you dispute this, can you provide any evidence whatsoever that variation in health care provided changes health outcomes?
WHAAAAAAAAAAAA
Are you saying that getting no health care if you have say, typhoid fever has the same effect as if you got effective modern health care?
Well, maybe variations in health care doesn't affect the undead, but variations in health care definitely affect us LIVING human beings.
Things you read on these blogs....
Everyone (insured or not) will be treated for typhoid fever, in the extremely unlikely event they were to contract it. Not that it really matters; since I wash my hands after #2, you'll never get typhoid from me. Or most people.
Regardless, I'm talking about variations in health care that is actually delivered, not the hypothetical case of "full modern medicine vs nothing at all".
The fact of the matter is this: repeated studies show no variation in health outcomes that is correlated with variation in health care (after controlling for endogenous variables). Some cities have great health care, some have poor health care, but health outcomes of similarly situated people don't change.
This has even been confirmed experimentally via the RAND experiment.
If you have any evidence whatsoever to the contrary, please post it.
This was multiple millions of shares. The info was reported in the Wall Street Journal today and is from regulatory filings. Apparently there are a few dumb asses, must not be "experts in healthcare finance," hired, at least indirectly, by Bill Gates who don't see the profit potential.
Freddie, I can't believe that the increase in scale could compensate for any but the most trivial drop in price. The number of real uninsured people is around 10 million, the majority of whom aren't especially old or poor(or they'd be covered under Medicare/aid). A 3% increase in population covered, most of whom aren't in the demographics to be using much medical care, isn't going to compensate for much of anything.
Freddie, might I suggest that that's because "every single medical expert" you've talked to has come filtered through some left wing source? Because almost no other health care economist believes this, for the simple reason that most uninsured people either don't go that long without health care (the number of uninsured counts everyone who lacked insurance for even a day during the year; the chronic figure is somewhere north of half the headline figure), won't be insured (they're immigrants), or don't use health care that much (they're young). The drug consumption by the remaining core of sick and chronically uninsured people, some of whom are already getting treatment through various charity programs, is not anything close to enough to restore the profits lost by price controlling the other 90-95% of patients. You can look up all these figures on your own and do the math yourself--it's pretty simple. Even making very conservative assumptions about price controls yields lower profits.
The private for profit health care system is a rogue system that will eventually do us in because of our psychological predisposition toward addiction.
We worship waste in other areas that bring us constant destruction and poverty, so it is difficult for anyone to make a sound case based upon principle or pragmatism for a national anything.
At least until we get on more firm ground psychologically as a nation.
I would like to know how to make basic healthcare available for the underinsured in their 20's. Is there some way to make this affordable without giving people the dreaded "pre-existing condition" warning later on if a condition worsens.
It makes very little sense in our current system of employer based health insurance when it stifles people from actually changing jobs or starting small businesses. Paying for private insurance is a nightmare. In the sense that if we can have the government regulate this to some degree, it would be better for everyone.
In terms of cost, what are we paying in terms of lost work hours/productivity, in treating conditions that could've been prevented, in preventing tuberlosis from recurring, in terms of expensive ER care for the poor as a first rather than last resort, in terms of bankruptcies due to medical costs.
Can this be calculated or is it just not easily done under most economic models?
If I had affordable insurance immediately out of college, there's a good chance I wouldn't have a cataract now. I had no idea that a minor skin condition of mine could even cause it (and I doubt anyone outside of a doctor would), but had the price of basic medical care not been so exorbitant for what felt like an ignorable condition. My quality of life suffers, and so does my productivity. Economics says people in my age group are less likely to die or develop conditions, but it doesn't say that the cause of conditions later in life didn't start in my 20's or below.
Lost in the discussion about obesity earlier is a discussion on how to change the discussion towards health. The information is out there on how to improve or prevent so many basic conditions, but the way information is spread is so faulty that it doesn't even begin to spread to the basic consumer. Imagine The Atlantic had a blogger with a spotlight on health and interviewed a specialist/doctor about basic common conditions instead of puff health articles in the newspaper.
Despite studies that have completely discredited fields such as homeopathic medicine (they aren't more effective than a placebo), why do people still use them? Why is the FDA so poor about regulating supplements and products such as Zycam, which recently was in the news for causing people to lose their sense of smell?
Why do people buy lottery tickets?
I had no idea that a minor skin condition of mine could even cause it (and I doubt anyone outside of a doctor would),
Was this before the internet, or could you have researched it online? You should always perform due diligence.
If not, what would the consultation have cost? Would Medicaid have covered it? If not, what would have prevented you from getting treatment and paying it back over time?
I'm very sorry you have this condition, but it appears to be the result of decisions you made.
The phrase "a result of decisions you made" is a devious, but empty, tautology. Because it assumes that he could reasonably have been absolutely informed of the circumstances surround his skin condition, and that he was remiss in not knowing about it.
Yes, if he had understood that condition, he wouldn't have cataracts now. But your formula is a kind of secular version of the doctrine of karma. It applies to every possible victim of suffering in the world, who, if they had perfect knowledge aforehand, could have avoided that suffering. Yes, that includes the victims of Stalin and Hitler: they chose to remain in tyrannical regimes.
You have this misconception that extremely specialized knowledge is readily available to everyone. The condition was extremely extremely mild eczema which is easily mistaken for occasional dry skin. I did not even know I had it. How should I know? At what point would it be reasonable to see a specialist/dermatologist for this? My optometrist was mystified that it developed. The skin problem was caught by an ophthalmologist recently and the cataract developed in the gap I didn't have insurance through work. Why should I see someone for what my doctor that caught it said was nearly invisible to a layperson?
Things happen that are out of people's control. You don't seem to grasp that people don't even get basic checkups in our current market because it simply costs more than they can afford. To you, it's a decision. To them, it's whether they get to eat or pay rent.
And guess what? If the doctor catches something while you're uninsured and go in for a checkup? It often shows up as pre-existing condition on your insurance policy when you do get insurance. You will not be able to get insurance for that condition at ANY price. The system is broken.
What Freddie has been trying to get at is that the realities of American health care don't seem to get pointed out by Megan often enough. Rather, it's a retreat into the world of math and studies that don't necessarily get at the details of what people actually need on the ground. It is heartless and cruel because the average person cannot be expected to know what a doctor knows.
Given that I am fairly educated and have trouble getting through the ins and outs of our system of medicine, do you really think someone with less education would have an easier time? Likewise, if someone has a medical emergency, would they react completely rationally? Would they check the internet and be able to come up with what you can?
Stop and try to think of it from other perspectives from time to time. Your patronizing tone over the years has been extremely aggravating. You convince no one who doesn't agree with you that you are correct with the attitude of "WELL I WOULD HAVE DONE THIS."
Stories like http://www.time.com/time/nation/article/0,8599,1883149-1,00.html ARE the norm in America these days, and it's only going to get worse as the boomers age and chronic illnesses like diabetes take up more of the cost of healthcare.
Jorah - I've lived nearly all my life in NZ and the UK. It never would have occurred to me to go to a doctor with a very mild skin condition, I just would have applied moisturiser. And I strongly suspect that if I had, the doctor would have just prescribed some moisturiser for me, I have had bad eczema in my 20s for which I saw a specialist dermotologist, along with a number of other doctors, and none of them even mentioned cataracts as a possible complication. I think you were just awfully unlucky.
Not to second-guess here, but if you didn't know you had it, what are the odds you actually would have gone to a dermatologist for it? Unless it's pustulent acne, most young people, men especially, wait a long time to go to the dermatologist. It sounds like you had insurance before the cataract developed (you speak of a "gap"), but you didn't go to the doctor for your eczema, which is a long term condition.
TracyW, I suspect you should look into it because there is plenty of research that eczema increases the risk of cataracts early. Perhaps you should perform due diligence and find out more about it instead of just relying on your derm?
Clarifying, I would probably have seen a doctor for the somewhat severe pustulant acne/rosacea I had at the time. I did not say that only a dermatologist would've caught it. In fact, I said my eye doctor did. I would have had more regular checkups with a GP who likely would've caught it earlier rather than the sporadic visits with him for other things I've had. Furthermore, the insurance coverage I had was under my parents at that time (hey maybe my parents made mistakes about my care out of my control, but I know they did the best they could with the knowledge they had), then college, then a gap because my immediate job after college could not afford the insurance premiums and still run as a business.
Instead I treated the acne with OTC medications because of the cost of drugs was untenable. There's certainly an aspect of bad luck here for me because I made a decision to self-medicate via information from the internet whereas a GP may have flat out caught and treated the eczema if I had gone in for acne treatment. Quite a few people don't go to doctors unless they feel they have a problem after all, and a large number of them won't go in unless the problem has become severe enough to warrant it in their minds.
The conditions you guys are imposing on basic care is ridiculous. The bar for basic care is higher than any of you want to admit for more than just the poor, and under our current system, employers will be dropping healthcare coverage as projected costs balloon, leaving more people uninsured. Surely a system that is punitive towards those who lose their jobs and have to make a choice between making COBRA payments or being uninsurable in the future, or using that money for rent, is an insurance system that needs overhaul right? Not everyone has a social network to rely on or people to borrow money from, etc. God forbid they should use a credit card at 25% rates to pay for it and go bankrupt later. I can tell Megan is likely more sympathetic to these issues than it may seem because of that 15% of income proposal she mentions though, so I don't want to be harsh here, but can we get a realistic proposal on the table under our current system?
I know someone who has bought mail order antibiotics because they knew the cost of seeing a doctor and then getting a scrip was potentially absurd for their income level. Why should he pay 200 dollars he couldn't afford or borrow in costs for antibiotics because he's just out of college working a menial job for an obvious throat infection? Why do people risk permanent future damage to their bodies by waiting until things get so bad in their early 20's after college? Why do people attack Deamonte's mom for being a bad mom instead of pointing out that their education may not have taught them proper tooth care? Guess what, I bet the majority of you guys don't truly know proper dental care either. Why can't the bar for entry (which is rising these days) be lower?
The point I'm trying to get across is that people put off medical decisions down the line until they turn into chronic conditions. Our insurance system as it stands now puts a ton of pressure on people not to go get basic care until it turns into something worse. There's a very real feeling that employer based healthcare puts you into a trap where you either stay in a job you hate for the care rather than start your own business or move to another job, particularly in people I know who have chronic conditions. Instead of attacking the mythical single payer strawman proposal that isn't on the table yet, why not look into the details of actual proposal on the table now?
Very basic care is overlooked even when you do have insurance in this country and going without affordable basic care is a nightmare. Putting off minor medical decisions has a very real cost, but what model of medical economics tells us what regular basic care would save us? How does one calculate cost savings in increased productivity by preventing chronic conditions in the first place? Just looking at the number of medical bankruptcies as a portion of all bankruptcies in this country should be raising red flags and their obvious downstream costs (which are much clearer than the innovation costs we might lose that you posit).
Megan, I know you mentioned Nexium elsewhere in this thread, and I don't want to get into your personal medical history (I'm aware you have another condition), but did omeprazole not work? Do you understand all the medical literature on proton pump inhibitors? I've spent time researching them and it's still difficult to find out for sure whether it really causes long term dependency even after the original condition (e.g. h. pylori) has been treated. I'm convinced that they are still not well understood as a class of drugs in the long term. Also, I forget, does Nexium only work for you or would a cheaper alternative like omeprazole work? The cost difference between the two is staggering and the difference between the two is not large.
It's also worth mentioning that doctors believe GERD increases as a result of obesity, even in the smaller weight gain range. So do other things such as sleep apnea, increased stress on joints, etc. But that is a point for your other thread. I've long agreed with you that weight is a ridiculous measure of health, but don't necessarily agree that environmental changes can't benefit us.
You have this misconception that extremely specialized knowledge is readily available to everyone.
I did not say it was (although it increasingly is). I asked if that was the case here.
The condition was extremely extremely mild eczema which is easily mistaken for occasional dry skin. I did not even know I had it.
Then what difference would insurance have made?
You've written a lot of words, but I'm not hearing anything indicating you couldn't have paid to have a doctor look at this yourself.
Our insurance system as it stands now puts a ton of pressure on people not to go get basic care until it turns into something worse.
Oh dear God. You think socialism is going to make this better?
You do realize we do FAR more diagnostics here in America than socialized countries do?
