Cafe Hayek: Gladwell on Nationalized Health-Care Coverage
mcwop
· 3 years ago
From the New Yorker article:
"America’s private pension system is now in crisis."
America's government pension system is in crisis too. In fact the liabilities are probably greater than the private systems. Of course the tax payer gets to bail that piece of government mismangement too.
http://www.heartland.org/Article.cfm?artId=18549
Don
· 3 years ago
Furthermore, there would be no benefit to corporations if the government "took over" paying for workers healthcare insurance. The value of healthcare insurance provided by employers is just another form of compensation, in lieu of cash or some other thing of value. If employers ceased to provide healthcare insurance, they would have to provide alternative compensation to make up for the reduction in total compensation. The price of labor is set by s&d and productivity, so assuming constant s&d and productivity, the "cost" of a worker doesn't fall just because healthcare no longer has to be supplied. The same labor will cost the same regardless of how an employer goes about paying for it. Does your "cost" to your employer drop when you move your kid from company provided day care to publicly provided kindergarten? No.
save_the_rustbelt
· 3 years ago
I believe most government systems are funded by employer taxes, so... where is the savings?
This could shift taxes among employers.
It would help old line companies with ridiculous contracts (think UAW) shed those contracts, that could provide major savings to some companies.
ben
· 3 years ago
To get an idea of how bad government provision of healthcare can be, look no further than New Zealand's nationalized health care. The government here has increased funding of national healthcare by at least 1% of GDP in the last six years, yet people can queue for years to get their hip replaced. The situation is now so bad that patients are now being dumped off waiting lists. Imagine the shock of that. You're ill, you've been waiting for your operation for six months, only to receive a letter saying you won't be getting an operation any time soon, and possibly not at all.
For all the bad press American health care gets, the bottom line is you get treated much much faster under private health care. That, ultimately, is what matters, isn't it?
John Dewey
· 3 years ago
"the bottom line is you get treated much much faster under private health care. That, ultimately, is what matters, isn't it?"
Absolutely! If we could measure number of days of pain while awaiting treatment, socialized medicine's ills would quickly be apparent.
99
· 3 years ago
*****"Third, and most fundamentally, the idea that having government supply health-insurance will improve the efficiency of the U.S. economy is nonsense."*****
Don: right you are, but Gladwell isn't really making the argument that big government health insurance will make the economy as a whole more efficient. He's arguing that having government take over healthcare will make a small number of large manufacturing firms more profitable. And he may well be right. Which is all the more reason to reject his line of reasoning: the government ought not to be interfering in the marketplace to help this or that sector.
Indeed, given America's faster rates of growth (even on a per capita basis, US GDP is growing faster than the EU's last time I looked), emulating Europolicies is essentially arguing for lower growth and living standards. But hey, if a GM sharholder or factory worker is better off, who cares about the effects on the nation as a whole?
Patrick
· 3 years ago
This isn't really an argument for most of us is it? One form of payment, insurance premiums-for most American paid for in part or full by our employers-would be subsituted with taxes (pay Blue Cross $350/month or have the equivalent taken out of your paycheck by the government). But think carefully at who that would affect. The lower economic strata (about 10% of the population) would fare terrifically well. The top part of the economy (about 5%) wouldn't care, they would continue to pay the best doctors themselves and get exemplary care. So, it would be the 85% of us in the middle that would feel the direct and adverse impact of socialized medicine-our taxes would go up, our employers would essentially be off the hook for paying our medical care expenses and we would wait in line for a bypass. As I've told my liberal friends to think carefully about socialism-the middle class generally gets screwed (thank you Karl Marx).
Che Stadium
· 3 years ago
Wilbur has been known to bust a few pension plans while rolling up companies. My sense is that he would accept the government paying as much of his companies costs as possible. Socialized medicine just happens to be the main one on the table.
Mike Huben
· 3 years ago
What a pathetic bunch of idiotic squabble.
If we adopted the Canadian system (or any other first world system), we'd save a significant fraction of our health care dollars and be able to insure everybody. You guys are arguing over who'd get those dollars. It would be pretty odd to improve our whole society's efficiency without improving our competitiveness.
As for John Dewey's "Absolutely! If we could measure number of days of pain while awaiting treatment, socialized medicine's ills would quickly be apparent.", evidently the pain of the large numbers of people currently uninsured doesn't count.
Tom West
· 3 years ago
I think you misunderstand the advantages of a national health-care scheme. If the Canadian model is any indication, you can get about 90% of the health outcomes for close to 50% of the costs.
Two things, however. National health-care works because it *is* rationing. Anybody who thinks they can get the advantages of national health-care (much lower costs) without the downside (somewhat lower health outcomes) is completely fooling themselves.
Frankly, unless Americans are willing to accept this trade-off, (and I don't think they are) it isn't possible to gain the primary benefits from a national health care system. (Yes, rationing can take place outside of a national health-care system, but much the cost-saving of a national rationing system are lost, and it is much harder to ration effectively when a non-rationed system is right there to compare to. It's easy to be told "there's nothing we can do for Grandpa any more". That doesn't work when next door somebody
is doing something (mostly fruitlessly spending dollars, but there will be *some* successes) for their Grandpa.)
However, Mr. Boudreaux's premise is false. There *are* significant cost advantages to having a national health-care system. It's simply that Americans would be unwilling to make the tradeoffs necessary to obtain them. (A better analogy instead of steel is cars. People are currently buying BMWs, but if the government centralized it, we'd all be riding Toyota Corolla's. A *lot* cheaper, but not quite the same thing.)
