Political Theory

Re: The free market will never cover sick people

Ansury — Sat, 23 Jan 2010 01:25:28 GMT

DD5:

This is an impossible criterion to even measure. What is sufficient?

When I said "sufficient" I meant sufficient to convince people that the free market solution is superior. (Rather than keeping people "sufficiently" healthy, which I agree is impossible to define.)

Same thing regarding looking for historical comparisons, by accurately describing the historical context, it may be possible to describe a real life example of a "health care system" that is more free market than what we have today but which (here's where the research is needed) functioned better than our current system. This is not to argue that health care was ever or will ever be "sufficient", but to fully (sufficiently) convince the lay person that a free market in health care does not abandon the sick any more than our current system does.

Re: The free market will never cover sick people

Jorge A. Medina — Fri, 22 Jan 2010 12:24:07 GMT

Human desires are unlimited but resources are scarce, therefore decisions must be made, i.e., we must economize. No law or social order will never change that truism.

Re: The free market will never cover sick people

Jon Irenicus — Fri, 22 Jan 2010 06:55:39 GMT

There is an optimal amount of regulation at any point in time

Ask for the equation and its parametres that determines this then bombard the bozo with Mises's calculation argument. There is no survival. Sorry, no computers no matter how "super" will rescue socialism. Sob, cry, wail, throw a fit &c. &c.

Re: The free market will never cover sick people

aderwent — Fri, 22 Jan 2010 06:46:55 GMT

And his response to me:

""Under a government plan, these would be impossible." No they wouldn't. The government plan is meant to be an alternative for people who choose to "opt-in." To me this is seriously silly, but it already exists (USPS vs. UPS and FedEx).

As far as a "panel of experts," you are absolutely right. This is a very classical economic argument. No matter how brilliant a certain group of people are, no matter how fast they can think and come to perfect decisions, it's impossible for them to be omniscient of everyone's situation everywhere, and every factor that contributes to it.

However, I do feel that with the increasing power of computers, information processing has the potential to be much more efficient than it is now.

Government regulation may be contributing to the problem. But removing it could cause problems. The modern paradigm is "the market is always the answer," but if you look at Russia's post communist transition, a reckless embrace of capitalism, without the proper institutions in place (by institutions I mean legal, political, or social ones - not just government bureaus).

Regulation increases certain costs (the cost of making and selling drugs), but also reduces other costs (transaction costs, information search costs - it is generally safe to take drugs doctors prescribe because it is necessary that experimental research prove drugs to be reasonably safe).

There is an optimal amount of regulation at any point in time, although time is continuous and policy decisions occur at discrete intervals. So also, part of constrained optimization is determining the correct time to implement policy decisions.

Less regulation is always theoretically favorable, but it is agreed by most economists that certain state intervention is necessary to even create the conditions for competitive markets"

I'm too tired to respond to him today, but you can have fun with his comments if you please.

Re: The free market will never cover sick people

Jon Irenicus — Fri, 22 Jan 2010 06:37:02 GMT

Idiots abound, time is limited. Praxeologically derived answer: ignore them.

Re: The free market will never cover sick people

aderwent — Fri, 22 Jan 2010 06:09:53 GMT

My response was this:

"A government powerful enough to protect property, is certainly powerful enough to take it away. See: eminent domain. Not to mention there really isn't private property in the United States. We lease our land from the government.

As for health care; I agree that people need to be healthy for care to be its cheapest. However, why should the government be at liberty to force people to be healthy? Just as it is with health care coverage (or lack thereof), the people should have their choice in the matter. It should be up to them what they consider healthy, not a panel of politicians or "experts", and whether or not they want to be.

The problem lies in people who want coverage, but cannot afford it (which is a relatively small percentage of the people uncovered currently, hence the huge opposition to the health care bill in America). Among other things, I think health insurance should be much like car insurance. Unless you want to pay huge premiums, you're not covered for the most unlikely of occurrences. At the same time, you're not covered for things such as gas, or oil changes. Why then should health insurance cover routine doctors' visits, etc?