So, you won the obscure disease lottery and suffered. That's tragic, and you deserve sympathy, but there isn't a government solution to every problem.
Because it assumes that he could reasonably have been absolutely informed of the circumstances surround his skin condition, and that he was remiss in not knowing about it.
It doesn't assume that at all; obviously if he knew there was a serious underlying condition he'd have made a different decision, but in real life we have to do decision-making under uncertainty. Anytime you have a minor condition, there's a small chance it's a symptom of something more serious. You decide to have a doctor look at it, or not. The doctor decides to run more tests, or not.
The natural inclination was to avoid seeing a GP unless I absolutely had to at that point in my life. Flaking skin around my eye that was intermittent and went away did not qualify as a pressing need. Waiting it out to see if went away on its own (and it did) seemed more rational at that point if it didn't seem to be interfering with life. I ended up paying thousands out of pocket for another major medical expense and could simply not afford it.
Things have been fine since I've got a job with insurance, but I'm still left with an eye that does not function quite as well as it could have as a reminder of how things can go to shit really fast over easily ignored conditions.
Broke people aren't going to go see doctors. They can't afford the high premiums for private insurance or the poor coverage for cheap insurance. The answer is that I simply could not prioritize something that felt so minor when there were other pressing major monetary concerns that I ended up paying out of pocket for. Make rent? Choose to eat? What do you do?
Shit happens, but to think that people aren't behaving reasonably and the answer is "why didn't you pay for it?" is the mark of someone who clearly doesn't understand how people live. Have you grown up poor or did you grow up with well-to-do parents your entire life? Do you have a social net to fall back on in times of need so you don't end up in the street? Do you even acknowledge the % of people who go bankrupt from medical expenses even though they have coverage?
In that period of time, I would have gladly paid for insurance if it were affordable. It simply wasn't, and paying out of pocket for a checkup is not really reasonable.
Btw, eczema is extremely common, not rare. Doctors treat eczema if they see it and it's extremely cheap to treat.
Cataracts are also extremely common, just not in people in their 20's. Treating which one is going to cost the healthcare system more in the long run?
Not once did I say socialism btw, which we already do have to some degree in US medicine. I was complaining about access to insurance and care that students fresh out of college go through. We get a system where the very young and very old get healthcare through the government already. I am saying that there are almost few decent coverage options for a large segment of the population if you don't have an employer that pays for it or you're lucky enough to be young enough or old enough to be on Medicare or CHIP.
What I'm getting at by pointing to basic care repeatedly is to say that there is a level of preventative medicine that can be provided for everyone. It is not expensive to treat many conditions that turn into expensive ER visits later.
I'm not proposing everyone gets access to expensive diagnostics MRIs and CT scans, but basic things from clinics run by nurse practioners or doctors like easy access to vaccinations, perhaps teeth cleanings, a walk-in checkup for a throat infection for antibiotics, or a professional to talk to if you have a reasonable set of medical concerns. If you do it via private or public means (Some pharmacies hire RNs for programs this), I don't care, but it seems a push towards preventative care would not be a bad idea and would likely save expenses later.
It'd also be good to get the perspective of GPs, several of whom tell me that they have to spend more time with more paperwork than with patients, and make less than doctors who perform procedures. If you talk to some, GPs have less financial incentives than other doctors in the US. How do we pay them fairly?
Broke people aren't going to go see doctors
That's a poor decision, then. Pay it back over time.
Shit happens, but to think that people aren't behaving reasonably and the answer is "why didn't you pay for it?" is the mark of someone who clearly doesn't understand how people live. Have you grown up poor or did you grow up with well-to-do parents your entire life? Do
Ha, no. My mother got cancer and went on Medicaid. I've lived without insurance for several years and made some tough cost/benefit decisions here and there. I've traded pain for money. But no one promised me life would be a rose garden, and I don't see a massive expansion of the government as the answer to any of my problems.
Jorah, your story interested me, so I did some quick/dirty google-based "due diligence" as you call it. Couldn't find anything that suggested that treating eczema early could prevent related cataracts; in fact, it looks like corticosteroids, a common prescription for eczema, can actually cause cataracts in some cases. If that's the case, having seen a doctor would have made you even more likely to develop them. In any case, it seems that they're a pretty rare complication of both the disease and its treatment, and it sucks that you got stuck with them.
edianes:
Elidel is used for facial eczema, which is not a corticosteroid.
For severe cases (which mine wasn't), cataracts are a common side effect. I just happened to be unlucky in getting over my eye.
Thinking more about what TallDave had to say about paying for care. Sure it makes sense in a vacuum. I simply could not afford regular care at that point, and that's all there is to it. The risk of also becoming one of those in a dreaded "pre-existing" from a doctor visit also is real.
TallDave, I am just trying to bring up common points. You certainly have a point in that we should pay for visits, but the way American healthcare works has real landmines for the uninsured and a way of driving costs towards the underinsured. And the doctors certainly have a huge information advantage over the consumer....actually Schwenkler summarizes a lot of it better than I could in the next links.
Reading this now, and what Schwenkler has to say about it after:
http://www.theatlantic.com/doc/200909/health-care
http://www.amconmag.com/schwenkler/2009/08/14/maybe-the-best-thing-ive-read-on-health-care-reform/
I simply could not afford regular care at that point, and that's all there is to it.
Again, I think you could have borrowed and paid it back over time or gone to Medicaid, though it sounds like they may not have caught it anyway.
I think this attitude is a major problem in health care: we are so used to paying for the privilege of not making any cost/benefit decisions re healthcare that most of us just cannot conceive of the idea of paying for medical care the same way we buy cars or TVs or furniture. Arnold Kling goes into considerable detail on this in his excellent book, Crisis Of Abundance.
It's understandable why we would do this. I once took local anesthetic for some oral surgery because it was cheaper, against the advice of the surgeon. I wore contacts with protein deposits long past the time I should have; they burned my eyes terribly for the first minutes every time I put them in but it saved me money. These are things people try to avoid.
I would support an incomes policy for seniors who can't work, and subsidies for seniors who can't afford health insurance. I might sign on to some sort of reinsurance for excessive health costs. I might sign onto a proposal I made years ago, whereby the government covers all healthcare expenses that exceed 15% of your income. I expect that this would be very expensive, but also probably worth it.
Isn't this , in effect, Medicare, Medicaid, plus government financed catastrophic health insurance for all? This sounds even more radical than any of the three bills in Congress-and more expensive. I don't see cost controls of any kind, which means the drug companies will be happy, though the taxpayers may not be.
Megan,
Your faith in the efficiency of the free market to spur life-saving innovation seems to be largely based on the notion that we the consumers who desire life-saving pharmaceutical technology can demand it from companies.
This view unfortunately overlooks an important structural flaw in Big Pharma: the frequent, instantaneous disappearance of large profit centers. A blockbuster, billion dollar drug that goes off patent might be lucky to generate $30 in sales the next year. I exaggerate. But not by much.
The upshot for investors from the overnight disappearance of $1 billion in profits is the expectation that senior management will replace that $1 B next year, plus $100 million to reflect the required growth rate from the recently-departed profit center.
What you're left with then is public advocates, bloggers and the like asking Big Pharma to innovate to save lives, and then also investors looking for their $1.1 Billion.
If an RLS drug will deliver $1.1 Billion while a vague and challenging cure for cancer may or may not deliver anything, which do you think we'll get from Big Pharma?
OTOH, if curing RLS is the height of your expectation from pharmaceutical innovation, then perhaps its right to cheer solely for the private sector.
And yet private sector pharma delivers new cancer drugs every year. Doesn't that sort of invalidate your contention?
Not at all. Take an example: Gleevec. Nice drug for leukemia, nice and profitable for Novartis. As the Gleevec profit center threatens to dry up, what do you expect out of Novartis? A tweak of Gleevec, one that doesn't materially advance the ball in curing leukemia but buys Novartis 17 more years of brand dominance? An RLS treatment?
Or a brand new drug to stop a brand new form of cancer?
That's about the most obvious loaded question I'll pose on a blog this year.
Well, I'd imagine that they probably have people trying to do both, so...
A tweak of Gleevec, one that doesn't materially advance the ball in curing leukemia but buys Novartis 17 more years of brand dominance?
Why would people pay more for the new drug... oh wait, they don't care because they have no connection to costs!
And we wonder why premiums go up.
Did you know it is ILLEGAL for insurance companies to suggest alternative treatment? I know this because I asked after had a modern procedure costing a few thousand dollars after which I could walk out right away, in place of a less effective traditional procedure costing tens of thousands which would have involved months of being bedridden as well as significant chance of serious complications.
Needless to say, I had to find this modern treatment myself, on the Web.
You're being deliberately obtuse. By your logic Gleevec shouldn't exist at all, since somewhere along the line it was a "vague and challenging cure for cancer".
Of course they'll fund allergy medication. And they'll fund drugs for heart disease, cancer, pecker perkers, acne, and whatever else looks like it might turn a profit.
The one hole in the system, from what I can see, is vaccines. I'm all for government funding vaccine research, since by and large there's no way to make money from them. But I can't think of another category where that is true.
Replying to TallDave:
Re: Why would people pay more for the new drug... oh wait, they don't care because they have no connection to costs!
How many people have no exposure to Rx costs under their health plans? Ever hear of a copay? I have an excellent health plan through work; my Rx copays range up to 50$ for a month supply of some pricier drugs. I just had a prescription filled this past week, and specifically asked for it to be written for the generic form of the drug to save money. The current system does contain price incentives for people to keep their costs low. The trouble is that in too many cases there is no cheaper alernative they can opt for.
Megan,
I don't see any problems raised by global warming w/r/t the lives now vs. lives latter argument. The simple answer is lives now in both cases (or for some, lives later). Different results can generally be reduced to class. Rich liberals--healthcare now, gw later; rich conservatives--healthcare later, gw now; poor liberals--healthcare now, gw whatever; poor conservatives--RAWR!!!
Turning your hypothetical back around: would you support plans that simply shovel money at the pharma industry generally? Say, negative taxes on medical companies. Presumably this would lead to more medical innovation, the 1% compounding would work its magic, etc. If not, why not?
Hey, if we pay the pharmaceutical industry $100 for every dollar of profit they earn, we just might be able to cure what's killing 300 million Americans. Its geometric progression, bitches!
Like a couple of other commenters: 'principle not principal', 'principle not principal', 'principle not principal'.
If your spell-checker didn't pick up "principaled", get a new one.
Megan, you're far too kind to Holbo, who is a world-class idiot. His concluding paragraph, in which he steals every base on the way home, is a marvel. Honestly, I've never seen a philosophy prof so bad with arguments.
Health Care: A Lesson in Practical Philosophy
MM, bravo for writing up this lesson
while clearly still in recovery
from a disorienting illness :)
What is the answer,
what is the answer ?
What was the question ?
I will take time travel, to 1950, which is
where I expect this country to be, in its
Economy, Politics, Health Care, and Population,
four years from now; each of the four factors
transforming the next.
So we're going to be in a postwar boom, fighting Communist spies, thinking penicillin is the new hotness, and in the middle of a baby boom?
since the most grotesquely exaggerated estimates released by interest groups pin the latter figure at around 0.8% of deaths in America (a much smaller number than the number who are estimated to be killed by access to the system--nosocomial infections and treatment side effects).
Wow, what a great and powerful point. If you know the numbers you immediately realize this must be true, but I'd never thought to compare them before.
I remember reading once that prescription medications taken as prescribed were among the top ten causes of death.
This isn't a crisis, this is a rounding error. And Obama has the gall to call opponents of his plan "scaremongers!"
What I don't understand is why the US isn't leaning--and leaning hard--on Europe to stop the sleazy practice of free-riding on the innovation spurred by the high prices we pay. Americans are literally dying because Europeans are too damned cheap to pay their fair share; why is this not the major diplomatic issue that it should be?
There's one of us and many of them. Guess which way the WTO goes on the issue.
Or you might actually want to offer some statistical proof of this 'free-riding', which nobody has actually done yet. In fact pharma turnover in Europe and the US is comparable, which would strongly suggest that the free-riding argument is in fact an exaggeration at least.
Huh? If Country X pays more than Country Y (which sets prices by fiat) for the same drug, then Country Y is free-riding on Country X. You don't need a bevy of statistics to state the obvious.
