History

Re: just came across this argument from a left-wing about US healthcare

Autolykos — Tue, 31 Jul 2012 17:08:45 GMT

Here's my own examination of his claims.

Market mechanisms tend, by adverse selection, to penalize the elderly and those with chronic diseases

It doesn't look like he understands what "adverse selection" is typically taken to mean. Going with the standard definition of "adverse selection", it's the absence of adverse selection in market mechanisms that tends to "penalize" the elderly and those with chronic diseases. Why is that? Because the elderly and those with chronic diseases are riskier to insure. If he doesn't like that, then I suggest he take it up with the universe.

health is an attribute that determines the possibility of consumption of all other goods and services

At best, I think he needs to clarify this. At worst, I think he's arguing that, unless one has "perfect/total health", one can't consume any good or service. I don't think I need to explain just how ridiculous that sounds.

we have information asymmetry between service providers and consumers

And where does he think this comes from?

the existence of externalities, ie the fact that the use of some services produces benefits not only for those who get them, but to society as a whole

Is he saying that I owe someone something because they're healthy instead of sick or dead? Again, I don't think I need to explain just how ridiculous that sounds.

the occurrence of moral hazard

Oh, like people visiting the ER more often because they have better medical insurance?

induction by supply and demand nature potentially infinite health needs before the finite resources to meet them.

Another inherent aspect of reality. This one can be summed up with a single word.

Another thing that complicates things is that in health the incorporation of technology does not reduce the overall costs of labor or, what it does is increase the required number of specialists in addition to the direct costs of the new procedures.

And why is that, exactly? Could it have anything to do with how there are government-imposed restrictions on the number of doctors, nurses, etc.?

But the most important factor in spending growth has to do with the very model that focuses on medical and hospital care, and that thing that ever I mention with a topic we have a process that converts any medicalization of depression and anxiety disorder.

I'm not sure what he's trying to say here.

The various settings of the U.S. health care system some ancaps complain because they think it would be nothing more than a means of precluding competition emerged in reality because these costs were exploding.

I'd really like to see some substantiation for this. As it is, it's just another bare assertion.

The deal, as I said, is that the preventive approach, which is beyond the logic of the market, is much more efficient, as evidenced when comparing data between countries.

By his reasoning, then, the market would only build houses that collapse immediately, cars whose wheels fall off and engines blow up immediately, rotten food, contaminated water, etc. It's a wonder any of us are still alive!

What is "the market"? Ultimately, "the market" is simply people. Leftists are fond of treating "the market" as this thing which is somehow independent of human interaction. It baffles me as to why they do this. Maybe it's just because they really don't understand "the market" at all.

In the early twentieth century, the richest people was attended by private doctors and private nonprofit hospitals through payments made by direct disbursement while the poor used hospitals and clinics, where they were met by teams of medical students.

This completely overlooks the so-called "friendly societies" and other mutual-aid societies, which were essentially wiped out by new (for the time) government regulation.

Insurers and plans Blue Cross and Blue Shield, developed later in the 1930s, practiced uniform rates for all members and served as the middle option.

Those sprung up after the aforementioned mutual-aid societies disbanded, for the aforementioned reasons.

In the 1960s, with the population aging and already some [social tensions], there was a significant government intervention in the health sector through the creation in 1965 of the Medicare programs (federal) and Medicaid (state governments).

Oh, more government intervention to try to solve problems created by existing government intervention?

These programs are compatible with private insurance and initially preserved the system of payment per service (fee-for-service).

How so?

The medicare is one that serves the elderly and disabled, and provision of services is primarily through insurance companies contracted by the federal government (ie, well within what you said). The Medicaid for the poor is that it and the provision of services is done basically by community centers, medical schools and hospitals. You mean that greater state intervention did not mean a change in the private logic of the system, she came to cover a hole, complement and not stifle the market.

First off, where did the hole come from? As far as I can tell, not from "the market" itself.

Second, there's also a clear philosophical difference here. If I choose to not buy a homeless person a meal, am I depriving him of one? My answer is no, because I didn't take food away from him that he already had. He didn't have any food to begin with. What I'd really like to see finally is an explanation of how and why the universe owes anyone a certain living.

And by the eighties / ninety had an explosion in health care costs so that there is a large gap between them and the family income, and there came many of the regulations.

Well what caused this "explosion in health care costs"? Computers have also been essential to society (for a while), yet their costs have consistently gone down over the same period! Could it be that there's less government intervention in the market for computers than there is in the markets for medical care and medical insurance?

These high costs have to do with an "over-treating patients," coordination failures and moral hazard and adverse selection here may be the difference between life and death.

And what caused all of those things? As far as I can tell, they were caused by government intervention to begin with.

We know that regulations are sources of costs and could mean a less competition but we can not make the mistake of thinking them evenly to understand how it came that way a new market for capital appreciation, where the financial system and in all "quasi-markets "capitalists, assumed responsibility for financing the supply and demand.

I have no idea what this is supposed to mean.