Government regulation has allowed insurance and pharmaceutical companies to become the evils they are. So I fail to see how more regulation could help.

If companies so wish, they should be allowed to force people under their plans to have an annual doctor's visit. High cholesterol? Premiums up. Smoker? Premiums up. High blood pressure? Premiums up. Obviously pre-existing conditions should be exempt. If people don't like that, they can move to a different company, or skip having insurance altogether. Under a government plan, that would be impossible.

These changes, among others such as opening up interstate competition, would help keep costs down. Also, the hand in pocket relationship between pharmaceutical and insurance companies with the government would need to be stopped."

Re: The free market will never cover sick people

aderwent — Fri, 22 Jan 2010 05:34:19 GMT

This is more to just health care in general but... a comment I saw:

"I think the greatest issue in health care is not who can accuse whom of being more vile and wicked, but rather what policy decisions will lead to the greatest net increase in social welfare.

Although health care is a complex problem, it is a problem of optimization like any other. Various constraints exist and the goal is to elicit the most beneficial outcome.

Markets are generally efficient in theory, but a major concern in health care is if anti-competitive or exploitative behavior is occurring on the part of pharmaceutical and insurance companies. This is of great concern because health care is not an industry from which utility only is derived, but also livelihood.

The problem is further confounded by the fact that individuals with poor health have poor productivity. Productivity loss over something as simple as smoking can amount to billions of dollars a year.

Thus, it is in our national interest to try to have a populace that is as healthy as possible. One answer is "remove all regulation and let the market do the work." This is an attractive answer, but you must determine if the current political and social institutions and landscape can accommodate such a solution - and the general consensus is no.

Of course the theoretical disadvantage of a government run health care program are clear (deadweight loss in the industry), a fundamental principle of economics is that sometimes government intervention can lead to better outcomes. A clear example is the government intervening to protect things such as property rights and facilitating easy entry for firms into an industry.

I'm not particularly well-versed in the health care industry, but I can assure you that the same principles apply. Of course, political pressure complicates the matter severely with interest groups, but the simple question of "what is best?" is easy to answer, given that you are explicit about what variables you are trying to maximize (in this case, total health care provided and equal access to it, to an extent)."

It's rather vague to me. Just seems to be skirting around the issue. What do you all think?

Re: The free market will never cover sick people

Capital Pumper — Fri, 22 Jan 2010 03:00:30 GMT

Nielsio:

"The fact of the matter is you can't just simply say government's good or bad; there are some things we do well and there are some things we don't do as well. But health care is a case that we know the free market is never gonna be the way you solve every problem cause they're never gonna cover sick people."

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Re: The free market will never cover sick people

Libertyandlife — Fri, 22 Jan 2010 01:59:17 GMT

I'd say opening up the market will give more money to the people in general. That will make things cheaper for sick people. Charities always will and always have exist. Giving more money to general population will make some people want to give their excess cash to charity.

Re: The free market will never cover sick people

DD5 — Fri, 22 Jan 2010 00:46:27 GMT

Ansury:
I'm not sure "charity" is going to be a sufficient answer, but perhaps history can prove me wrong on that count?

This is an impossible criterion to even measure. What is sufficient? Due to the reality of scarcity, to the naked eye of the untrained economist, it will always seem that some people are deprived relative to others. They will always relate to only what they see with their own eyes.

I can convince you that if we had a free market and "Chrisopher Reeve" like scenarios would not only entail much much lower costs for the type of treatments he has received in the past, but also more and better treatment with better outcome. But there will always be expensive cutting edge treatment that not everybody will be able to afford. To the naked eye, this will always appear to be a failure of what you describe since you can imagine that at the present conditions, confiscating the wealth of healthy and wealthier people can make these things more affordable.

So your quest for historical evidence is meaningless and can provide nothing.

The free market solves the economic problem of scarcity. Socialism doesn't. And Interventionism simply hampers the market and creates artificial scarcity, while paving the way, in incremental steps, towards Socialsim.

So we don't need to prove anything by relating to historical evidence.