I don't know what you're talking about with "pharma turnover" but I don't see how it could be relevant. All pharma companies sell to all countries.
erm . . . no. Firstly, prices are not set by fiat in any European country I can think of, no European government I know of issues instructions saying how much each drug should cost. Even in countries with national health systems like the UK, the price is the result of negotiation between the medical system and the pharma companies, with private healthcare providers like BUPA negotiating their own prices. Prices will also usually be lower in low-income countries because firstly the costs of getting the product to market will usually be lower and secondly the people in that country will be less able to afford it. I cannot therefore pick on, say, Jamaica, and say that simply because Jamaicans pay less for their drugs this is a result of Jamaicans free-riding on the United States
Even in countries with national health systems like the UK, the price is the result of negotiation between the medical system and the pharma companies
Government intervention rather than fiat, then; however you dress it up it amounts to the same thing. Canada, for instance, has explicit price control formulas, while other governments intervene in other ways.
Prices will also usually be lower in low-income countries because firstly the costs of getting the product to market will usually be lower
Are we talking about FDA approval? There might be some truth to it being more expensive here, but there's no reason to think we're not paying for approval in other countries too, since as you point out...
and secondly the people in that country will be less able to afford it.
...in other words, we're socializing their costs to our richer country. They are free riders.
The problem is all the costs are sunk by the time the pharma company is actually making the approved, marketed drug, which generally costs very little in comparison to the development costs.
"Government intervention rather than fiat"
Only if you believe that the money which the armed forces, police, schools, transport etc. pay for their various purchases does not reflect the true price of the products they buy simply because it is the government that makes the majority of purchases of the relevant products.
"Are we talking about FDA approval?"
We are talking production, labour, marketing, shipping, storage etc. etc. etc. all of which are likely to be cheaper in poorer countries due to lower labour costs.
"we're socializing their costs to our richer country."
Drug companies offer lower prices for many products in poorer countries in an effort to prevent IP infringement, gain local good will etc. This is not "socialising costs to richer countries", this is drug companies adjusting prices to suit local conditions.
Only if you believe that the money which the armed forces, police, schools, transport etc. pay for their various purchases does not reflect the true price of the products they buy simply because it is the government that makes the majority of purchases of the relevant products.
Of course it doesn't. Many of those are explicitly cost-plus contracts.
Drug companies offer lower prices for many products in poorer countries in an effort to prevent IP infringement, gain local good will etc.
In other words, we in richer countries are socializing their costs. You're just making my point.
You could have just said BOTH, and saved me from having to wade through your long post.
A slightly different approach to this question.
Libertarians often cite a belief in some abstract notion of competition, which apparently conjures up Ben Graham's Mr. Market, who shows up with a wink and a smile, making the world better, at least better than those stiffs in the government could ever make it.
Government we know. We know it sucks. Business we read about in books, so we're pretty sure it must be great.
Suppose you looked at the list of top selling pharmaceuticals in the attached Wikipedia link. Suppose you also noticed that the list is dominated by so-called "lifestyle drugs", and that of the top 20, only Rituxan (#12) is devoted to the #2 killer, cancer (and a specific form, at that).
So you say, hm, I think I would like to have more big drugs making a big dent in cancer, that disease scares the hell out of me, much more so than asthma (Advair: #2), GERD (Nexium: #4), or arthritis (Remicade: #6). Whom would you trust more?
1) The General Manager of the profit center of one of these lifestyle drugs, soon to come off patent, leaving a $1 Billion hole in their profits (a hole that may result in as much as $750,000 of bonus money personally at risk for that GM), or
2) Some shlub at the NIH making $75,000/yr...no bonus...but working strictly for the advancement of scientific understanding.
In conclusion, I find it funny that libertarians talk at such great length about the importance of freedom and business and the John Galt-ish things therein, but they never bother themselves with pesky little details like profit centers...details, that, on closer inspection actually give rise to the same selfish counterproductive behaviors libertarians despise in government.
http://en.wikipedia.org/wiki/List_of_top_selling_drugs
If you had a clue, heart disease would scare you more than cancer. And the #1 and #3 drugs on your list are both devoted to reducing the risk of the heart disease.
On cancer: "cancer" isn't a single disease, it's a huge category of diseases. Any drug developed will work only for a specific form, and will have a limited market. Asthma, on the other hand, is a single disease which affects 7% of the population. So obviously the market share of an asthma drug will be larger than that of almost any individual cancer treatment.
Likewise, asthma was a serious killer before all these "lifestyle drugs" (and still does kill), while rheumatoid arthritis is the autoimmune version of the disease, which becomes crippling if untreated. Psychosis and schizophrenia are hardly lifestyles, nor is hypertension, which used to cause a lot more strokes and massive coronaries. Even gastritis can be disabling--when I first went on nexium, I went to the doctor's office thinking I had stomach cancer.
The first NHS patient was an 11 yo boy sent to Switzerland for his asthma. He came back to England and later worked as a welder. If Felix could work out a similar deal for you 'maybe you could be turned around on this issue?' This is in the 'Life and Arts' (maybe) section of Saturday's FT.
I finally understand the libertarian viewpoint on health care. In a market system the price for medical services will be determined so that provider profits are maximized. The libertarian perspective views this price point as being socially optimal because it will maximize the incentive for innovation. In a nutshell the debate should then be between high prices(less coverage) + greater innovation versus lower prices(more coverage) + less innovation.
Personally I think you get less innovation bang for the buck beyond a certain price level. Thus if we could reduce prices we could get more coverage at little innovation cost. Obviously that's an assumption but I think the fact that other countries are able to give comparable care for so much cheaper is pretty good evidence.
You're basically correct in what libertarians think. Just don't assume for a minute that we libertarians believe in entirely unfettered free markets, and don't assume that we think that libertarianism is a panacea to all ills: we just tend to believe that government solutions, while the appropriate solution to some problems, are more often than not much worse than free market solutions.
I was also thinking about the protest: while the lifestyle drugs are significant in big pharma, those companies are working on curing cancer too.
They sure are. But look at that list from wikipedia again. Not a lot of cancer success there. Which, in the context of the mysterious world of business, calls to mind a fabulous little book called "How to become CEO" by Jeffrey Fox. If you ever want to join corporate America, take it from some anonymous dude on the web, that's the book to start with.
Anyway, Fox's book is basically a series of one-page aphorisms, one of which is that, to be successful in business, one needs to be "in the flow of money". This means that corporate superstars are the ones who work in the areas where the greatest profits are generated.
Pertinent to our discussion, assuming Fox is right, the big winners in big pharma are arguably not managing the research programs that are of greatest concern to us.
So who is managing those research programs?
Leads to a curious conclusion: assuming your primary concern with American pharmaceutical innovation is curing cancer, not curing asthma, you're pretty much left with a choice between some shlub at the NIH or some shlub at big pharma.
I kinda think I'd take the NIH shlub. Less likely to spend his days worrying about being downsized.
"Or you can bite the bullet and say, we should save lives now at the expense of lives later. There's philisophic justification for that choice. But that opens up a whole can of worms about things like global warming. It helps if you phrase it aggressively: "How dare you suggest that someone should suffer now when we can treat them, so that someone who's not even born yet can live?" "
This is unhinged. You need to back up some of this crap with real-world evidence from real reality. Can you point to the public healthcare experience of any country where anything like this has happened?
I don't understand why Megan expects anyone to take her assertion-based go-Google-it arguments about public healthcare seriously. You have every other western country for the last 50 years as datapoints on this, yet you act like liberals ought to be producing better evidence. In particular, what's wrong with all those other public systems...they appear to be fairly functional, people seem more or less content...is that a miracle? Why should anyone place any value on your slippery-slope doomsday scenarios in the face of actual experience and evidence?
Megan's readers are expected to put up with thin libertarian thought experiments as stand-ins for serious positions in a real public debate that has immediate consequences. I guess that's an implicit admission that there's not much to the pro-private healthcare side except vague nostalgia for a libertarian ideal that exists in science fiction novels.
>Can you point to the public healthcare experience of any country where anything like this has happened?
Right now, in British Columbia and Alberta, health expenditures are being cut. There is a shortfall in revenues, and they don't want to borrow too much money. So the waiting lists get longer.
Tell me. How do waiting lists save money?
Derek
I sincerely wish that young, mentally energetic dogmatists like McArdle would read a little more "philisophy" (at least enough to spell the word correctly) and stop using the childish "government" versus "market" dichotomy.
Like all exchange systems, our "market" is a creation of extensive "government" laws, as a casual familiarity with history or political "philisophy" will readily show. And it is not simply the historical creation of "market" institutions. McArdle can visit K Street and see the "market" being created on a day to day basis.
The point about health care is this. Markets by necessity "price out" a certain percentage of the potential consumers. There is no "market" that includes all potential consumers in its pricing. This means that anything considered a "right" or "necessity" to individuals or to the nation must be removed from the "market" system.
Agriculture, national defense, money supply, education, water, electricity, housing loans... all of these are considered essential and are thus at least partly removed from the "market," (though some still allow private management with exorbitant private salaries and exploitation, just appease libertarians.)
If health care is a right or necessity, then the market cannot adequately provide it. The market is great at producing potato chips and bras. It cannot produce anything that is considered a universal good. When the market handles "part" of the market and government the rest, then taxpayers are effectively funding the high incomes of the "market"s management and and passive investors.
Every time McArdle and her ilk refer to the "market" they are referring to functions based on an enormous complex of government laws and entities. What they are really defending is any system with unequal outcomes. What they want is any system with a hierarchy and "winners" and "losers." To them, that indicates "freedom."
(Tragic aside: It is shame that our country is in the hands of a generation of capitalist boosters whose idea of "philisophy" is a passing acquaintance with Nietzsche, two quote by Locke, and a thrilling sophomore year encounter with Ayn Rand.)
If McArdle, et al, really believed in a free market, why not allow Americans to buy drugs and doctor care in Canada and Mexico? Or even Cuba, which historically has better care than two-thirds of U.S. income levels. Why not allow a "government" not-for-profit insurance system to compete? The reason we cannot do this is because our "government" shelters our "free market" from competition with systems that are not designed to maximize investor and management revenues.
The main issue for libertarians has to do with the "philisophy" of natural law inequality. If a system does not have "winners" and "losers," they distrust it. For many libertarians, such as the odious Ayn Rand (with her bad teeth, tobacco breath, false memories, and unwholesome sexual cravings) , this was matter of sheer personal sadism. For young Americans like McArdle, I believe, it is simply a matter of indoctrination in the Reagan era.
McArdle and the GOP needn't worry. Libertarians have a long, successful history of preventing the introduction of anything approaching reason into the United States, and I am sure they will succeed in killing health care, gutting social security, and massively increasing the number of "losers" that prove they are "winners." That is what liberty is all about.
Good stuff, Nelson. Well said.
The "free market" in regards to health care is a canard. It should be run like a well-regulated utility just like in every other civilized nation.
The nuclear reactor that furnishes my electricity is state-of-the-art and safe for everyone regardless of their level of wealth. No reason to believe that pharmaceuticals and medical expertise couldn't be state-of-the-art and safe under a health care utility.
(And electricity isn't even a right in our society; health care is.)
That nuclear power plant is state of the art and safe, but it couldn't be built today as a result of government regulation.
And, at least in the US, health care is not a right.
Some trolls I can't resist feeding:
It cannot produce anything that is considered a universal good.
That's why so much of the food you eat came from government-run stores and was grown on government-owned farms.
Mr. Alexander might want to read some history and philosophy written by non-Marxists before spouting off his uninformed blather in the future.
Does being a (qualified) socialist and critic of market ideology qualify one as a "troll" in this blog? Well, maybe I was being too impolite.
Speaking of politeness, in regard to my "uniformed blather," I am making the simple point that the rhetorical distinction between "market" and "government" is highly inaccurate and used in a way that has become, in the United States, almost pure propaganda.
Do I get my food from "government stores"? In a sense, yes. When I buy food in an African market or off the street in Mexico, I am buying food in relatively free market system with minimal government intervention in the exchange process.
When I buy food in an American supermarket, I am buying food that has passed through an enormous system of state regulations, bureaucratic systems, licenses, tariffs, patents, etc.--many of these laws sponsored by corporations through K Street. The management and enforcement of all these rules is not paid by the profiting corporation but out of tax funds.