Noumenon
· 3 years ago
Does your "cost" to your employer drop when you move your kid from company provided day care to publicly provided kindergarten? No.
I don't follow at all. Before, the company had to pay your salary and your day care cost. Now it only has to pay your salary. Maybe in some perfect economics world you would instantly renegotiate your salary till your total benefits package once again became equal to your productivity. In the real-world example you give, though, your cost to your employer has definitely dropped and your cost to taxpayers has risen.
John Pertz
· 3 years ago
I couldnt think of a better time to create the largest entitlement program in U.S government history. I mean we only have a couple of trillion dollars debt. Whats another couple of trillion?
John Pertz
· 3 years ago
Canadian health care is good for one and only one group of people, the poor. Waiting for surgery is not a big deal when you probably couldnt afford the procedure under an alternative system. The real injustice of nationalized health care occurs with the middle and upper middle classes as they probably could have afforded immediate care under an alternative system but now they are forced to wait.
Tom West
· 3 years ago
"the middle and upper middle classes as they probably could have afforded immediate care under an alternative system but now they are forced to wait."
Indeed, if you're trying to maximimize health care outcomes (and spending), the American system is the way to go. However, if you're trying to minimize health care spending while accepting somewhat less than maximal outcomes, then national health-care makes a great deal of sense.
Also note, the Canadian health-care system does have two advantages. One, you cannot practically avoid it, which means that all voters (and thus politicians) have an incentive to keep the quality of care reasonable while keeping prices down. Two, there is an "escape", in that high income users can go to the US where they can spend as much as they want. However, the escape is far enough away that most users of the Canadian system do not compare outcomes directly. This means Canadians don't have to directly compare themselves with unrationed health-care, increasing satisfaction with the system, while providing an escape mechanism for those who would feel most hard-done by in a rationed health care system.
Bill Stepp
· 3 years ago
Gladwell overlooks that government intervention was the proximate cause of employer-provided pensions and health insurance. In the case of the former, they were offered as a way to make peace with labor unions, which were granted negotiating leverage by the government they would have lacked in a free market. Employer-spoonsored health insurance came into existence during WW II in order to offer competitive pay packages that had been truncated by wage controls.
Gladwell seems blythely unaware of the unholy origins of these interventions.
Prentiss Davis
· 3 years ago
These are excellent, well thought out arguments. What confuses me, someone whose economics training consisted of sleeping thru two years of college classes, is why is it that every slightly educated person can’t grasp these obvious truths? Witness the endless minimum wage debate)
It’s particularly puzzling as to why persons with PhDs in economics can have entirely different opinions even when faced with the reality of how things actually work.
Tom West
· 3 years ago
"why is it that every slightly educated person can’t grasp these obvious truths?"
Because we are dealing with human beings and vast systems that are so complex that economics can only hope to provide rough guidance that may or may not be accurate. Generally, because people refuse to act like "homo economus", that legendary creature that acts rationally and is a prerequisite to so many economic models.
Take the sharing game. You give $1 to A, who splits it between A and B. All B can do is veto the split, in which neither get anything. Even in single games against an unknown player, people will generally reject anything less than 1/3-2/3 split out of hand. "Homo economus" will accept any amount, since any amount is better than nothing.
So, (1) economists have models that may or may not conform to reality because people refuse to conform to the equations and (2) even when they models do work, economist's ideas of acceptable outcomes are not always the same as most human's ideas of acceptable outcomes.
Take the minimum wage as an example of both of these. First, there are studies indicating that raising the minimum wage doesn't necessarily decrease unemployment, (although obviously it will if it goes high enough). Anyway, the economic model is obviously not flawless. Secondly, a lot of people in general are happier in an economy where jobs that are so economically unviable they can't even pay minimum wage don't exist. Who want to live in a society where some fraction of society lives on $1 an hour. Look at societies that don't have a minimum wage, and see how many people would like to move there from here. The problem is that minimum wage laws (an economic position) *cannot* be divorced from the social position that people intrinsically have worth, and that worth is reflected in their wages. Of course it *should* be possible, it just doesn't happen in real life.
In a nutshell, *that*'s why people don't worship at the alter of economists' policy suggestions.
JohnDewey
· 3 years ago
Mike Huben: "evidently the pain of the large numbers of people currently uninsured doesn't count."
Two groups of people are uninsured in the U.S.: those who can afford insurance and choose not to buy it; and those who truly cannot aford health insurance. The second group is actually very small. That second group can receive free medical care in just about any city in this nation.
I see no reason for anyone in the U.S. to be waiting in pain for medical treatment. The poor gain through our free market system of medical care: it ensures the nation has enough physicians and hospitals to serve them as well as the insured and otherwise paying patients.
Sam Grove
· 3 years ago
Government subsidies for ANYTHING introduces delays in market pricing feedback.
Proponents of socialized health care labor under the delusion that government actually PAYS for anything. Everything is paid for by someone laboring to produce goods or services, in fact, most costs of production are labor costs. Hence, the function of socialized medicine is to get those with low health care costs to subsidize those with higher health care costs.
It may be supposed that government can make the process of producing goods and services more efficient, but all I can see is that it introduces additional overhead costs.
The productivity of the U.S. economy is simply amazing given that we are not only able to afford a high standard of living, but we are able to post troops in over 100 countries and engage in various simultaneous conflicts as well. If we wish to recude the cost of living, including the costs of health care, there is one obvious solution, but that would impinge on the delusions of collectivists.