Re: The free market will never cover sick people

Ansury — Fri, 22 Jan 2010 00:31:30 GMT

I believe the quote provided by the OP was referring to more extreme cases of "sick" people. (If not, it should have been.)

For example there are those with such extreme or rare medical needs that the cost of their care (in today's world) reaches into the 100's of thousands of dollars over time, and sometimes these needs will continue for the rest of the person's life. I have yet to see a free market solution to this particular problem (the worst case health care scenario) that will satisfy most people.

My own counters include:

The present system causes costs to skyrocket due to...

Lack of effective competition
Massive Federal regulation and bureaucracy (FDA)
The AMA "cartel" (medical certification requirements)
High cost of medical education due to government interventions into education (a whole different problem entirely!)
Outrageously high cost of obtaining "approval" to bring new drugs (and I'd assume medical equipment in general) to the market
Government subsidy of the system through programs such as medicare/medicaid, which can only have the effect of pushing prices higher (same phenomenon occurring in the education sector)

I'm sure there's other factors as well such as high legal costs (malpractice insurance) and other things I'm not as familiar with. (Not to mention the fact that the legal costs of trials is probably jacked way up due to the government as well...)

But... is all this "enough" to satisfactorily resolve a "Christopher Reeve"-like scenario involving a poor person rather than a rich actor? Or will someone with a "pre-existing condition" have to pay such a high price for insurance that they can't come close to affording it? What happens when an insurance company tries to drop someone because the cost of their treatment is too high? The healthy would certainly not have a problem affording coverage in a fully free market system, but I have trouble picturing what would happen to the chronically unhealthy vs someone otherwise healthy with some resolvable issue.

I have a feeling that history (as it often does) has the answer to this problem, but I've yet to do any research on the topic. I'd be curious to hear what others have to say regarding the most extreme medical cases, "worst case scenarios". I'm not sure "charity" is going to be a sufficient answer, but perhaps history can prove me wrong on that count?

Re: The free market will never cover sick people

Jorge A. Medina — Thu, 21 Jan 2010 21:41:47 GMT

Snowflake:
Aside from State boundaries and requiring insurance to cover superfluous stuff, what other regulations does the insurance industry enjoy?

I'm not sure how PPOs operate, but I know that doctors in an HMO network are compensated for their services on a "capitation" basis, e.g., on a per head basis. It is not a fee for service arrangement. This creates an incentive structure that rewards the doctors that get people out of their offices quickly and punishes those that spend a lot of time with their patients. The more they do for a patient, the more their profits sink.

The above is consistent with the following truism: When the Government interferes in the free market, the trend is for quality to drop and costs to rise over time. It's the opposite of the free market.

Re: The free market will never cover sick people

The Late Andrew Ryan — Thu, 21 Jan 2010 21:38:29 GMT

Nielsio:

the free market is never gonna be the way you solve every problem cause they're never gonna cover sick people."

Epoch failure. I'm sorry, that's all that needs to be said.... I broke my arm once and a doctor fixed it..... Therefore we must have the state.

Re: The free market will never cover sick people

ladyattis — Thu, 21 Jan 2010 21:26:08 GMT

Byzantine:
and unhealthy consumers can't compete with the purchasing power of insurers, or to form buyers' clubs which could otherwise compete on a normal footing with Medicare/Medicaid. Very complicated issue.

Absolute truth. I remember that my public speaking teacher had two genetic disorders which knocked her out of the normal coverage of even Blue Cross/Shield, so she had to pay a bit more (it wasn't impossibly expensive, just usually so for her unusual conditions). Anymore, I wonder if such a person wouldn't do better if there were fewer regulations so they can pay cash instead for their treatments and medicines. Also having the option to try experiment drugs for rare diseases wouldn't hurt too (cheaper w/o useless FDA regs, but with the risk as the price offset).

Re: The free market will never cover sick people

Jonathan M. F. Catalán — Thu, 21 Jan 2010 21:21:20 GMT

Usually, they publish my comments. There was 102 approved comments, and mine is not one of them.