On the production side, we can leave aside even such notorious lobby-based "free markets" as the sugar industry. Since my family once owned a small farm, I cannot be persuaded that corn and soybeans come from the "free market." That old market system began to fail dramatically in the Dust Bowl era due to speculative land management and the ruin of many farmers by the banks.
For most American farmers today, a large share of checks come from the federal government, and the financing and seed "leases" are controlled through numerous patents and lobbyist-sponsored laws. Huge sectors depend on tariffs or laws that prevent price competition with Russia or Cuba, for example. Farming under the NEP programs of the early Soviet Union were, for all their failures and horrors, wide open "free markets" by comparison, with direct peasant sales for profit. Since you picked food, I will not go on to health care or pharmaceuticals.
I confess to an hereditary disposition to "blather." But, Anthony, why "uninformed"? Why "troll"? I am trying to supply an informed argument. I see very little but smug insult in your reply. If you can be clearer about what you mean by the "market" supplying our food, I am trollishly all ears.
And the food you're buying in the US supermarket is no safer than most of the food bought in the markets in Mexico. In either case, if proper preparation and cooking techniques are followed, you will not get sick.
In the US however, we spend billions upon billions of taxpayer dollars to "ensure the safety of our food system" yet in addition to the unknown number of unreported cases of food poisoning that occur every single day we seem to be constantly fighting widespread outbreaks of salmonella, E. coli, and other forms of food-borne bacteria that actually kill people.
The solution, we hear from the statist, is to pour even more money into the FDA so they can "get serious" about their job. Hire more people...hound businesses even more...make more regulations...
And then there are farm subsidies...more government interference...
So you're right - We have nothing close to a free market at all in food production and distribution. It's highly socialized. We have tons of subsidies and regulations and inspections and what-not that add to the production costs and drive the consumer prices of our food ever higher - in some cases ten or twenty times higher than in a Mexican market despite the fact that they're basically the same product.
And you don't see a problem with that?
Replying to Col Sanders, below.
My point concerned loose lipped libertarian arguments about "market" versus "government," not a defense of the American food system. But "no safer"? Um, any data on that? Anyway, if you wish to hold up American agriculture and supermarkets as an example of the failures of socialism, so be it. (A very strange reversal of the Nixon-Khrushchev kitchen debates.)
If my African and Mexican examples of "free markets" in food appeal to you, note that they exclude the U.S. corporate intermediaries as well as "government." For an unregulated American system you might try Upton Sinclair's "The Jungle" or read reports on, for example, the unregulated milk markets in U.S. in the 19th century. If you libertarians have a craving for a nice cold glass of spoiled milk from tubercular cows with sugar and chalk dumped into it, well then an unregulated food market should really hit the spot.
So:
1) Any grounds for the 80% figure?
2) Any statistical evidence for the free-rider/US-subsidised theory?
"When you factor in the anti-immigration political pressure that national health systems create, the case becomes even more murky. Those immigrants, no matter how sick, would probably not be better off back in Chiapas."
Yes, that's a good reason to oppose a national health system -- fewer ethnic restaurants for Tyler Cowen to enjoy!
Every argument Megan makes against government involvement in health care applies to Medicare. Therefore, it's reasonable to ask if she and her supporters in this thread would like to see Medicare repealed. And it's also reasonable to ask if she and her supporters would also like to repeal Medicaid and SCHIP.
I said I would like to repeal Medicare and roll it into some sort of means-tested program. No need to ask. But as it stands, I don't find it especially worrying, except that it's a terribly structured system that has proven nearly impossible to reform.
Medicare is a special case for at least 2 reasons. Since it has been embedded in our financial and medical arrangements, abolishing it has equity problems. In the interest of equity all those who have paid into Medicare would have to be reimbursed and then you would have the issue of retiree benefits from private or state employers. Equity would demand that they be reimbursed, for the cost absent Medicare, if they pay for retiree care.
Another thought:
Some have taken up the argument that the treatments for chronic conditions (e.g. "lifestyle drugs") are in fact extremely serious, which I guess is a way of implying that unfettered free market mechanisms in pharma research have optimized our consumer interests.
I apologize if it sounded like I questioned the seriousness of RA. I didn't - its a bad disease. However, I still maintain that the list of top medicines doesn't come close to reflecting our relative fear of disease.
Oh, and a prediction...perhaps we can reconvene in 25 years to find out:
Given that:
1) Many first-generation blockbuster drugs are about to come off patent, and
2) That will leave a giant profit hole in several highly-contingently-compensated managers' profit centers, and
3) The government and many private insurers are notoriously unwilling to pay for the next-generation molecule when the off-patent cheap generic works just as well...
I predict:
Large, private institutions will double down on their motivation to produce high-profit but low-utility lifestyle drugs.
25 years hence, we'll lament the dozen new and improved ED treatments for each Gleevec the magic of the market gave us.
The problem with your point is that you want to protect innovation, but the current dynamic which allows this innovation is not stable. It is based upon a collection of factors which don't provide sufficient downward pressure on costs, and the result is an increase in these costs well in excess of inflation. The market has absorbed these increases so far, but we are approaching a breaking point.
This means that you cannot have what you want, which is to retain an environment for pharma innovation that is similar to what we have now.
Megan, you seem to be saying that the only way to change your mind is to "prove" that healthcare reform will make things better. There is no way to "prove" it without doing it. There is, however, evidence-many years worth in Canada-that a system different than ours will work. Someone in Canada decided to innovate a procedure for stem cell transplants for Type I diabetes, despite working in a system in which he/she was not guaranteed get any profit, according to you.
Furthermore, it seems to be commonly accepted that the current system is unsustainable. So no matter how much you and other Libertarians would like to keep things how they are, no matter how strongly you want to keep innovation out of government or specialty boards' or medical exerts' hands, at some point in the not too distant future, we will be spending 50% of our incomes on healthcare related expenses. By most estimates you are already spending about $100 a month for uncompensated, emergency basis care. As more and more people are priced out of the system, that amount will continue to go up.
You believe that researchers and scientists innovate to make money. I believe that researchers and scientists innovate because they are wired to look for solutions to problems just because the problems are there,-- because they think it would be cool to invent a telephone, for example. Nope, no proof of that, just as you have no proof that researchers and scientists do it all or mostly for money. Yes, everyone, I know I am naive to believe in people doing good for the sake of doing good, just as I think you are cynical to think the opposite.
You might find that all the equipment that the guy used to extract those stem cells WAS developed, and manufactured, by profit driven evil corporations. Without that equipment, the doctor would be dead in the water.
I actually have a relative who is a big time dentist, who's done gobs of research for which he received no compensation. He actually teaches at a Ivy League medical school. He was one of the guys who did the "proving" research in the efficacy of baking soda and peroxide and pushed toothpaste makers to incorporate it. To prove that, he used fancy diagnostic equipment to track bacteria growth - all invented and made by greedy evil corporations. Without the equipment he could not have tracked the bacteria.
In the future, you will see far more use of lasers in dentistry. My relative has been testing them for almost 15 years for the FDA. Those lasers were invented and made by greedy evil corporations. Without them, there would be nothing to test.
I in no way think corporations are evil any more than I think that they are good. I'm simply saying that innovation is not necessarily mostly or only driven by profit motive.
Without being a scholar of the history of personal computing, I believe the story goes that a couple of guys working out of their garage "invented/created/innovated"(whatever word you want to use) the first personal use computers. They did not have a corporation sponsoring or paying for their work at the time. There was no way to know if they were going to make money off of this or not, but they thought it was a cool idea and did it anyway.
http://www.enotes.com/history-fact-finder/science-invention/who-invented-first-personal-computer
It is true that not all innovations or advances result in corporate profit or are driven by it. Jack Pritchard, MD went a long way in establishing injected MgSO4 as the superior preventative for seizures in hypertensive disorders of pregnancy. Along the way he did well at suppressing (other?) nutritional theories in the disease in which he was aided in his position as a Department Chairman. Also he did provide a share of grant funding to the medical school. Bottom line: medical advance and no corporate profit. However, as Mao said, it is best to 'let a 1000 flowers bloom' and the opportunity for profit, like water and sunshine in the field in the case of flowers, is going to help growth.
Ever notice how when you point out the flaws in Megan's arguments - if you can even dignify them as arguments - it makes you a 'liberal'? Notice how no moderates are ever singled out for disagreeing with her? This is a typical ploy of hacks the world 'round.
Notice also that Megan still hasn't presented any sort of evidence for her assertions. Instead, we get the Nathan Thurm treatment[1]. Pay attention around 1:45 mark. Remember the tobacco sketch where Nathan claims that 'studies exist' that prove smoking is good for you, and when challenged to produce them, he says that the interviewer has to go find them, he already knows what they say? Sound familiar?
Instead of presenting any sort of evidence, we get the frantic response that the onus is upon 'liberals' to show shes wrong, not on her to show that she's right. Doesn't want to take the gamble see, the candle's not worth the game. And didn't I just call that as well in the last thread, the appeal to Pascal's Wager?
Hmmm . . . I claim that we should all start worshiping Ahura-Mazda and renounce daily the evil Ahriman. Anyone who doesn't will suffer the torments of Hell . . . forever.
Proof? I don't need to show you no steenkin' proof. I'm just playing the odds: if I'm wrong, no foul. But given there's a chance, however infinitesimal, that I'm right, the only logical recourse is practice a sort of modified latter-day Zoroastrianism. Notice that in this type of analysis, I'm much more right than Megan could ever hope to be. And yet, I suspect few people will buy into this reasoning.
So, where's even the econ101 cost-benefit analysis with some numbers attached that Megan should have used, assuming that all three layers of her unproven assumptions are given? Or is this yet another level? Does she want a tertiary level of unproven assumptions?
[1]Megan Mcardle as Nathan Thurm. I'd say that describes her modus operandi of late to a 'T'.
Why do people constantly harp on the cost of drugs, produced by "greedy evil" drug companies as such a huge part of medical costs? The costs of most drugs is quite small compared to even one day in the hospital. The cost of drugs is small compared to many medical tests.
About 12 years ago my mother spent a few hours at a hospital for some tests. The bill was about $7,000 - all paid by Medicare. That's just one example. Here's another. A few years ago My wife slipped at home on a Saturday night and managed to put her arm through a window, resulting in a huge cut, but not much bleeding. I took her to the emergency room where they cleaned out the cut, took an xray to make sure there wasn't any glass left and then sowed her up. The total time spent actually treating my wife was well less than an hour. That was something like $3500.
Compare that to the dentist, where not too many people have insurance. I just paid $140 for a thorough cleaning, a full set of xrays, and maybe 15 minutes of having the dentist poke around my mouth to make sure everything was ok. One time, a few years ago, I needed oral surgery for an infection in the jaw bone. That took some time and I paid under $1000. By the way, this is in high cost New York. I somehow get the feeling that those costs would be quite a bit higher if many more had dental insurance.
Nobody seems to question why hospital costs, and related services like tests, are astronomical. Instead they scream and yell about a prescription that might cost $300.
People, including our present government leaders, also vilify insurance companies whose rates only reflect what they pay out - like all insurance. If they were such "greedy evil" pigs they would be making money hand over fist and their stock price would be through the roof. The Market Cap for Aetna is $12 Bil. United Health is 32Bil. Wellpoint is $25 Bil. Meanwhile Apple is $149 Bil. So three of your largest health insurers have a combined market cap less than half of Apple's.
There are many reasons for our high health care costs, with the cost of hospital, hospital related, outpatient procedures, and various tests being absurdly high. Yet nobody seems to ask WHY?
As a physician, I can tell you there are many theories as to why. This is acutually debated quite a bit amongst us, with no clear winner. A few possibles:
1. the high cost of defensive medicine due to the fears of malpractice litigation
2. the ever increasing cost of technology much of which is used indiscriminately for no known benefit (ex. MRI's and back surgery for back pain; these have largely fallen out of favor; knee arthroscopy for arthritis, also falling out of favor; drug eluting stents with no known benefit over low cost medications for many with coronary heart disease; the list goes on)
3. that physicians spend on average $64000 a year per doctor filling out forms that are required by insurance companies
4. ancillary workers needed by doctors and hospitals to actually even get paid-private physicians usually employ 1-2 each for this
This is not an exhaustive nor authoritative list, just a snapshot of the most commonly discussed possibles.