Tony
· 3 years ago
Right now, an educated, middle-class friend of mine who owns his own house has had to wait nine months in excruciating pain because his health problems have made him unemployable. He lost his insurance on a technicality, and being disabled without employment he is completely uninsurable. He finally got the artifical elbow joint he needed through Medicare, but it was an unbelievable nightmare of pain and bureaucracy.
This article totally ignores the large and very real problem of uninsurability for anyone who has pre-existing health problems. It's a terrible catch-22 that I wouldn't wish on anyone. It is a trap that anyone, even the middle class, can fall into without warning and without recourse. And that, IMHO, is the chief problem with the American system - chronic insecurity.
Jadagul
· 3 years ago
Noumenon: if just one person has his kids graduate from day care to kindergarden, because the labor market is not perfectly efficient he will cost his company less. But if the company discontinues its daycare program, that reduces their competitiveness overall and creates an upward pressure on wages (or removes a downward pressure on them). A program that would end all employer-paid medical insurance is like the second, not the first. Companies could afford to pay more, and so would have to.
Tom: you point out that one of the big advantages of the Canadian model is the existence of the US as an escape valve. I'm sure you've noticed this, but if the US moved to a Canadian model neither we nor they would have such an escape. Nonetheless, good points overall; you actually make me in some ways less likely to support the Canadian model, but for reasons that are value-based and not economic.
Allen
· 3 years ago
Mike Huben --> Note that in Canada, everyone is insured but not everyone is treated. As others have pointed out, rationing occurs whether it's New Zealand or Saskatchewan having budget troubles. If you care about everyone getting treated, UHC isn't going to bring that about either.
What I find interesting is how often liberal friends of mine stress how money isn't important. They will point out they spend more for organic food at their local co-op or that they buy into a CSA because of the greater benefits both for themselves and the earth. They don't mind paying a premium for a house in the city that was built 80 years ago because they save money and time in other ways and overall just like it more. They clearly can grasp the idea that you just don't look at something like housing or food as an straight up expense that you do everything possible to minimize. They realize that spending more on it can increase their benefits.
So why is they struggle to understand that in spending more on health care than their foreign competitors, US companies may be gaining a lot more benefits from spending more rather than less on health care?
I think one clue is how many people are suprised when I point out that Sweden's gone from being the 5th richest country to the 24th in the world. In their minds they still see highly socialized countries as being nearly as rich as the US, just with more benefits. They're willing to live with that trade off. In reality the gap between these highly socialized countries and more capitilistic ones is growing relatively fast. Universal Health Care is one part of their problem.
joan
· 3 years ago
“Even if all American producers suffer production-cost increases of 15%”
—The effect our current system is that high wage firm have an increase in production cost while low wage firms do not, because they generally do not provide health insurance. Let me ask, which American firms are more likely to enjoy a “comparative advantage”?
Martin
· 3 years ago
The British National Health Service was founded in 1948 to provide healthcare that was intended to be neither quick nor effective, but free for the user at the point of use.
The model broke down within three years. In 1951, its creator, Aneurin Bevan, resigned as Health Secretary over the introduction of charges for eyeglass prescriptions and dentures. Since then, despite massive advances in the quality of healthcare, it has continued to operate on the principle that is free for the user at the point of use.
The presence of MRSA and other superbugs means that you are likely to leave an NHS hospital more sick than when you entered - if you leave standing up at all. Despite being a foremost political priority, no government has been able to cut the waiting lists for treatment that are an inevitable consequence of socialised anything, let alone medicine. There are 100,000 nurses not in nursing in the UK, and one in four fails to complete their training.
And yet such is the hold of the NHS over the public imagination that people who have no hesitation in going on three foreign holidays a year and filling their homes with every possible kind of consumer good that markets can create still squeal like infants at the thought of having to pay for medical treatment.
It sure beats me.
true dough
· 3 years ago
Tom--
“[In Canada] there is an "escape", in that high income users can go to the US where they can spend as much as they want.”
Actually, last week the Canadian Medical Association elected a new president, Dr. Brian Day, the owner of Canada's largest private health-care clinic. He advocates the introduction of a (legal) hybrid of public-private health care in Canada.
If Canada moves to a model similar to the U.S., I'm not sure an “escape” for Canadians will be necessary. Perhaps we'll see the tables turn?
Jadagul
· 3 years ago
True Dough, as I read Tom's argument, he thinks that the lack of private health care in Canada was an important part of the Canadian system, because it reduces resentment of those who can get the superior private healthcare. So he wanted a safety valve, but one that wasn't too visible. Private care in another country fit nicely. Private care in your own country wouldn't.
John Booke
· 3 years ago
The "who pays for health care issue" is a red herring.
The Dirty Little Secret of Health Care Cost In America - "CPT" code Revision
These codes are used by Medicare to determine its payments to physicians and hospitals for the various services physicians and hospitals provide. CPT codes describes the time physicians spend on a procedures or office visits (professional portion). CPT codes effectively also determine what percentage of the Medicare fee should be alotted for interpretive skills of physicians and what proportion should be alotted to the cost of devices and desposables used in procedures(the technical portion). An office visit with your primary care doctor is of course mostly professional whereas a MRI is mostly technical. Because fees paid by Medicare are published private insurers use them for their own fee structures. So basically the government fixes the price for medical care fees in the US.
