My school has a newly formed debate club and, as you may have guessed, it is dominated by liberals and has a hardy make-up of Neoconservatives. We are to discuss Health care next meeting and I have already been asked many difficult questions. I am young and fairly new to Austrian economics, and when hammered with many of these questions, I have no valid response except " Let the free market handle it". I was wondering if anyone could please help explain the Austrian view towards free market health care, and I was looking for an answer to some frequently asked questions that I have a hard time answering thoroughly.
Here are some questions I struggle in answering ( if you think of any more, please feel free to address them and give me an Austrian answer. Also, I am writing as a Liberal that may question me, I myself follow Austrian views):
- Private health care caused the problems we have today, look at our private health care now!
- How could old people, poor people, or very sick people get coverage when they needed it, when companies would most likely have rates too high for them to pay, based on their bad conditions physically and economically? They could not be able to afford it when they need it and die!
- Even if one is not denied coverage initially, a person may become very ill and may be old or poor, and the company could drop their coverage all together. How would that be regulated ( I imagine the market would let these unfair companies go out of business, but it would have to happen to some people before it was denied by the market).
-How would people pay for expensive problems that may come up out of nowhere if the government can not help. ( should a tax free Medical Savings Account be established and how would it work).
These are only a few questions, but feel free to go in depth on this issue and offer answers to additional questions I or others may have. Thank you very much for your time and help everyone.
Quinn Rogness: 1. End the FDA (Food and Drug Administration)The FDA was founded to protect us from unsafe drugs and medicine. The FDA has failed in that aspect and has caused a significant increase in health care costs today. The FDA should be replaced by free-market alternatives that do not drive up health care costs and are beneficial to the average American. An example of FDA failure includes the 10 year wait in approving the drug Propanolol (Heart medication). 100,000 people died during this time that could’ve been saved by this drug. The FDA has been destructive to Americans, and deserves to be abolished.
1. End the FDA (Food and Drug Administration)The FDA was founded to protect us from unsafe drugs and medicine. The FDA has failed in that aspect and has caused a significant increase in health care costs today. The FDA should be replaced by free-market alternatives that do not drive up health care costs and are beneficial to the average American. An example of FDA failure includes the 10 year wait in approving the drug Propanolol (Heart medication). 100,000 people died during this time that could’ve been saved by this drug. The FDA has been destructive to Americans, and deserves to be abolished.
I think the Vioxx case also provides an example as to why the FDA is pretty useless. Vioxx and products like it (called COX-2 inihibitors) are similar to aspirin, but are more specific to certain receptors in the body. It was believed that this specificity would eliminate or vastly reduce the number of deaths associated with aspirin by substituting a COX-2 for people taking aspirin for chronic mild to moderate pain. Most people don't know this but aspirin kills about 15,000 people a year in the US by causing bleeding ulcers in the stomach. Unfortunately, Vioxx also resulted in some deaths due to affects on the heart. This affect wasn't detected in the studies the FDA requires for approval because it doesn't occur that often and the studies weren't statistically powered to detect them. It also was not an endpoint in these studies because, at the time, no one suspected it. Even today, after the effect has been detected, the mechanism for it is still not clear.
In any event, the FDA was not able to prevent this and I don't think any amount of regulation really could. The issue was settled where it should be settled - in civil court. If there had been no FDA, it would still have been settled in court. So why have an FDA? The best "check and balance" for manufacturers to market safe products is the liability they assume, not any regulations. All the FDA does is run up costs for everyone - the tax payer, the consumer and the manufacturer. I imagine the clinical studies groups in all major pharma companies are working hard to find ways to improve their ability to detect any bad effects of their drugs prior to marketing in order to avoid litigation. This is at it should be.
But if a very large hospital comes about, and provides mostly all of the medical care in an area, the market there is satisfied by this big hospital and many other businesses won't be found. Then say something happens causing this large hospital to go out of business. The time between that hospital going out of business and new medical care facilities will no be instant, and many may need medical attention in that time. How would that work? *Also, what if someone very poor who does not have insurance is shot, should he be left to die?
C Le Master: But if a very large hospital comes about, and provides mostly all of the medical care in an area, the market there is satisfied by this big hospital and many other businesses won't be found. Then say something happens causing this large hospital to go out of business. The time between that hospital going out of business and new medical care facilities will no be instant, and many may need medical attention in that time. How would that work? *Also, what if someone very poor who does not have insurance is shot, should he be left to die?
1) For the time problem, there would probably be some futures market that already has allocated surplus supplies to future use for patients.
2) For the "too poor to afford insurance" argument, that person could just be helped by charity, for free, etc. There is nothing about capitalism that goes against free help.
C Le Master: But if a very large hospital comes about, and provides mostly all of the medical care in an area, the market there is satisfied by this big hospital and many other businesses won't be found. Then say something happens causing this large hospital to go out of business. The time between that hospital going out of business and new medical care facilities will no be instant, and many may need medical attention in that time. How would that work?