The scheme used was the securitization of risk, in which a portion of the population is directly or indirectly, through taxes, financing costs. The goal was to give support to the practices of the medical-industrial complex that had formed and dominated the dynamics of health systems.

In other words, yet more government regulation to try to solve the problems caused by existing government regulation. Where have I seen this before?

In this context, increasingly, the mechanisms of capital accumulation began to be ordered and governed by financial capital. Hence the need to contain medical costs and promote the intensive use of technology. New management practices (managed care), such as budget control, business development and control of pharmaceutical benefits offered were incorporated, with increasing impacts on the evolution of the system. So I insist that the current state of American health care system, despite the post-Obama deserves a separate discussion, represents a new stage of capitalist development in the area of ??health, the financial capital aims to become hegemonic.

What definition of "capitalism" is he using?

This is capitalism, and irony of ironies, at various times I feel like the biggest supporter of this system. What legitimizes capitalism is largely innovation and a true capitalist therefore try to defend the American health care system (with some criticism of some over-regulation here and there, but not to the system as a whole), as the great debate in health between public and private is not about to turn back there because of an absurd idealization of the past, but between innovation and fairness. This innovation, which naturally has a lot to do with the existence of intellectual property rights (forms of monopoly).

What definition of "fairness" is he using?

Like all forms of monopoly, intellectual-property monopolies are enforced not only coercively, but aggressively (IMO) - that is, through illegitimate coercion. Does he think the ends justify the means here? Why or why not?

Re: just came across this argument from a left-wing about US healthcare

xahrx — Tue, 31 Jul 2012 14:12:50 GMT

Market mechanisms tend, by adverse selection, to penalize the elderly and those with chronic diseases, health is an attribute that determines the possibility of consumption of all other goods and services, we have information asymmetry between service providers and consumers, the existence of externalities, ie the fact that the use of some services produces benefits not only for those who get them, but to society as a whole, the occurrence of moral hazard; induction by supply and demand nature potentially infinite health needs before the finite resources to meet them.

While I'm not usually a grammar nazi, this sentence is too long to be coherent. He offers no proof for the adverse results, he merely states they exist.

Another thing that complicates things is that in health the incorporation of technology does not reduce the overall costs of labor or, what it does is increase the required number of specialists in addition to the direct costs of the new procedures.

This is pure bullshit. First off, seen and unseen. An MRI might require a specialist and some electricity, it also means patients don't have to get sawed open from pelvis to sternum for exploratory surgery. Some might consider that an avoided cost. Second, it also misses the aspect of improved quality of care; that is spending more is worth it if you're getting more. Third, while the current US system is in place there's no real way to know what price behavior would have been absent the massive interventions like control of licensed practitioners and the ridiculous amounts of money being pumped into the system and chasing after these goods and services, a system that is dominated by third and single party payment arrangements.

The deal, as I said, is that the preventive approach, which is beyond the logic of the market, is much more efficient, as evidenced when comparing data between countries.

This is provably BS via insurance tiering and incentives. Better drivers get lower rates, some companies even offer monitors that send driving stats back to them and, if you're driving well, reduce your rates. Home insurance companies offer incentives to reduce risk. So preventative behaviour is demonstrable in the market righ now. However, in the healthcare systme you have moral hazzard very much along the same lines as what happens in flood planes. The government subsidizes the insurance and you get people building houses right next to rivers that routinely flood over their banks. Likewise because 'we' are picking up so much of the cost via Medicare, Medicaid, Veterans, and Indian Health Services, the government is subsidizing unhealthy behavior that insurance companies could and would use, and demonstrably do use in other industries, in their tiering of risk groups.

The Medicaid for the poor is that it and the provision of services is done basically by community centers, medical schools and hospitals. You mean that greater state intervention did not mean a change in the private logic of the system, she came to cover a hole, complement and not stifle the market.

The government can't compliment the market, it can only stifle it. Any service the government offered to 'compliment' the market would only serve to decrease market incentive to provide that very service. Again, we don't even need to turn to insurance to see this, we can see it in other industries like education. The government moves in and essentially forces a first purchase, which makes spending on a second and third purchase much less likely. If the government decided to provide everyone with Hondas you'd see budget and mid level car sales plummet because, whether they liked it or not, people would already have one car and would be much less likely to buy another. The market that remained would cater more and more to those people who could afford a second purchase of a good or service which for the majority would only be a one time purchase. A group known as The Rich. The same people who can afford to drop a good chunk of dough on purchasing another education for their kids in addition to the one the government already forces them to buy, to offer another analogous industry. Same goes for any other good or service, including medical care and charity.

And by the eighties / ninety had an explosion in health care costs so that there is a large gap between them and the family income, and there came many of the regulations.

The regulations didn't start in the 80s, and even if they did then by his own logic they failed, because here we are 30 years later and things are worse.

These high costs have to do with an "over-treating patients," coordination failures and moral hazard and adverse selection here may be the difference between life and death. We know that regulations are sources of costs and could mean a less competition but we can not make the mistake of thinking them evenly to understand how it came that way a new market for capital appreciation, where the financial system and in all "quasi-markets "capitalists, assumed responsibility for financing the supply and demand.