Unfortunately the American Medical Association (AMA)owns and controls revisions to CPT codes. Subcommittees of specialists within the AMA are responsible for revisions to codes. For example procedural codes like cardiac by-pass surgery or nerve conduction tests are controlled by cardiac surgeons and neurologists respectively. When procedural and technical advances significantly reduce the training, time and costs of a procedure physicians responsible should revise the codes. If technology simplifies a procedure so much that training becomes insignificant and supplants months of training in residency programs and device costs plummet then non-specialist are easily able to acquire the testing capabilities of specialist. These procedures become widely available. This is where an open and free market really breaks down in the US - Codes are NOT revised to reflect improvements.
Physicians will argue that in fact new technology drives medical care costs higher. That is true because so many more people have access to more and more physicians who perform more procedures at the same old unrevised price.
Medicare has two options that will greatly reduce the cost of medical care in our country: 1) insist on yearly revisions to the CPT codes or 2) devise a pricing system with much less influence from the AMA.
Tom West
· 3 years ago
"So he wanted a safety valve, but one that wasn't too visible."
Exactly. Two tier health care within the counry is a dangerous development to the main reason of a national health-care system (cost containment through rationing).
David Don
· 3 years ago
I am Canadian and enjoy universal health coverage. I does create a free-rider problem, and that’s why we are currently moving (slowly) towards a mix of private-public healthcare system. There's another side to it, though: at the same time it spurs the free-riding problem, it eliminates the « badluck » problem (is it not true that most of US bankruptcy is a result of a hospital bill? ). It is a trade-off, it’s inefficient, but we are willing to pay for it because efficiency is sometimes a subjective measure.
Second, your point seems to be: if US firms stop paying for healthcare, US consumers will spend less, thus reducing the amount of goods bought from US firms. So it doesn’t change the comparative advantage of US firms. Seems to me that, with globalization, US consumers buy goods from a lot of country, including many foreign firms. So the loss of purchasing power due to healthcare premiums is shared among all international firms, while their healthcare premium is a cost paid by US firms only. So it is a competitive disadvantage. And the higher cost for government (picking up the bill) doesn’t change much unless it has to hike up corporate taxes in return.
Matthew
· 3 years ago
I'm not really liking this whole "America vs. Canada" debate. That's the South Park movie, not the debate between liberalized and socialized health care.
Because, in reality, the US system is FAR from a classically liberal system and is at best a free market severely perversed by multiple agents. These agents include:
1. The government's unefficient redistribution of resources from other sectors into health care. Government does this through the obvious subsidies (Medicare) and through the more subverse benefits income tax loophole. In other words, the forgone taxes of that loophole have served as a distorting incentive to buy health care over other goods.
2. The American Medical Association is another agent for the inefficient allocation of resources. They are essentially a union of doctors which, like all other government-supported unions, acts on behalf of its members at the expense of the general public. These actions include the medicare price controls and what's really collusion on salaries, giving American doctors much higher salaries than what the UHC systems must pay.
3. Smaller reasons such as the rule to force emergency rooms to give care to anyone and the medical malpractice lawsuits and the defensive practice of medicine.
So, when you have all these agents either pulling the demand curve outward or the supply curve inward, you amazingly get the high price of health care today.
It always amazes me that people cannot simply step back, look at the US economy as a whole and realize that the two sectors with the most government intervention (Health Care and Education) are the two sectors with the worst performance. While EVERY single type of governance will have its sob stories, economic liberalization has been shown in case after case, in country after country to produce the greatest for the greatest number, including the poor.
But to the point of the original point, I also think the idea that health costs providing a comparative disadvantages is absolute hogwash for almost every case. Both employers and employees will act for their own self-interest, with employers looking to get the most productivity for their compensation and employees looking to get the most after-tax total compensation.
When the tax system does not tax employer-paid health benefits, the employer will then pay the employee partly through health benefits, giving the employee the same after-tax income for less total compensation on the employers side. This gives said employer a cost advantage over their competition.
Only when the employer and employee enter into ill-advised contracts, such as what the American auto companies entered into with UAW, will a comparive disadvantage be realized by the American company. But its rather tenuous to stretch these isolated costs into an argument for an all-encompassing government program.
beedubs
· 3 years ago
Interfering with others' medical care against their will (e.g., via government monopoly rationing) has always been indefensible; interefering with their medical care for the purpose of subsidizing business is a new and particularly morally repugnant concept to me. No, call me selfish if you like, but I will not wait six months for a bypass so we can export more Post-It notes.
alex
· 3 years ago
The main arguement for a national health insurance scheme is the overhead costs of private health care. Overhead eats up at least 10-15% of health care costs, or hundreds of billions of dollars. This is because private companies do everything to not pick up the tab, and involve lots of time and paper work. Also, the lack of prevention until its too late means that the operation that could have been had and treatment for $5000 is not, while in the end half a million is coughed up. Now that's our blessed health care system at work.
Additionally, remember that health care is inelastic. So, you can charge anything you want. Now then, why shouldn't private companies join together, jack price sky high and role in the money, while leaving people to die for want of care? Well, thats exactly what is actually happening. So, the moral of the story is, if you don't mind lots of people dying from lack of preventive care, and don't mind cartels, rigged trusts, and monopolists being able to charge whatever they want, then a fully private system is alright.
John Dewey
· 3 years ago
alex: "Also, the lack of prevention until its too late means that the operation that could have been had and treatment for $5000 is not, while in the end half a million is coughed up."
Do you have any facts to support this assertion?