But if a very large hospital comes about, and provides mostly all of the medical care in an area, the market there is satisfied by this big hospital and many other businesses won't be found. Then say something happens causing this large hospital to go out of business. The time between that hospital going out of business and new medical care facilities will no be instant, and many may need medical attention in that time. How would that work?
What do people who live in very rural areas of America do about this problem already? Oh yes, they find transportation and make their way to a hospital. They don't just sit around slowly dying because the closest hospital is over 25 miles away or something.
C Le Master: *Also, what if someone very poor who does not have insurance is shot, should he be left to die?
*Also, what if someone very poor who does not have insurance is shot, should he be left to die?
Yes! Someone on mises.org who knows about the dangers of fluoridated water. I have some great bibliographies if you want to read more into it. Fluoride in water: It is all a "lie" -- a way for government monopolies to rid of their toxic by products.
I'd suggest that, ahead of the debate, you take some time to research lodge practices and mutual aid societies - i.e. what the market for healthcare looked like when there was a free market. The AMA expelled doctors who ran lodge practices, which provided healthcare at minimal cost. The whole purpose of the formation of the AMA was to increase healthcare costs, and they've done it through the help of the regulatory apparatus. Look into regulatory capture as well. If a body is formed to regulate and dole out healthcare, will it be controlled by the average person, or monied interests?
Also, regarding the question about a hospital closing - is a hospital necessarily a good way to provide healthcare? Maybe in a free market there would be different models of distribution. We know that bigness tends to come with government control. Why should all the healthcare resources be in one big building, with immunocompromised people around sick people?
Finally, although it's hard to bring this up at healthcare debates, the whole damn system is screwed up. The government is churning out false information on nutrition that's making us unhealthy in the first place. We spend so much time talking about how to pay for CABG and not why heart disease was unknown until 60 years ago - and people then ate a higher fat diet. The people who want to run the thing are the ones lying to us about health, for the purpose of making us dependent. If we'd read Weston Price and eat right, we'd be a lot better off.
Christian,
The scenario of a hospital going out of business in a free market, completely absent of government regulation, will not happen as you or your friend may think. It is highly probable that that hospital will not be the only entity of health care in that area. Furthermore, If there is only one hospital in that area, then that is a clear sign for a profit seeking individual to move in start his own hospital. Therefore, those two hospitals will compete and if they both do "equally" as well, then they will both stay in the market. Now, lets say that one of those hospitals does very poor work -- i.e., the comprising doctors there are all like the mainstream over-prescribing, lack-of-skill and lack-of- knowledge fools that they are in the so-called market today ; then that hospital will eventually fail. That is the beauty of the free market -- for it weeds out the trash. By word of mouth others will know that this hospital is doing poorly and once again some profit motivated individual is going to come and and hopefully make things better -- e.g., buy the place and kick the poor quality workers out. Therefore, It is a seemingly endless cycle -- the same situation can be applied to one hospital in the area (your scenario) -- others will know that the hospital does poor work and before it ultimately fails, someone will in and innovate.
Okay, suppose, some how the single hospital failed and there was no other one to replace it right away: There are other forms of care in the area -- e.g., small private practices that will take in patients (more work for them, thus, profit). Even if private practitioners refused to treat these individuals, then it is not like there isn't some other hospital or private doctor some number of miles away that won't treat them.
In other words, the beauty of the market is that there will always be a supply if there is a demand. It is safe to say that health care will always be demanded, therefore, there will be an abundance of highly skilled doctors with reasonable (what the consumer is willing to pay) prices.
In the free market people will not lack charity. If someone comes in bleeding death because some menace violated his individual property, and he also lacks an immediate form of payment, then a doctor will treat him first and talk payment later. If the patient can't come up with payment, then a contract can be made that will reach a reasonable conclusion. If governments run health care then, doctors can't make their own private contracts with patients and doctors get screwed. The cycle is endless in that if that same person comes in a again, he can do the same stunt because the government has his back. If the government were absent, then that doctor could just easily shun that free loader away.
In a private free market there will most likely be no third party intervention in health care -- e.g., insurance companies. Therefore, it will be a mutual exchange between doctor and patient, nothing more and nothing less. One reason the health care system is as bad is it is now is because insurance companies got involved and eventually governments.
With government intervention in the health care field, like with all fields, quality of work goes down and prices go up. This is a result of absurd regulations, documents, taxes; and insurance regulations and documents. All these barriers place a burden on the doctor as he spends less time: with the patient, education, learning, practicing his skills, and balancing other parts of his life. As a result, all this, leads to a failure of innovation and a market full of crappy doctors.
Myla: Christian, In a private free market there will most likely be no third party intervention in health care -- e.g., insurance companies. Therefore, it will be a mutual exchange between doctor and patient, nothing more and nothing less. One reason the health care system is as bad is it is now is because insurance companies got involved and eventually governments.