There are several healthcare systems in the US that provide better than average care for lower than average costs, such as the Cleveland Clinic. They have salaried physicians who must meet quality benchmarks, limited access to pharmaceuticals based on cost, and systems that promote evidenced based practices, all of which would happen under a universal single payer systems such as this one:
http://www.pnhp.org/
Yep! You're right. The government will contain costs. That's proven by all the other government programs that work so efficiently. That's why government spending keeps going down and we have a huge budget surplus. It's all because Government is so darn efficient. It's amazing how cost effective the government has been with its 2 present medical programs, Medicare and Medicaid. There just rolling in excess money.
Not only that, but the bureaucrats deliver top notch service. That's why it only takes you 10 or 15 minuted to fill out your income tax forms, after reading the easy to follow, one page, instructions.
That's why we all recently read about how the Mayo Clinic was trying to emulate the government run Walter Reed Hospital, and most other hospitals are trying to copy from government run VA hospitals. That's why the Social Security Administration has several totally incompatible computer systems. When it comes to quality and efficiency, NOBODY can come close to government bureaucrats.
Yep! The government is absolutely guaranteed to provide effective cost control AND efficient quality service, and all you have to do is look at how well run the rest of the government is to see it.
no one, including me, is proposing government run health care.
Obama visited Cleveland Clinic recently. The NYT pointed out the reform propsals would in no way promote such clinics.
Chuckle. What saves this comment from being completely obnoxious is just how wrong it is. I guess he's never seen the Pew survey report that shows that only 9% of all scientists identify themselves as conservative, and only 6% are Republicans. I'm guessing also that he's technically untrained enough not to have heard of selection bias or the dangers of relying on anecdotal evidence.
For my part, one thing I've found amazingly consistent among the meta-incompetent right(at least, the ones I see online) is how they are so sure they know so much while in reality knowing so little. As Mark Twain famously said, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."
Rob, I know you know better than this. People aren't disputing what she says, they're being skeptical and demanding some evidence. The skeptical ones don't have to produce any evidence whatsoever; the burden of proof falls solely on Megan and others who endorse this thesis.
But this does point to yet another interesting pattern. That would be the continuing attempts to try to foist the burden of proof onto the skeptics. No, I don't have to try to prove anything, nor present any evidence. That's all on the people who say things like "America has the best health care system in the world", or "Government price schemes will destroy innovation in the pharmaceutical industry".
A further problem is that innovation seems to be on a downward spiral for reasons independent of any sort of libertarian dialectical analysis. People can claim that "government price controls stifle innovation" all they want, but the reality is that innovation is being 'stifled' anyway. Given that this is the case, this seems to be yet another reason to discount this line of argument.
I also question the need for more, more, more pharmaceuticals. We've become a nation hooked on drugs, when changes in lifestyle would most likely fix 90% of our ailments. I suggest that Big Pharma is doing us in. Let's hang em high.
Would that include new antibiotics as bacteria develop resistance to old antibiotics? How about antivirals to battle always mutating viruses?
I'm sure if we just "changed or lifestyle" things like Multiple Sclerosis, or Ovarian Cancer, or Pneumonia, or Osteo Arthritis or any of the thousands of other maladies that effect people would all just magically disappear.
Yep! That "evil Big Pharma" that constantly works on things to cure disease, or reduce disability due to disease. is doing us in and should be "hung high". I'm sure the next time you get a cold you will not take aspirin or simple cough medicine. After all, both were developed by "evil big pharma". I'm sure If you come down with bacterial pneumonia, you'll refuse the antibiotics developed by "evil big pharma". Instead you can just "change your lifestyle" and see how that works out.
I'm just playing devil's advocate. But I do think we have way too many recreational drugs(Viagra, Cialis) and diet-related drugs(Lipitor). People wouldn't need cholesterol-lowering medicine if they just ate right, dammit. Oh and men who exercise and eat right wouldn't need special assistance to get it up after 50. I bet the ED/Cholesetrol drugs are 50% of all drugs sold!
That's really not true. A substantial number of severe heart patients have livers that just pump out the cholesterol on its own--the only way to stop it was to eat a nearly entirely fat free diet, which almost none of them manage to do. I've known two men with this problem. Both were dead before the age of fifty. If they'd been born 20 years later, they'd have normal life expectancies.
Likewise, excercise and eating right won't protect you from an enlarged prostate.
Yes it is a moral issue that a certain% of Americans do not get gold-plated health care like McArdle or myself. I want a more Communist-type utopia where we all get to eat dirt.
I think you're optimistic. At best, dirt will be available every other day, and you'll have to wait in line for three hours to get it.
At best too many liberals are just dumb. They actually don't want Communism, but they keep voting for fairy airy principles that will lead us right to it. The actual, real Communists are a rather small % of the Democrat party.
I assure you, EH, I would not have reached the weight I have here in Britain on a diet of dirt.
As I noted up thread, I am skeptical of the claim, and I can provide counter-examples, as in the development of the transistor and laser at Bell Labs.
One of McArdle's rhetorical devices is worth noting, because it is stock fallacy of libertarianism.
When "market" libertarians argue that laissez faire is better for all of us, how do they explain the current inequities of the society? Their reply is that is will be better for all of us in the long run. This was the argument for noninterference in the dreadful labor (and healthcare) conditions of the 19th century and during the depression. And it is McArdle's case for the lives that "will be saved" by market innovation, (a peculiar philosophical position for anyone who purports to be positivist or utilitarian, arguing the moral value of a nonexistent good). She then gussies it up with the red herring of "geometric progression," failing to note all the other "geometric progressions" involved in any counterfactual.
This "long run" moral argument for the market was what prompted Keynes' famous retort: "In the long run we're all dead." Particularly apt in the present case. It is one thing to argue for the rights of property. It is another to argue that the "rights" of property are more conducive to healthcare than the right to healthcare. This is why the GOP must, on so many issues, resort to obfuscation, false data, outright lies, and mass hysteria. It is like arguing with a weeping, shrieking five-year-old clinging to her "property."
The idea of free markets and libertarianism is that most people make out well in it. A certain % are born losers and are destined to be dirt eaters. We just have to live with it.
Care to be more specific about "most" people? Most you know? Most on the planet?
By any economic measure the vast majority of human beings, living and dead, qualify as the "losers and dirt eaters." Libertarians have a fondness for the word "losers." It betrays the rivalrous instinct in their market rationalizations. Their only empirical measure of "liberty" boils down to inequality of outcomes. The more "losers and dirt eaters" below me the greater my "liberty."
Libertarianism can be roughly defined as favoring the maximum social inequality compatible with my own privileges. Thus it can appeal to many income levels, provided their are sufficient losers and dirt eaters under the boot.
Hmmm . . . I'd say that the development of those two devices is not quite so simplistic as that; in particular, the ur-transistor was actually patented in Canada, iirc, and the first official working laser was developed in Hughes Labs. But you're basically correct in re the comments about non-profits/regulated monopolies. Ironically, from your source on Bell Labs upthread we have:
What, it was the loss of government money that was a big part of the decline of Bell Labs? Say it ain't so!!
I actually worked at Xerox PARC in the 1980's, so I'm pretty familiar with that situation. PARC was set up to develop new technologies to compensate for the fact that Xerox's patent on the copier was going to expire. A truly Golden period, which the company was never able to fully capitalize on.
The transistor was definitely invented by Shockley, Bardeen and Brittain at Bell. There were competing patents by Julius Lilienfeld at the same time, but he did not construct working devices (the patent office only requires working models for one type of claim - perpetual motion machines). Regardless, the Bell group was unaware of Lilienfeld when they did their work, and when Bell set up their tutorials for industry.
And Bell Labs never was the same after the AT&T breakup. The changes did not happen instantly, but the loss of the monopoly source of funds was a game changer. The separate baby Bells were supposed to continue funding Bell Labs at prior levels, but it did not happen. I have many friends who worked at Bell before, during and after the break up, and it is sad that the world has lost this "patent factory." In this case, competition and innovation did not mix.
So let me offer another hypothetical. If liberals can build an alternative to the profit model that's at least as productive, in dollars spent, as the private sector, and looks reasonably likely to scale, I'll probably cave.
Hmmm, let's check the contenders. I think those North Koreans might be on to something like this. Has anyone looked into how that's working out?
Seriously though, a Brit acknowledged the other day that our cancer survival rates are better across the board than their NHS. Mark Steyn pointed out today that those life expectancy difference actually move into America's favor the older you are: at age 80, you have a better life expectancy here than in Sweden, which has the highest LE at birth. Since people need more health care as they age, LE would correlate more strongly to health care quality at higher ages. This argues again that we have better healthcare.
One thing that's a common theme among leftists I encounter is they have an visceral hatred towards businesses and executives.
A look at the WHO life tables confirms that this is true; for those aged 80-84, the life expectancy in Sweden is 8.8 years vs. a life expectancy of 9.1 additional years in the United States.
Otoh, the life expectancy for Canadians aged 80-84 is 9.4 years. So by your argument, Canadians have the better health care.
I'm sure you're going to change your mind when presented with this evidence, given that this is your argument ;-)
Ain't it amazin'?
Liberals say that we spend more our private health care system than other developed countries yet get the same or lesser result. The answer is to give people an alternative with more government involvement.
The United States also spends far more on our government run schools (aka public schools) than any other developed nation. Every study says US results are worse than all the other developed countries. Yet, all you hear liberals say about that is that we should spend more money on government run schools. When conservative recommend an alternative like vouchers, the liberals all yell bloody murder.
It's because they're not really interested in better results, but more equity. Even its equitable dirt-eating so be it.
Given that virtually every other socialized country has a lower LE at 80 than we do, I'd say the point stands. It does suggest Canada has better care than most socialized countries.
But what you would really want to look at is how the relative rankings change as a population ages (i.e., as they start becoming more dependent on medical care). The U.S. starts out at 78.1, below most countries, and ends at 9.1, above most countries. That suggests our care is better than most countries.
I suppose one would want to do a detailed analysis at all ages to track this movement more reliably. You still can't control for things like lifestyle (red wine and green tea, etc), but one certainly ends up with a better indicator of health care quality than LE at birth.
Interestingly, according to Steyn the longest-lived people are in the relatively poor U.S. Northern Plains.
@ Alsadius: 50s replay: Whats not to like ?
Trying to dig out of the Depression while fighting off
terrorists armed with world black market NBC weapons.
Thinking penicillin would have saved the baby's life.
Also set the clock back on Civil Rights and
Women's Rights. Still smiling ? I am not.
So you tell me: What is the _your_
worst case scenario for 2010 ?
What Philosophy will rule ?
Bell Labs:
Yes, Judge Green did us a real favor there:
Amputated the Crown Jewels, he did.
A few years later a Clinton appointee came
around and gave a speech on the new regime
which ligated whatever creativity remained.
They had Philosophically superior uses for
the funding.
My worst case scenario for the ruling philosophy of 2010? That's four months away. Prevailing philosophies of a nation do not change significantly in four months, barring national trauma. Assuming no 9/11, Pearl Harbor, or similar "OMGWTF" type event, it will be basically indistinguishable from today.
I'm guessing that you aren't aware that your namesake supported a robust welfare state. More likely you're a Rand type stuck at a teenage just-having-finished-Atlas-Shrugged level of understanding and you wear Hayek like a bumpersticker.
If McArdle keeps accumulating these types in her "crowd" she'll be guest-blogging at NRO and on the way to her own Liberal Fascism-style book in no time.
I haven't read "Road to Serfdom", but I suspect Hayek supported some measure of social welfare as an appeasement to prevent Bolshevism, rather then any liking for it on a moral level.
That would follow from the American popular caricature of Hayek, where conservatives almost to a person literally know nothing else about Hayek other than the title of one of his books.
http://books.google.com/books?id=nclLLOfnGqAC&lpg=PP1&pg=PA55#v=onepage&q=&f=false
It has nothing to do with Bolshevism, it's a sane conception of the minimal duties of the modern rich state to its people. Public healthcare falls easily within those bounds, as does welfare for the unemployed.
The man is not a Randian nut by any stretch, I'd guess that if more Americans who think they're in agreement with Hayek actually read what he wrote they would be underwhelmed (due to the fact that he doesn't align with their truly nutty, adolescent views of economics and history).