United HealthCare is my insurer. After I was diagnosed with diabetes, they paid a lot of bucks for my nutritional training. They are well aware that preventive care for a diabetic will save them $10,000 or more in the long run.
alex: "why shouldn't private companies join together, jack price sky high and role in the money, while leaving people to die for want of care? Well, thats exactly what is actually happening."
Do you have any evidence that private companies are colluding to raise the price of medical care? Do you have any evidence that people are dying for lack of medical care in the U.S.?
I've lived in nine U.S. cities in my life. Every one had at least one non-profit hospital that provides medical care for households that cannot afford it. Every one had free or very-low-cost medical clinics as well.
All Comments
From the New Yorker article:
"America’s private pension system is now in crisis."
America's government pension system is in crisis too. In fact the liabilities are probably greater than the private systems. Of course the tax payer gets to bail that piece of government mismangement too.
http://www.heartland.org/Article.cfm?artId=18549
Furthermore, there would be no benefit to corporations if the government "took over" paying for workers healthcare insurance. The value of healthcare insurance provided by employers is just another form of compensation, in lieu of cash or some other thing of value. If employers ceased to provide healthcare insurance, they would have to provide alternative compensation to make up for the reduction in total compensation. The price of labor is set by s&d and productivity, so assuming constant s&d and productivity, the "cost" of a worker doesn't fall just because healthcare no longer has to be supplied. The same labor will cost the same regardless of how an employer goes about paying for it. Does your "cost" to your employer drop when you move your kid from company provided day care to publicly provided kindergarten? No.
I believe most government systems are funded by employer taxes, so... where is the savings?
This could shift taxes among employers.
It would help old line companies with ridiculous contracts (think UAW) shed those contracts, that could provide major savings to some companies.
To get an idea of how bad government provision of healthcare can be, look no further than New Zealand's nationalized health care. The government here has increased funding of national healthcare by at least 1% of GDP in the last six years, yet people can queue for years to get their hip replaced. The situation is now so bad that patients are now being dumped off waiting lists. Imagine the shock of that. You're ill, you've been waiting for your operation for six months, only to receive a letter saying you won't be getting an operation any time soon, and possibly not at all.
For all the bad press American health care gets, the bottom line is you get treated much much faster under private health care. That, ultimately, is what matters, isn't it?
"the bottom line is you get treated much much faster under private health care. That, ultimately, is what matters, isn't it?"
Absolutely! If we could measure number of days of pain while awaiting treatment, socialized medicine's ills would quickly be apparent.
*****"Third, and most fundamentally, the idea that having government supply health-insurance will improve the efficiency of the U.S. economy is nonsense."*****
Don: right you are, but Gladwell isn't really making the argument that big government health insurance will make the economy as a whole more efficient. He's arguing that having government take over healthcare will make a small number of large manufacturing firms more profitable. And he may well be right. Which is all the more reason to reject his line of reasoning: the government ought not to be interfering in the marketplace to help this or that sector.
Indeed, given America's faster rates of growth (even on a per capita basis, US GDP is growing faster than the EU's last time I looked), emulating Europolicies is essentially arguing for lower growth and living standards. But hey, if a GM sharholder or factory worker is better off, who cares about the effects on the nation as a whole?
This isn't really an argument for most of us is it? One form of payment, insurance premiums-for most American paid for in part or full by our employers-would be subsituted with taxes (pay Blue Cross $350/month or have the equivalent taken out of your paycheck by the government). But think carefully at who that would affect. The lower economic strata (about 10% of the population) would fare terrifically well. The top part of the economy (about 5%) wouldn't care, they would continue to pay the best doctors themselves and get exemplary care. So, it would be the 85% of us in the middle that would feel the direct and adverse impact of socialized medicine-our taxes would go up, our employers would essentially be off the hook for paying our medical care expenses and we would wait in line for a bypass. As I've told my liberal friends to think carefully about socialism-the middle class generally gets screwed (thank you Karl Marx).
Wilbur has been known to bust a few pension plans while rolling up companies. My sense is that he would accept the government paying as much of his companies costs as possible. Socialized medicine just happens to be the main one on the table.
What a pathetic bunch of idiotic squabble.
If we adopted the Canadian system (or any other first world system), we'd save a significant fraction of our health care dollars and be able to insure everybody. You guys are arguing over who'd get those dollars. It would be pretty odd to improve our whole society's efficiency without improving our competitiveness.
As for John Dewey's "Absolutely! If we could measure number of days of pain while awaiting treatment, socialized medicine's ills would quickly be apparent.", evidently the pain of the large numbers of people currently uninsured doesn't count.
I think you misunderstand the advantages of a national health-care scheme. If the Canadian model is any indication, you can get about 90% of the health outcomes for close to 50% of the costs.
Two things, however. National health-care works because it *is* rationing. Anybody who thinks they can get the advantages of national health-care (much lower costs) without the downside (somewhat lower health outcomes) is completely fooling themselves.
Frankly, unless Americans are willing to accept this trade-off, (and I don't think they are) it isn't possible to gain the primary benefits from a national health care system. (Yes, rationing can take place outside of a national health-care system, but much the cost-saving of a national rationing system are lost, and it is much harder to ration effectively when a non-rationed system is right there to compare to. It's easy to be told "there's nothing we can do for Grandpa any more". That doesn't work when next door somebody
is doing something (mostly fruitlessly spending dollars, but there will be *some* successes) for their Grandpa.)