The blame lies with government and whatever companies receive special favors through lobbying. Another problem is doctors and their associations both barring entry to the profession by way of regulations and demanding certain treatments be mandatory for insurance companies to cover.
You are wrong to demonize insurance companies, at least the ones that would prosper in a free society. Insurance companies simply provide the service of transferring an unknown possible future risk (medical payments) for a known outlay (insurance premiums).
Democracy means the opportunity to be everyone's slave.—Karl Kraus.
"You are wrong to demonize insurance companies, at least the ones that would prosper in a free society. Insurance companies simply provide the service of transferring an unknown possible future risk (medical payments) for a known outlay (insurance premiums)."
Non sequitur E.R,
I was obviously talkin' about current insurance companies -- don't play dumb.
E. R.,
Also go educate with some real history, rather not what you "learned" at some public college. Once insurance companies started getting involved in health care, the government used its regulation on insurance companies as also a means to ultimately regulating health care.
The answers as i see them...
C Le Master wrote the following post at Mon, Feb 1 2010 5:19 PM:
Private health care caused the problems we have today, look at our private health care now!
But government goes a step further to make this problem even worse. Recently, CMS (the government agency responsible for setting these prices) has changed its regulations to "address" this problem - it lowered the reimbursement rate for referrals, and private insurers, as willing participants in this government sponsored cartel, are expected to follow suit. The idea of the regulators is that physicians in training will no longer see specialty as preferred and thus increase the number of primary care physicians. This is, of course, the opposite of what will happen if you know anything about economics. The individuals who become physicians are not stupid and their world is not made up of only two possible choices in careers. We are going to now have a shortage in specialists as well as primary care physicians.
How could old people, poor people, or very sick people get coverage when they needed it, when companies would most likely have rates too high for them to pay, based on their bad conditions physically and economically? They could not be able to afford it when they need it and die!
We have to look to history for parallels to answer these types of questions since the past is the best (and only) indicator of the future. I believe food provides a good example - it is essential, affects everyone, cosumed, variable in quality, and is in constant demand. A very simplistic analysis if you're constrained for time would be to just point to historic examples of government controlled food supply vs market controlled food supply and say, "See!". Perhaps a picture of a Soviet market from the 1970's would be helpful.
A more detailed analysis would consider the Malthusian popluation / food problem of the last century. It was suggested, and widely accepted, that our human capacity to produce food would not keep pace with worldwide population growth and we would eventually have hundreds of millions starving all over the globe. In addition, there were many already starving and it was only going to get worse. Probably the best modern statement of this point of view is Paul Ehrlich's The Population Bomb.
The predictions did not come true. The reason why is because as population grew, free market allocations of resources adjusted and also enabled the creative faculties of human beings to develop practical solutions. Farming methods improved, land productivity increased and people like Norman Borlaug developed new food technologies.
As with healthcare, the question wasn't how can we feed everyone all the time. No system is perfect and it is not realistic to aim for that goal. The meaningful question was, what system will provide the best food to the most people? History's judgement is clear - the market approach is superior. it is academic to point out that it is not pefect - some people still go hungry, small time farmers must find something more economically productive to do with their land, etc. But perfection is not our goal.
This example really demonstrates the tragedy of socilized medicine - the solutions which we would have developed will either be delayed or never appear due to our constraint of humanity's greatest resource - the market's ability to unleash our creative genius to solve our most pressing problems when people are allowed to pursue their self interest. There may be a far better solution completely different from private insurance, some new organization of human capacity, that we will never discover.
Even if one is not denied coverage initially, a person may become very ill and may be old or poor, and the company could drop their coverage all together. How would that be regulated ( I imagine the market would let these unfair companies go out of business, but it would have to happen to some people before it was denied by the market).
How would people pay for expensive problems that may come up out of nowhere if the government can not help. ( should a tax free Medical Savings Account be established and how would it work).
I'll end this with a quote from Milton Friedman
In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it's exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear: that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.
JA lankatz.
Yes! A fellow libertarian that has heard of Weston A. Price; I have chills right now. Have you read his masterpiece, Nutrition and Physical Degeneration? Do you like 100% grass-fed raw dairy products from A2 cows? I recommend Thomas S. Cowan on, The Fourfold Path to Healing. The man is immensely bright.
'Also, check out anthroposophical medicine.
best,
MLG
Using industry standard definition of insurance, only accidents are insurable. Getting fat at McD's and having a heart attack is not exactly "risk".
Myla: Yes! Someone on mises.org who knows about the dangers of fluoridated water. I have some great bibliographies if you want to read more into it. Fluoride in water: It is all a "lie" -- a way for government monopolies to rid of their toxic by products.
Thanks but I got the general idea about it -don't drink the stuff!