RTS was a specific response to a specific threat. And note that Hayek's RTS thesis actually turned out to be wrong - we have 50 years of western democracies incrementally increasing regulation and the size of the state in general and not ONE that descended into authoritarianism or anything resembling "serfdom".
@ElectronHayek
I haven't read "Road to Serfdom
(Wipes tears from eyes) Thanks for that, that's my biggest laugh in quite a while.
Hayek, of course, says right in that book's introduction that it’s OK for government to provide a generous array of social services. It is telling that libertarians are ignorant of what their proposed patron saint says.
Megan has asserted a number of interesting things. She has provided NO evidence that any of her claims are true, and moreover, has speculated that the government may impose price controls in future. Of course, the government doesn't impose price controls, then her vaunted innovation will occur even in a single payer system. Really, Megan's argument is an argument against price controls, not against any system of health insurance in particular. As Matt Steinglass says:
I feel that we are really getting somewhere in this discussion. I have two basic questions here. The first is this: if Megan thinks the Dutch system is fine apart from the price controls on drugs, why don’t we adopt the Dutch system but not the price controls on drugs? If Megan’s problem with the House insurance reform bill is not the actual House insurance reform bill, but the prospect that it will ultimately lead to price controls on drugs, why doesn’t she back the House insurance reform bill and insist that it not adopt price controls on drugs?
http://trueslant.com/matthewsteinglass/
Good question. Megan hasn’t (and can't) answer this.
Now Matt feels that we are getting somewhere in that discussion, but I believe that he hasn't read this thread, or he would understand that his optimism is misplaced. So called libertarian commenters have simply accepted her claims on the basis of a pre-existing theory and they clearly don't wanted to be confused with facts to the contrary.
As for the " road to serfdom" crowd, consider this:
[...] HEALTH
We favor the union of all the existing agencies of the Federal Government dealing with the public health into a single national health service without discrimination against or for any one set of therapeutic methods, school of medicine, or school of healing with such additional powers as may be necessary to enable it to perform efficiently such duties in the protection of the public from preventable diseases as may be properly undertaken by the Federal authorities, including [...] co-operation with the health activities of the various States and cities of the Nation.
[...]
The supreme duty of the Nation is the conservation of human resources through an enlightened measure of social and industrial justice. We pledge ourselves to work unceasingly in State and Nation for: [...] The protection of home life against the hazards of sickness, irregular employment and old age through the adoption of a system of social insurance adapted to American use [....]
Karl Marx? Vladimir Lenin?Mao?
Try Teddy Roosevelt , Bull Moose Party platform, 1912! (hat tip, Gary Farber)
http://en.wikipedia.org/wiki/Progressive_Party_1912_%28United_States%29
(intended as a response to ElectroHayek August 15, 2009 5:09 PM)
The problem I have with you're geometric-growth-of-technology argument against national healthcare is mostly that you aren't taking the implications seriously enough. It's actually an incredibly anti-libertarian insight.
Technological and scientific advances (of all kinds) made in the last 400 years have had an incredible impact on the material conditions of those living in the modern day, and if anything progress is likely to be even more radical in the next 400 years. Further, innovators now (through intellectual property law) capture only a tiny fraction of the utility they create.
The implication seems to be (1) that despite all we spend on science and technology as a country and as a planet, we undoubtedly spend only a tiny fraction of the optimal amount by a utilitarian reckoning (2) there is an extreme moral urgency to increasing our research output.
We could tweak our patent law to make it easier for holders to profit from new innovations that improve on their patents, and to some extent that might be a good idea, but it's a double edge sword because it puts a cost to a zero-marginal-cost good and inefficiently discourages these improvements.
My own view is that we should expand government expenditures on research to at least be 5% of GDP (on par with the military), even if means raising taxes, or better yet enter into an agreement with all industrialized nations to do the same.
Sir Eglamore (cool name...one of the twelve at the Round Table, or an "eggbeater" Isn't the internets (sic) a terrific investment?!? )
hear hear!
With Asia providing all of the factory labor for the global economy (the social conservatives just won't acknowledge that Walmart owes its cheap, schlocky goods to Chinese girls on birth control, see James Fallows "China Makes and the World Takes" on Shenzen 2008) the real US "value-added" is research and medical technology.
Let's turn UC Merced into a campus to produce Spanish-speaking doctors and nurses. More funding for the NIH. More funding for DARPA. Ask that McArdle woman why it's NOT Silicon Hyde Park. Massachusetts, Pennsylvania and Illinois have underfunded their PUBLIC universities.
The "free-marketeers" in Mississippi....forget about it. If Haley Barbour thinks we will entrust the 21st Century economy to the hillbillies from the Deep South he is seriously deluded. Keep lobbying for that FEMA money Haley. Mike Huckabee? They don't split DNA in Bible College. Palin? 6 years and a degree in journalism?!?
"We could tweak our patent law to make it easier for holders to profit from new innovations that improve on their patents, and to some extent that might be a good idea, but it's a double edge sword because it puts a cost to a zero-marginal-cost good and inefficiently discourages these improvements."
This is an excellent point, the irony is all this good stuff that Megan claims will be destroyed is due to government-created monopoly. Why isn't (as you state) more monopoloy = better, if drug innovation is so awesome? If Megan had, say, a track record of calling for extensions to drug patents, there would at least be some little smidgen of consistent argument on offer.
But instead we have a string of libertarian tone poems.
I'm relatively new to this side of the debate, Megan, so first, thanks for articulating your perspectives. Second, I'm a bit confused: Are you talking about socialized medicine along the lines of delivery of service, or rather about single-payer PAYMENT SYSTEMS? Because, while your argument about Pharma makes sense (and all kinds of biotech are similar), I just don't see the point or purpose of a payment system based on employer-based, tax-deductible insurance premiums. As you know, in the current state of affairs, the majority of Americans have seen most of their pay increases going to pay for higher healthcare costs (both insurance and services are inflated in cost).
I know (and agree) that you don't want to be "treated like a cell" within a system. But do you honestly think that actuarial tables are treating you with more personal respect or dignity? We are watching insurance companies commit murder by spreadsheet through recission, denial of services, etc. I just don't see how a well-regulated government program would somehow be less personal than the current impersonal system.
Truth is, from a payment perspective, you are just a cipher. Healthcare economics is impersonal. We look at trends. At least in a democratic society, you'd have more of a voice/vote/say in the process if you could fight back against an insurance company by joining a public plan.
In sum, I agree that we need to innovate and drive economic growth by improving everything from healthcare IT to pharma to treatment protocols. We should handsomely reward (through profit and accolades) success in improving healthcare. But I promise you, as a provider, that insurance companies are NOT profiting from providing better treatment. You could remove for-profit insurance from the equation and still have an innovative, personal, powerful healthcare system.
Megan:
That's really the only option you leave us. You seem congentially incapable of writing about this without it simply reducing to your speculations.
There's not a single word of empirical observation above. There's little or no such observation in any of your health-care writing.
Some lunatic Ayn Rand freak thinks freaky Ayn Rand things about health care services. So what?
Your ad hominem attacks have no meaning. You lost.
EH:
I can't lose when I don't play her rigged game.
In summary:
Megan: You can scream at me.
jfxgillis: YEAAAAAAARGH!!
Well played, sir.
You're changing the rules. Earlier you wrote:
Which could certainly be considered a valid point with respect to Sweden. It is not a valid point with respect to Canada. Me, I'm not ideological; I'm neither a registered Democrat nor an official Republican and have voted for candidates from both parties(as well as those from third parties) over the years. I don't care about fulfilling the dictates of some political or economic theory. I care about what works. If you want to use your observation above to suggest that health care for those eighty and over should be less like Sweden and more like the U.S., I would say that you're on to something, based upon hard, empirical data.
But by the same token, and based upon that same set of data, it also suggests that for health care for those aged eighty and over, it's better to be more like Canada and less like the United States. Frankly, I'm at a loss as to why anyone would think otherwise.
It does not suggest that our health care is better than that delivered in Canada, to name but one country that has superior outcomes for this age group. That's all I particularly care about.
Me, I'm not ideological;
Sorry, I stopped reading here; it was too hard through the tears of laughter.
Finally, look at this again:
And this:
This strikes me as bizarre. You cannot on the one hand start with the presumption that the United States has the best health care in the world and then selectively dismiss contrary data[1].
Nor can you say that the United States has the best health care in the world, and then when presented with contrary data such as life expectancy statistics, dismiss them as 'not being controlled for independent variables'. That is your job: You have to explain why this doesn't disprove your thesis. It most assuredly is not upon those who are not insisting that the U.S. is the best in the West.
Why conservatives seem to think the burden of proof goes the other way, I'll never understand. It's as if some startup comes to me looking for some venture capital, and if I evince the slightest bit skepticism by asking them to justify for their figures for the first three quarters, they challenge me to prove them wrong. Huh? It just doesn't work that way.
[1]Why is it that when life expectancy is greater for certain age group, it 'proves' the superiority of the American system, but when it's lower, "other variables haven't been controlled for"? Doesn't the same observation also apply to those countries the U.S. beats out in terms of life expectancy? Wouldn't that be, you know, consistent? As opposed to the inconsistency of the first formulation?
re: Life expectancy getting longer as you get older
Consider that as our overall LE is relatively low in the US, an individual who has made it to a certain age could have an overall better level of health than someone else at a similar age in another country with better healthcare. This could explain part of the dynamic.
Agreed. I don't think it would be wise to suppose that basic research is going to get any cheaper over time, at least, not in the short to medium term. Think about particle physics in the 30's. I could build (assuming I had the necessary craft) particle accelerators, cloud chambers, etc, comparable to what they used to do cutting-edge research from scratch with basic materials I could find at any good hardware store, plus an electronics supply store. Shoot, Scientific American used to have a 'how to' column in the 50's on into the 70's that would give you explicit instructions on how to build this type of equipment.
These days? Well, you're not going to be building a foot-square cyclotron in your garage and discovering new physics. No, what happens these days is it takes an international consortium do this sort of research; something over a hundred countries to fund, build and staff the LHC to mention the obvious one.
The same for any of a number of other fields. I personally grew up with ham radio when you were supposed to build your own equipment, and the days where some guy is probing a galena crystal with a cat's whisker to find the right contact spot are over and done with[1]. Sure, skull sweat can always beat out better toys . . . to a point. But even that has been commodified to the extent that the sweat is now often collected from the common brow of a hundred or a thousand researchers.
Research that ultimately drives new products and new techniques in health care doesn't seem to be the exception to this rule. Goodbye, Leeuwenhoek.
[1]I suspect that it was just this phenomenon, the garage or attic inventor, that made early sf so appealing to so many. And less so today.
Ah, I meant to comment on this yesterday, but forgot:
It's not just libertarians that use this style of 'argument'. Suppose you are in a hospital engulfed in flames and you have can do just one of two things: save a couple of three-year-old kids, or a freezer full of fertilized ova(say 100). Do you save the two kids on the basis that they're alive here and now, or do you save the 100 snowflake babies? Bearing in mind that they have the potential for 'geometric progression', that is, potentially, they could result in more living humans in 60 years than any two children ever could in the normal course of things?
If you buy the 'potentiality of geometric progression', Megan's argument given with absolutely no figures, you'd wheel out the freezer and leave the two children to die - regrettable, but pragmatic on these grounds. If you don't, which, I suspect, is most people, even those here who say otherwise, then you save the two kids.
Boy, lots of comments here. A few comments on the comments:
Megan doesn't have the burden of proof. The point of her article is to explain why she feels the way she does, and what it would take to convince her otherwise.
Anyhow, as she has pointed out a number of times, she is saying something fairly simple in terms of standard economics. If people tried to argue against her in some other field, they would sound ridiculous. Maybe health care innovation is indeed different, but someone needs to prove that.
Several people said things like, But Megan has completely failed to address the moral imperative of the people suffering now! Remarkable - read the post again, as its point is to address that. Her point applies in many contexts, including global warming: Gutting our technological society, or impeding it, kills people. A lot of people.
You're contradicting yourself. If she's not trying to be convincing, then it doesn't matter what other confirming or disconfirming sources might say. She can say that she believes it because the Blue Diamond Fairy told her so, and it wouldn't make a bit of difference, at least, according to your saying. She could also with just as much validity say that she'll change her mind when anyone can get the Blue Diamond Fairy to tell her otherwise.