However, Mr. Boudreaux's premise is false. There *are* significant cost advantages to having a national health-care system. It's simply that Americans would be unwilling to make the tradeoffs necessary to obtain them. (A better analogy instead of steel is cars. People are currently buying BMWs, but if the government centralized it, we'd all be riding Toyota Corolla's. A *lot* cheaper, but not quite the same thing.)
Does your "cost" to your employer drop when you move your kid from company provided day care to publicly provided kindergarten? No.
I don't follow at all. Before, the company had to pay your salary and your day care cost. Now it only has to pay your salary. Maybe in some perfect economics world you would instantly renegotiate your salary till your total benefits package once again became equal to your productivity. In the real-world example you give, though, your cost to your employer has definitely dropped and your cost to taxpayers has risen.
I couldnt think of a better time to create the largest entitlement program in U.S government history. I mean we only have a couple of trillion dollars debt. Whats another couple of trillion?
Canadian health care is good for one and only one group of people, the poor. Waiting for surgery is not a big deal when you probably couldnt afford the procedure under an alternative system. The real injustice of nationalized health care occurs with the middle and upper middle classes as they probably could have afforded immediate care under an alternative system but now they are forced to wait.
"the middle and upper middle classes as they probably could have afforded immediate care under an alternative system but now they are forced to wait."
Indeed, if you're trying to maximimize health care outcomes (and spending), the American system is the way to go. However, if you're trying to minimize health care spending while accepting somewhat less than maximal outcomes, then national health-care makes a great deal of sense.
Also note, the Canadian health-care system does have two advantages. One, you cannot practically avoid it, which means that all voters (and thus politicians) have an incentive to keep the quality of care reasonable while keeping prices down. Two, there is an "escape", in that high income users can go to the US where they can spend as much as they want. However, the escape is far enough away that most users of the Canadian system do not compare outcomes directly. This means Canadians don't have to directly compare themselves with unrationed health-care, increasing satisfaction with the system, while providing an escape mechanism for those who would feel most hard-done by in a rationed health care system.
Gladwell overlooks that government intervention was the proximate cause of employer-provided pensions and health insurance. In the case of the former, they were offered as a way to make peace with labor unions, which were granted negotiating leverage by the government they would have lacked in a free market. Employer-spoonsored health insurance came into existence during WW II in order to offer competitive pay packages that had been truncated by wage controls.
Gladwell seems blythely unaware of the unholy origins of these interventions.
These are excellent, well thought out arguments. What confuses me, someone whose economics training consisted of sleeping thru two years of college classes, is why is it that every slightly educated person can’t grasp these obvious truths? Witness the endless minimum wage debate)
It’s particularly puzzling as to why persons with PhDs in economics can have entirely different opinions even when faced with the reality of how things actually work.
"why is it that every slightly educated person can’t grasp these obvious truths?"
Because we are dealing with human beings and vast systems that are so complex that economics can only hope to provide rough guidance that may or may not be accurate. Generally, because people refuse to act like "homo economus", that legendary creature that acts rationally and is a prerequisite to so many economic models.
Take the sharing game. You give $1 to A, who splits it between A and B. All B can do is veto the split, in which neither get anything. Even in single games against an unknown player, people will generally reject anything less than 1/3-2/3 split out of hand. "Homo economus" will accept any amount, since any amount is better than nothing.
So, (1) economists have models that may or may not conform to reality because people refuse to conform to the equations and (2) even when they models do work, economist's ideas of acceptable outcomes are not always the same as most human's ideas of acceptable outcomes.
Take the minimum wage as an example of both of these. First, there are studies indicating that raising the minimum wage doesn't necessarily decrease unemployment, (although obviously it will if it goes high enough). Anyway, the economic model is obviously not flawless. Secondly, a lot of people in general are happier in an economy where jobs that are so economically unviable they can't even pay minimum wage don't exist. Who want to live in a society where some fraction of society lives on $1 an hour. Look at societies that don't have a minimum wage, and see how many people would like to move there from here. The problem is that minimum wage laws (an economic position) *cannot* be divorced from the social position that people intrinsically have worth, and that worth is reflected in their wages. Of course it *should* be possible, it just doesn't happen in real life.
In a nutshell, *that*'s why people don't worship at the alter of economists' policy suggestions.
Mike Huben: "evidently the pain of the large numbers of people currently uninsured doesn't count."
Two groups of people are uninsured in the U.S.: those who can afford insurance and choose not to buy it; and those who truly cannot aford health insurance. The second group is actually very small. That second group can receive free medical care in just about any city in this nation.
I see no reason for anyone in the U.S. to be waiting in pain for medical treatment. The poor gain through our free market system of medical care: it ensures the nation has enough physicians and hospitals to serve them as well as the insured and otherwise paying patients.
Government subsidies for ANYTHING introduces delays in market pricing feedback.
Proponents of socialized health care labor under the delusion that government actually PAYS for anything. Everything is paid for by someone laboring to produce goods or services, in fact, most costs of production are labor costs. Hence, the function of socialized medicine is to get those with low health care costs to subsidize those with higher health care costs.
It may be supposed that government can make the process of producing goods and services more efficient, but all I can see is that it introduces additional overhead costs.
The productivity of the U.S. economy is simply amazing given that we are not only able to afford a high standard of living, but we are able to post troops in over 100 countries and engage in various simultaneous conflicts as well. If we wish to recude the cost of living, including the costs of health care, there is one obvious solution, but that would impinge on the delusions of collectivists.
Right now, an educated, middle-class friend of mine who owns his own house has had to wait nine months in excruciating pain because his health problems have made him unemployable. He lost his insurance on a technicality, and being disabled without employment he is completely uninsurable. He finally got the artifical elbow joint he needed through Medicare, but it was an unbelievable nightmare of pain and bureaucracy.
This article totally ignores the large and very real problem of uninsurability for anyone who has pre-existing health problems. It's a terrible catch-22 that I wouldn't wish on anyone. It is a trap that anyone, even the middle class, can fall into without warning and without recourse. And that, IMHO, is the chief problem with the American system - chronic insecurity.
Noumenon: if just one person has his kids graduate from day care to kindergarden, because the labor market is not perfectly efficient he will cost his company less. But if the company discontinues its daycare program, that reduces their competitiveness overall and creates an upward pressure on wages (or removes a downward pressure on them). A program that would end all employer-paid medical insurance is like the second, not the first. Companies could afford to pay more, and so would have to.
Tom: you point out that one of the big advantages of the Canadian model is the existence of the US as an escape valve. I'm sure you've noticed this, but if the US moved to a Canadian model neither we nor they would have such an escape. Nonetheless, good points overall; you actually make me in some ways less likely to support the Canadian model, but for reasons that are value-based and not economic.
Mike Huben --> Note that in Canada, everyone is insured but not everyone is treated. As others have pointed out, rationing occurs whether it's New Zealand or Saskatchewan having budget troubles. If you care about everyone getting treated, UHC isn't going to bring that about either.
What I find interesting is how often liberal friends of mine stress how money isn't important. They will point out they spend more for organic food at their local co-op or that they buy into a CSA because of the greater benefits both for themselves and the earth. They don't mind paying a premium for a house in the city that was built 80 years ago because they save money and time in other ways and overall just like it more. They clearly can grasp the idea that you just don't look at something like housing or food as an straight up expense that you do everything possible to minimize. They realize that spending more on it can increase their benefits.
So why is they struggle to understand that in spending more on health care than their foreign competitors, US companies may be gaining a lot more benefits from spending more rather than less on health care?
I think one clue is how many people are suprised when I point out that Sweden's gone from being the 5th richest country to the 24th in the world. In their minds they still see highly socialized countries as being nearly as rich as the US, just with more benefits. They're willing to live with that trade off. In reality the gap between these highly socialized countries and more capitilistic ones is growing relatively fast. Universal Health Care is one part of their problem.
“Even if all American producers suffer production-cost increases of 15%”
—The effect our current system is that high wage firm have an increase in production cost while low wage firms do not, because they generally do not provide health insurance. Let me ask, which American firms are more likely to enjoy a “comparative advantage”?
The British National Health Service was founded in 1948 to provide healthcare that was intended to be neither quick nor effective, but free for the user at the point of use.
The model broke down within three years. In 1951, its creator, Aneurin Bevan, resigned as Health Secretary over the introduction of charges for eyeglass prescriptions and dentures. Since then, despite massive advances in the quality of healthcare, it has continued to operate on the principle that is free for the user at the point of use.
The presence of MRSA and other superbugs means that you are likely to leave an NHS hospital more sick than when you entered - if you leave standing up at all. Despite being a foremost political priority, no government has been able to cut the waiting lists for treatment that are an inevitable consequence of socialised anything, let alone medicine. There are 100,000 nurses not in nursing in the UK, and one in four fails to complete their training.
And yet such is the hold of the NHS over the public imagination that people who have no hesitation in going on three foreign holidays a year and filling their homes with every possible kind of consumer good that markets can create still squeal like infants at the thought of having to pay for medical treatment.
It sure beats me.
Tom--
“[In Canada] there is an "escape", in that high income users can go to the US where they can spend as much as they want.”
Actually, last week the Canadian Medical Association elected a new president, Dr. Brian Day, the owner of Canada's largest private health-care clinic. He advocates the introduction of a (legal) hybrid of public-private health care in Canada.
If Canada moves to a model similar to the U.S., I'm not sure an “escape” for Canadians will be necessary. Perhaps we'll see the tables turn?
True Dough, as I read Tom's argument, he thinks that the lack of private health care in Canada was an important part of the Canadian system, because it reduces resentment of those who can get the superior private healthcare. So he wanted a safety valve, but one that wasn't too visible. Private care in another country fit nicely. Private care in your own country wouldn't.
The "who pays for health care issue" is a red herring.
The Dirty Little Secret of Health Care Cost In America - "CPT" code Revision
These codes are used by Medicare to determine its payments to physicians and hospitals for the various services physicians and hospitals provide. CPT codes describes the time physicians spend on a procedures or office visits (professional portion). CPT codes effectively also determine what percentage of the Medicare fee should be alotted for interpretive skills of physicians and what proportion should be alotted to the cost of devices and desposables used in procedures(the technical portion). An office visit with your primary care doctor is of course mostly professional whereas a MRI is mostly technical. Because fees paid by Medicare are published private insurers use them for their own fee structures. So basically the government fixes the price for medical care fees in the US.
Unfortunately the American Medical Association (AMA)owns and controls revisions to CPT codes. Subcommittees of specialists within the AMA are responsible for revisions to codes. For example procedural codes like cardiac by-pass surgery or nerve conduction tests are controlled by cardiac surgeons and neurologists respectively. When procedural and technical advances significantly reduce the training, time and costs of a procedure physicians responsible should revise the codes. If technology simplifies a procedure so much that training becomes insignificant and supplants months of training in residency programs and device costs plummet then non-specialist are easily able to acquire the testing capabilities of specialist. These procedures become widely available. This is where an open and free market really breaks down in the US - Codes are NOT revised to reflect improvements.