You are also, of course, dead wrong about 'something fairly simple in terms of standard economics' . . . but why don't you try to be convincing where Megan is not ;-)
Huh? She can believe in the Blue Diamond Fairy if she wants, but you wouldn't read her. She represents a point of view shared by a lot of economists; it might even be the normative position. She is pretty convincing, actually. Only - people who want health care reform don't want to think about it that way. Do you think it's a coincidence that people in favor of health care reform "aren't convinced", and those who are against it think it's a mighty good argument? We tend to prefer arguments that favor what we want to believe.
So Megan is asking a simple question: Are you really sure you're right? Most of us don't understand economics that well. I'd submit that events of last year prove that no one understands economics that well. If this does harm innovation, it will kill a lot more people than you can save now. Have you taken that into account?
Hooray! The public option is dead!
We did it. We killed the worst part of this bill, the part that probably meant government would eventually end up taking over 15% of the economy.
Ed urges we not be complacent, and he's right, but nonetheless this is a moment to savor. Congratulations to everyone who spoke out against this monstrosity, whether at a town hall, online, in a letter, at the water cooler... Congress has heard our voices and sanity has prevailed.
God Bless America, the land of the free.
And now I do my happy dance.
Thanks for a laugh at the thought of you morons sincerely taking marching orders from Ed Morrissey.
We don't take marching orders from anyone! What we do is gather information and viewpoints from a number of different web sites and develop our own marching orders.
And since you are evidently prone to ad hominem attacks, with no reasoned logic, we certainly aren't reading you for information or viewpoints.
It's always been amazing to me how leftists don't believe that we small "l" libertarians can think for ourselves, but must rather be guided by others who think for us. Sounds like projection to me.
A non-response to any points being made, and a rather infantile one at that. That's why I don't take you seriously. Iow, it's not your ideology politics I find so lacking in content; it's the intellectually negligible manner in which you defend them.
For the life of me, I can't decipher any unambiguous meaning from your reply. Maybe that was intentional. Shrug.
Megan feels that big profits are necessary for the pharmaceutical industry and developers of medical technology to continue to innovate. As she well knows, the pharmaceutical industry supports the administration because it feels an increased customer base would increase the industry's profits. This doesn't affect her thinking. In response to a post of mine, she said she would like Medicare to be replaced by a means-tested system. This is bound to decrease the customer base for drugs and medical technology, but no matter. There are elderly equivalents of welfare queens out there getting help from the feds with their medical bills, and she'll have none of it.
The idea that somebody who wants big profits in the health business to spur innovation would also want to hold down the number of consumers of this innovation is too contradictory for me to understand. Maybe TallDave or some other economic genius can explain.
Doesn't seem contradictory to me. That's not the kind of profits that spurs innovation. Free market competition spurs innovation.
Apparently the framers disagreed and decided to put a patent system in place under which the government hands out monopolies (enforced by the power of the state), the best modern example of which is the drug industry.
Not sure what your point is. You're in favor of patents? Or against? Or you think this proves that the free market is unconstitutional? Or you think that I think that an absolutely unregulated free market is the way to go?
The driver of innovation in drugs is only secondarily competition and primarily the patent/monopoly system. It's (apparently unintentionally) ironic that Megan and others are using the market for drugs as the center of their innovation "argument" (in fact it's so incoherent that I'd be abusing the term without scare quoting it).
It's the sort of basic error that makes me look at Megan and her ilk on a subject like healthcare and decide they just don't want to be serious. They're/you're using this as an excuse to have a libertarian brain fart where terms like free market, innovation, capitalism, freedom, choice, etc are reassembled in near random order, bald assertions are made, and none of it has any connection to reality.
Steve C,
I think you have a chicken or egg problem. Patents are meaningless unless there is competition. All a patent allows you to do is prevent someone else from making, using, or selling the patented item. In the absence of competition, why would you bother obtaining such a limited monopoly?
Patents exist BECAUSE there is competition in the marketplace. The government grants a limited monopoly in exchange for full disclosure of the invention. This spurs innovation as companies try to be first to develop and patent something.
MikeR's thinking is even more bewildering than Megan's. Adding to the pharmaceutical industry's customer base doesn't inhibit free competition between individual actors in the industry, and the sentence "That's not the kind of profits that spurs innovation." strikes me as a slogan rather than a logical argument. If 20 million more people have health insurance and some fraction of them can now start buying more expensive medications, Lipitor will still be competing against Simvastatin and Viagra against Cialis. To repeat, I'm still confused as to why Megan feels that fewer customers means bigger profits.
If you don't understand why sacrificing market share in order to maintain hire prices will often yield vastly higher profits then it isn't anyone's job to explain good business practices to you. However, you shouldn't feel too bad as most people make the "let's reduce price to expand market share and we'll all be better off" mistake.
As to why an existing company might be in favor of the legislation? Because they've just created a huge barrier to entry for any start-ups that can no longer rely on substantial profits (resulting from heavy R&D) in future drug development.
I think many large, established companies would be happy sacrifice -some- future potential profit gains if it reduces the likely hood of another company coming onto the scene and displacing them.
Doesn't everyone realize nearly every large company, once it is established and stable seeks to erect barriers to entry as a way of maintaining its competitive advantage?
"Doesn't everyone realize nearly every large company, once it is established and stable seeks to erect barriers to entry as a way of maintaining its competitive advantage?"
Not libertarians. They love their "free market" fiction, in which government (evil!) is in this corner and businesses (good!) are in the other so much that they decide it's real. Some of the most highly profitable corporate investments are campaign contributions and lobbying. But if you just posit that businesses and politicians don't get in bed together at the earliest possible moment, your mental experience is so much less complicated, and you can indulge in manichean fantasies where you come down on the side of innovation and free markets and babies and apple pie.
I think you've missed the point. Libertarians are not defacto in favor of anything a company does. Companies will often use anything at their disposal to maintain their advantage, and once they are big enough that includes government and regulation. How that is an indictment of a libertarian is beyond me, because the libertarian would simply keep the government out of it.
My point was simply that large corporations stand to benefit the most if the rules are changed so a new company marketing the next successful drug no longer have a large profit potential. Sure the existing company will trade off future large gains in growth for some stability, but when you already worth $100billion it's a trade off you're willing to make in order to maintain (and slowly grow) that $100billion worth!
I'm not a libertarian, but I agree with -some- of their conclusions.
samX, the practical effect of Megan's desires is a) no increase of the medically insured if it comes from government action, and b) a decrease of elderly people with medical insurance achieved by means testing Medicare. This has to do with the total market, not market share. If you think increasing the customer base affects market share, please explain your reasoning. With regard to the sentence of yours quoted by Steve C, please also explain why increasing the customer base creates a barrier to start-ups. And since you're defending MikeR, please explain why increasing market share doesn't provide the kind of profits that spurs innovation. What kind of profits do?
I started reading this blog to understand how libertarians think. I found that many people on the right object to their money being used to subsidize the life style of people they regard as improvident, and some regard this kind of income transfer as immoral. I understand this point of view, and part of me agrees with it. But the garbled thinking exhibited by Megan and her followers on health care reform is unconvincing, to put it mildly.
"To repeat, I'm still confused as to why Megan feels that fewer customers means bigger profits."
Companies often decide to serve fewer customers in order to make bigger profits. I don't think there is much to debate.
Your point about increasing the population of potential customers by adding them to the insured list is well taken, but they are already potential customers now.
What you and others seem to be talking about, and I apologize if I got it wrong, is getting better/cheaper rates out of the drug companies to serve these newly insured (by the government) customers. That may help profits, but more often than not cutting prices in an attempt to sell to a larger group of customers is disastrous--the loss in profit margin does not pay for the increase in volume.
So it would not be better for most drug companies to be persuaded to lower their prices by a significant amount now that the government is going to buy their drug for more customers.
This isn't really true when you are talking about companies with very low COGS and high initial development costs. In these types of cases it often makes sense to lower prices and make it up on volume. Of course this breaks down when the market for your good is so distorted that you can charge $400,000 a year for a drug that makes you slightly less sick. Of course what Pharma companies should really like to do is figure out how to successfully price discriminate , so they can charge the $400,000 to the people who can afford it, but not give up on all the other patients who can't. For this reason, I think a system like one that was proposed by an earlier poster might make sense, have a "free" public option plan, but it only has access to older medications and treatments. Say maybe a certain time from launch you have total market exclusivity and can dictate your own price just as you can now, then after a certain amount of time the drug becomes eligible for coverage by a public plan (which is free to negotiate price), some time after that it goes completely generic.
Of course with drugs only accounting for about 10% of medical costs...this isn't likely to get very far on a savings front.
I too get the impression that it's just word-salad. It's to the point where these sorts of people aren't even wrong anymore. It's more on the order of the answer to the riddle of why the chicken crossed the road - "Because he didn't have lips!" While that may work fine for some as performance art, there's really not much of an argument anywhere in there.
Of course, Megan's pathological inability to admit she's wrong on these sorts of things doesn't help either. It's a well-known trait of hers frequently discussed elsewhere that once she tosses off something that's obviously wrong . . . it just goes to prove that she's really right. And she'll write five more posts to prove it, putting much more energy into defending the original inanity than she ever did into researching the point in the first place. It's as if she can't function without some sort of enemy. Some people are wired that way, I guess.
You realize your post is written for yourself, I hope? Some people truly are wired to spend all day, commenting 15 times on every blog post, complaining about how everyone who disagrees with them just doesn't get it.
Me? For the most part I'd just like to be left alone by people like you, and I speak up every now and then to let my neighbors-and-would-be-dictators know that just because you like it doesn't mean everyone else does, and please don't try to feed it to me and my kids.
And the more we tell them this, the more they f**k with us.
We just can't win.
@ Alsadius: Not much change in four months, absent Apocalypse.
Congratulations: Professional grade simulated misinterpretation,
particularly your capitalization on my mistake in specifying
2010 instead of 2012, referring to the next two national
elections. One more time:
If, sometime during what is left of the next four years, leading
up to the 2012 presidential election, another economic meltdown
equal to the one just past occurs, how will the
ruling philosophy change ?
If your answer is still "not much", then I ask you, and anyone
else still on this thread: What would have to happen to change
the ruling philosophy, short of some moot-making TEOLAWKI
such as Yellowstone going off, again ?
You have no idea why I get periodically sucked back in to reading and commenting here. A large part of it is ill-mannered gawping at the victims and their severed limbs while driving slowly by a train wreck. In my personal opinion, and the opinion of a lot of other people, Megan's job is to attract eyeballs and clicks, not to make coherent substantive arguments backed up by scholarship and research. I'm only in on this round because of what I read elsewhere that was delivered in an "Oh, Gawd, what has she done this time" sort of tone.
Right. You have all sorts of economists on tap that you can cite for this one. Would you care to supply some links or quotes?
She hasn't even made a proper argument. What she's done is pile bald assertions on top of unchecked assumptions and then speculated, and then asked her audience to guess at the consequences if she's not wrong.
No. They tend to think about it in an economics sort of way. Or a scientific sort of way. They want evidence, not assertions, assumptions, speculations, and dialectical libertarian analysis.
You're not making any sense. Though it does explain how you guys think. My crowd tends to prefer empiricism, the scientific method, verifiable facts. We reason to a conclusion, not backwards from it, as you seem to be saying above.
Sigh. Let's assume for the sake of argument that this arrangement 'harms innovation'. How do you know that the costs will outweigh the benefits, that is, that the lives lost later will be greater than the lives saved now? What sort of numbers do you have?
But we can go even further. I have it on good authority from the god Ahura-Mazda that you should send me a check for $5,000 right now. If you don't, he says that you will be tormented in Hell beyond your wildest imagination for eternity. Not 100 or 100 million years. Eternity.
So, are you going to send me that check? You might say that that you're pretty sure I'm wrong, even 99.999999999% sure I'm wrong . . . but eternity is a pretty long time. Since you apparently think Megan's argument is a good one, I'm sure I'll be getting that check in the mail sometime this Wednesday or Thursday, right?
Btw, I suggest you read the whole thread before making any more comments. These points have already been addressed.
@ScentofViolets: You have no idea...
Who does ? Seriously, unless the contributors to this thread
can agree on a common data base and rules for analyzing it,
how can their debate move forward ?
A Science Court could rule on the medical/technical issues,
which is why we do not have one; TPTB would lose the power
to choose to accept conclusions justifying their policy
choices, delivered by their pet certificated experts
on "settled science".