Physicians will argue that in fact new technology drives medical care costs higher. That is true because so many more people have access to more and more physicians who perform more procedures at the same old unrevised price.
Medicare has two options that will greatly reduce the cost of medical care in our country: 1) insist on yearly revisions to the CPT codes or 2) devise a pricing system with much less influence from the AMA.
"So he wanted a safety valve, but one that wasn't too visible."
Exactly. Two tier health care within the counry is a dangerous development to the main reason of a national health-care system (cost containment through rationing).
I am Canadian and enjoy universal health coverage. I does create a free-rider problem, and that’s why we are currently moving (slowly) towards a mix of private-public healthcare system. There's another side to it, though: at the same time it spurs the free-riding problem, it eliminates the « badluck » problem (is it not true that most of US bankruptcy is a result of a hospital bill? ). It is a trade-off, it’s inefficient, but we are willing to pay for it because efficiency is sometimes a subjective measure.
Second, your point seems to be: if US firms stop paying for healthcare, US consumers will spend less, thus reducing the amount of goods bought from US firms. So it doesn’t change the comparative advantage of US firms. Seems to me that, with globalization, US consumers buy goods from a lot of country, including many foreign firms. So the loss of purchasing power due to healthcare premiums is shared among all international firms, while their healthcare premium is a cost paid by US firms only. So it is a competitive disadvantage. And the higher cost for government (picking up the bill) doesn’t change much unless it has to hike up corporate taxes in return.
I'm not really liking this whole "America vs. Canada" debate. That's the South Park movie, not the debate between liberalized and socialized health care.
Because, in reality, the US system is FAR from a classically liberal system and is at best a free market severely perversed by multiple agents. These agents include:
1. The government's unefficient redistribution of resources from other sectors into health care. Government does this through the obvious subsidies (Medicare) and through the more subverse benefits income tax loophole. In other words, the forgone taxes of that loophole have served as a distorting incentive to buy health care over other goods.
2. The American Medical Association is another agent for the inefficient allocation of resources. They are essentially a union of doctors which, like all other government-supported unions, acts on behalf of its members at the expense of the general public. These actions include the medicare price controls and what's really collusion on salaries, giving American doctors much higher salaries than what the UHC systems must pay.
3. Smaller reasons such as the rule to force emergency rooms to give care to anyone and the medical malpractice lawsuits and the defensive practice of medicine.
So, when you have all these agents either pulling the demand curve outward or the supply curve inward, you amazingly get the high price of health care today.
It always amazes me that people cannot simply step back, look at the US economy as a whole and realize that the two sectors with the most government intervention (Health Care and Education) are the two sectors with the worst performance. While EVERY single type of governance will have its sob stories, economic liberalization has been shown in case after case, in country after country to produce the greatest for the greatest number, including the poor.
But to the point of the original point, I also think the idea that health costs providing a comparative disadvantages is absolute hogwash for almost every case. Both employers and employees will act for their own self-interest, with employers looking to get the most productivity for their compensation and employees looking to get the most after-tax total compensation.
When the tax system does not tax employer-paid health benefits, the employer will then pay the employee partly through health benefits, giving the employee the same after-tax income for less total compensation on the employers side. This gives said employer a cost advantage over their competition.
Only when the employer and employee enter into ill-advised contracts, such as what the American auto companies entered into with UAW, will a comparive disadvantage be realized by the American company. But its rather tenuous to stretch these isolated costs into an argument for an all-encompassing government program.
Interfering with others' medical care against their will (e.g., via government monopoly rationing) has always been indefensible; interefering with their medical care for the purpose of subsidizing business is a new and particularly morally repugnant concept to me. No, call me selfish if you like, but I will not wait six months for a bypass so we can export more Post-It notes.
The main arguement for a national health insurance scheme is the overhead costs of private health care. Overhead eats up at least 10-15% of health care costs, or hundreds of billions of dollars. This is because private companies do everything to not pick up the tab, and involve lots of time and paper work. Also, the lack of prevention until its too late means that the operation that could have been had and treatment for $5000 is not, while in the end half a million is coughed up. Now that's our blessed health care system at work.
Additionally, remember that health care is inelastic. So, you can charge anything you want. Now then, why shouldn't private companies join together, jack price sky high and role in the money, while leaving people to die for want of care? Well, thats exactly what is actually happening. So, the moral of the story is, if you don't mind lots of people dying from lack of preventive care, and don't mind cartels, rigged trusts, and monopolists being able to charge whatever they want, then a fully private system is alright.
alex: "Also, the lack of prevention until its too late means that the operation that could have been had and treatment for $5000 is not, while in the end half a million is coughed up."
Do you have any facts to support this assertion?
United HealthCare is my insurer. After I was diagnosed with diabetes, they paid a lot of bucks for my nutritional training. They are well aware that preventive care for a diabetic will save them $10,000 or more in the long run.
alex: "why shouldn't private companies join together, jack price sky high and role in the money, while leaving people to die for want of care? Well, thats exactly what is actually happening."
Do you have any evidence that private companies are colluding to raise the price of medical care? Do you have any evidence that people are dying for lack of medical care in the U.S.?
I've lived in nine U.S. cities in my life. Every one had at least one non-profit hospital that provides medical care for households that cannot afford it. Every one had free or very-low-cost medical clinics as well.