Economic experts do exist: At least one correctly predicted
the meltdown; So why is he not advising the President?
See above.
Bayesian Analysis might help, but tends to give cautious,
conservative answers: When in doubt, don't, don't bet more
than you can afford to lose, if it isn't broken, don't fix it.
No opportunity for cri$i$ management there.
ScentofViolets, I'm not sure what more to say. This is standard stuff. You can start with Greg Mankiw (gregmankiw.blogspot.com), author of perhaps the most popular textbooks on economics; he has several posts there on this, including one where he cites Megan approvingly. But anyhow, it's not rocket science, it's the way most of us were taught economics. Free markets encourage innovation, command markets suppress it. If you don't agree, fine. If you have reasons why this market is different, fine. But if you don't agree, and heap scorn on the idea because we haven't convinced you, and we haven't convinced you because you hate the idea because it conflicts with your politics and your moral attitudes - well, we're kind of wasting our time.
"Sigh. Let's assume for the sake of argument that this arrangement 'harms innovation'. How do you know that the costs will outweigh the benefits, that is, that the lives lost later will be greater than the lives saved now? What sort of numbers do you have?" - No problem. I guess that means you don't have to worry about it?
"I have it on good authority from the god Ahura-Mazda..." Got it. Nothing here. Standard economics? Maybe, but we didn't convince you, so it doesn't count!
I feel roughly the same way, about the Global Warming panic. But I emphatically don't feel that the conclusion should be: I'm not convinced by the arguments, so Nothing To Worry About! Let's keep running our massive experiment on the Effects of CO2 on the Earth's Atmosphere. That's negligence.
Good luck, MikeR. I gave up on responding to SoV on Megan's former web site due to his/her inability to comprehend the basics.
By the way, Megan has a nice new post now that explains this better than I can: How liberals seem to miss all of what libertarians are trying to say, and translate it into something entirely different. Makes it hard to talk.
There are two versions of this post for some reason. Here's what I posted to the other one:
Because it makes us better off. It's a pity that other countries free ride, but those are the choices we have.
Greg Mankiw (gregmankiw.blogspot.com), author of perhaps the most popular textbooks on economics; he has several posts there on this, including one where he cites Megan approvingly.
NO. The fact that ONE economist cites Megan's post approvingly DOES NOT mean that most economists agree that Pharmaceutical's large profits in the USA is the main driver of 'innovation" in drugs worldwide. as far as I know, no economist has stated this or developed studies to prove this. If you know of such a study, please cite this. Thank you in advance.
. But anyhow, it's not rocket science, it's the way most of us were taught economics. Free markets encourage innovation, command markets suppress it.
That is a general statement, to be argued for and proven in sa particular case. It is not a law of nature(and you stating it as if it were does not make it so).There are in fact plenty of things that government does better than free markets, (for example, you do NOT want to be in a siutuation where you have to rely on private militias for national defense), things that markets do better than government, and things and governments and markets do working together do best.
We are currently engaged in a debate as where the best mix of private and public works in providing health care. NO ONE is talking about setting up a command economy. But if you want to, beat that strawman. Beat it good.
"no economist has stated this or developed studies to prove this". Seems to me this illustrates my point: You have a pretty big built-in preference for not believing.
"ONE economist" - likewise. Sorry, I'm not in the business of researching this. On request, I found one for you-all. If you're really interested, I bet you could find out what more economists think about it, instead of just Paul Krugman.
"There are in fact plenty of things that government does better than free markets" - of course. But innovation isn't among them.
"NO ONE is talking about setting up a command economy" - command market, I said. Oh yes they are. In fact, that was the original rationale for why we're doing this now - control the cost. By now, of course, that's kind of getting swept under the carpet.
Huh - just saw this:
http://hotair.com/archives/2009/08/17/video-the-difference-between-capital-transfer-and-consumption-spending/
A second economist!
Megan, can you refer us to the sections in the bills under consideration that would slash pharma profits by 80%?
As I have made clear in many other posts, I'm talking about the end game, not the current bill on the table.
"Does that mean I think the government solution will be better than a process of market evolution? Almost certainly not. It is, however, possible (even if unlikely) that the government solution will be better than the status quo. Laugh if you will, my fellow libertarians, but nowhere is it written that one heavily-regulated system is automatically better than another just by virtue of being a status quo system that some big (and politically connected) businesses happen to like. The state can deliver flawed systems with flaws of varying degree, and while I have no great confidence in the state’s competence I also have no sound basis on which to conclude that any and every regulated system will work out in practice to be worse than the status quo. We must wait and see before claiming the pyrrhic victory of being right about the suckitude of the new system.
I will say that I am actually confident that the system will continue to deliver high-tech medical pills and medical devices. The military-industrial complex, for all of its many flaws, has spent decades delivering technological wizardry. Even as we speak, our fine President continues a bipartisan policy of sending flying killer robots to shoot up rural Pakistan. Back in the 1980’s, we thought that flying killer robots were sci-fi nonsense, but now the Terminator is governor and Hunter-Killers are real. These technological breakthroughs will not be delivered with maximum efficiency, but that doesn’t happen now either. Moreover, do not confuse technological breakthroughs with efficient delivery of care. Magic pills are one type of innovation, and better delivery of care is another. It is not as glitzy, just as more efficient ground operations are less glitzy than flying killer robots, but it is important. So, if you are looking for a gloomy prediction to hang on to, if you need that consolation, predict fewer innovations in the less flashy areas."
http://highclearing.com/index.php/archives/2009/08/16/9719
And forgive me for the Rumsfeldian anaologies here but this is truly one of these arguments that I don't understand: we know that letting the current health care situation continue as it is, causes millions of people to be uninsured and is currently inefficient and woefully unfair in terms of delivery of care. But we don't know if innovation will be 'killed off' or some such thing if healthcare is changed to more public sector control (in fact there are many arguments that say there is a good chance that innovation will not be hampered to a devastating degree, if at all). So I read Megan, and I see some of her arguments as advocating for more concern about the unknown unknowns, than the known knowns. Somehow future innovaction that may or may not happen, (that many think isn't going to be sacrficied anyway) is worth more than the certainty that sub-standard delivery of care is occuring now, and will continue to occur in the future without significant reform in some capacity.
Either way in these scenarios that Megan provides, there will be sacrifice in terms of human lives (which I don't necessarily buy, but I'm just trying to understand that argument here). So, delivery of care is sacrificed for the American people that are alive today, because we need innovations that can only occur in the U.S. (the best ones anyway, I guess according to Megan) for imaginary people in the future. Other countries can have a much superior delivery of care system, but millions of American alive today will have to make do with the shoddy delivery of care system now for the uninsured, because...for everybody else because these innovations will be so great it will be worth the deaths today? If this is a wrong conclusion let me know, i'm just trying to understand here (admittedly I'm making a devil's advocate argument here above)...
Sigh.
To be blunt, Mike, I don't see that you've been taught any economics at all. From over here it looks like all you've got are a few empty slogans like "Free markets encourage innovation, command markets suppress it", which isn't even a general principal. All you can do is look at specific occurences(did the free market develop, say, the atomic bomb? Produce any innovations in that regard?), and make some sort of statistical observation on classes. You don't even attach any numbers.
Uh-huh. You wouldn't be projecting much, would you? It's simply not a matter of 'agreeing' or 'disagreeing'; it's a matter of hard-headed skepticism. I don't have a position on the existence of some god or gods and if someone wants to claim their existence, it's up to them to prove it. So when I am skeptical of the claim, it doesn't mean I agree or disagree with it. It just means I haven't seen good evidence for it. And mark this and mark it well - when you say things like "Americans have the best health care in the world", you've got to actually demonstrate this, using facts and figures if you want to convince me. I don't have to do a blessed thing. That's just the way it is.
In short, what we have here is a lot less about the specific issue, and a lot more about basic standards about how to argue a case and what constitutes evidence. I insist on them. You don't want to adhere to them, preferring instead to go into some song and dance about how I've got to prove you wrong(this, incidentally, is part of what makes this thread so interesting to me.) Uh-uh. Let's look at the next demonstration of this:
No. It means you've got to make some sort of case that the lives saved through innovation later will be greater than the lives lost to lack of health care now. If you can't do that, your case collapses. And that's assuming that what Megan argues is true. Which is nowhere close to being proved; it's just an assertion following yet another baseless assumption.
So what evidence do you have that this is the case? You say you know all about economics, right? So you know all about opportunity costs, cost-benefit analysis, that sort of thing, yes? If that's the case, you know that's what you have to do, and what Megan should have done.
Somehow, I don't think you're going to criticize her ;-)
What the!?!?!? You have no idea what the point was, apparently, but instead of asking for clarification you just turned on the word salad again. The point, since you missed it by a clean mile, is that you've got to be careful when you do these sorts of utilitarian analyses, because they typically involve very small numbers multiplied by very large ones which lead to extremely nonsensical results. You end up with weirdness where it's okay to torture a small child so that other people are saved the annoyance of a hangnail, or having the batteries go flat in their TV remote.
This is, btw, all standard stuff ;-)
Er, you've kinda got to show that this is what will actually happen. Not simply state that this does happen sometimes; sometimes it doesn't. So what makes you sure that it would? What numbers did you use?
I have no idea what you mean by this. What is a 'potential' customer as opposed to someone who is simply not a customer?
Sigh. I think most of us understand about supply/demand curves, equilibrium conditions, etc. Don't presume to talk down us; it's rather insulting. That being said, how do you know that "cutting prices in an attempt to sell to a larger group of customers is disastrous--the loss in profit margin does not pay for the increase in volume" will happen in this instance? Presumably you have the numbers and sources to back you up on this one, given the certainty of your tone.
This is why people are exasperated with the arguments from your side. It's nothing to do with any particular disagreement in theory; it's more the way that assertions are casually being tossed about with absolutely no attempt to back them up. And then the way certain people are acting indignant when they are asked to prove these assertions instead of letting them pass unchallenged.
In fact, I have no problem with this: if you can prove the thesis that instituting a plausible health care plan will 'destroy innovation' and that the lack of innovation will end up costing more lives in the long run than any short-term increase in the number of lives saved now could make up for, I'll happily agree that it's a good argument for not reforming our current health care.
As I said, I'm not particularly ideological, and within broad policy swaths, I prefer pragmatic utilitarian considerations.
"if you can prove the thesis that instituting a plausible health care plan will 'destroy innovation' and that the lack of innovation will end up costing more lives in the long run than any short-term increase in the number of lives saved now could make up for, I'll happily agree that it's a good argument for not reforming our current health care."
Ditto. But until that is proven, I don't agree either.
Megan,
Your point on geometrical progression is incredibly contrived. Any time you express a comparison as a percentage rate the growth will be geometric, but purely as a consequence of the number you invent.
It could be the case that, contrary to your firm belief, the public system turns out to innovate 1% more effectively than the private system, or that the people saved in the short term under the public system contribute in such a way as to generate 1% innovation.
It might be true that private product translation activities innovate at 1% per year, but that long-run returns from greater basic research under a public system will have a return of a higher order of growth, perhaps having a rate of innovation of .1% * n, where n is the number of years from swapping to a public plan. An order of growth like this would outpace your hypothetical in 18 years and afterward leave it in the dust with my suggestion at 350% growth after 50 years, while yours merits only 160% growth along the same interval.
The point being, not that either number is better, but that true statements about made up numbers are utterly meaningless. Network growth effects are everywhere. I can justify the numbers I made up with as much basis as yours.
Unless you provide some basis for your statistics beyond a thought experiment or some sort of model sturdier than a straw man, your claims to pragmatic justifications are seriously exaggerated.
Very nice Megan. Now present us with some evidence.
Megan - Assuming, arguendo (as you like to say), that any and all government action is off the table, what improvements, if any, would you like to see in our current health care system. Or do we already live in the best of all possible worlds?
Regarding the life expectancy at age 80, there are a number of conflating issue. Dead thread, so maybe this is pointless. Negative: we allow marginal people to die off sooner in this country leaving a pool of healthy people allive. Positive: Canada does as well as it does only because wealthy Canadians can easily cross the border and buy the care that their health system does not provide. Not even going to touch Medicare, racial makeup of populations (the disparity shrinks with age anyways), population density, climate issues, or trade policies which impact health.