Over treating is a consequence of third party and guaranteed/forced payment. Coordination errors only seem to be a systemic problem in government and heavily regulated industries. Likewise for moral hazzard. The rest of this paragraph is to be frank, incoherent and incomprehensible.

So I insist that the current state of American health care system, despite the post-Obama deserves a separate discussion, represents a new stage of capitalist development in the area of health, the financial capital aims to become hegemonic.

This system is most definitely not capitalism, so again, what the hell is he saying? The US system is fascist. It is already nearly 50% socialized with nearly half of all bills raised and settled each year coming from Medicare, Medicaid, Veterans, and Indian Services. And I know of no one who wants to use those services. Only those who, much as with our education system, simply have no other practical choice but to use them. And the rest of the system is a heavily regulated and largely corporate sponsored third party payment system. Calling it capitalist either severely misunderstands the system, or belies the author's true ideology.

Re: just came across this argument from a left-wing about US healthcare

Johnny Doe — Tue, 31 Jul 2012 12:32:17 GMT

shackleford:

Anenome:

Exploding healthcare costs are the result of government intervention, regulation, and increasingly irrational government policies and court judgments on malpractice and the like.

Exploding costs then become the gov's greatest argument to take over healthcare.

Problem, the gov cannot bring down costs by force. Doesn't work that way. It can ration by force, not much else.

What we need is a free market in healthcare. Actual capitalism. We haven't had that for several decades now at least.

To indict capitalism and the free market when what you're indicting is anything but is at best ignorant and at worst dishonest.

I recently heard the argument that socialized medicine is good because of the preventive aspect of it. You might be able to detect some sort of heart problem early before a potential future heart attack. Of course, there is still uncertainty. Preventine medicine doesn't always catch everything, even if you catch it there's no guarantee it wil prevent anything, and some catastrophes occur without any warning.

Has someone made a detailed, comprehensive list of government intervention in the health care insurance and medical service provider industries, e.g. specific legislation, regulation, taxation, etc.?

Because it`s "free", people will visit doctors more often?

When it`s free/regulated people won`t have any incentive to live healthy, i.e. no insurance premiums etc based on each persons lifestyle choices.

Re: just came across this argument from a left-wing about US healthcare

shackleford — Tue, 31 Jul 2012 01:21:37 GMT

Anenome:

Exploding healthcare costs are the result of government intervention, regulation, and increasingly irrational government policies and court judgments on malpractice and the like.

Exploding costs then become the gov's greatest argument to take over healthcare.

Problem, the gov cannot bring down costs by force. Doesn't work that way. It can ration by force, not much else.

What we need is a free market in healthcare. Actual capitalism. We haven't had that for several decades now at least.

To indict capitalism and the free market when what you're indicting is anything but is at best ignorant and at worst dishonest.

I recently heard the argument that socialized medicine is good because of the preventive aspect of it. You might be able to detect some sort of heart problem early before a potential future heart attack. Of course, there is still uncertainty. Preventine medicine doesn't always catch everything, even if you catch it there's no guarantee it wil prevent anything, and some catastrophes occur without any warning.

Has someone made a detailed, comprehensive list of government intervention in the health care insurance and medical service provider industries, e.g. specific legislation, regulation, taxation, etc.?

Re: just came across this argument from a left-wing about US healthcare

Anenome — Thu, 26 Jul 2012 04:52:48 GMT

Exploding healthcare costs are the result of government intervention, regulation, and increasingly irrational government policies and court judgments on malpractice and the like.

Exploding costs then become the gov's greatest argument to take over healthcare.

Problem, the gov cannot bring down costs by force. Doesn't work that way. It can ration by force, not much else.

What we need is a free market in healthcare. Actual capitalism. We haven't had that for several decades now at least.

To indict capitalism and the free market when what you're indicting is anything but is at best ignorant and at worst dishonest.

Re: just came across this argument from a left-wing about US healthcare

shackleford — Thu, 26 Jul 2012 04:31:33 GMT

Well, technicaly, science (natural) is constrained by history. Why do you say that history cannot prove or disprove economic theory?

Re: just came across this argument from a left-wing about US healthcare

vive la insurrection — Mon, 25 Jun 2012 05:21:59 GMT

Let's talk about the case of the U.S. then to understand how the system where he came.

Fortunately you can stop reading right here.

We can not form theory off of historical narration. History isn't science, nor can it prove or disprove anything that has to do with economic theory. This is a narration fallacy / conformation bias.

Never trust a dude explaining why things didnt work in the past.

Re: just came across this argument from a left-wing about US healthcare

Michel — Mon, 25 Jun 2012 03:52:37 GMT

Cortes:

What of the argument that rising costs in healthcare aren't due to the burden of programs like Social Security/Medicare/caid etc since countries like Sweden and Germany have huge safety nets yet pay the lowest costs for their healthcare?

Well, to my knowledge, swedes pay 48% of their income in taxes, and hate it (anedoctal, my english teacher lived 4 years in Sweden), and they rationalize health care to the extent that people die on the telephone calling the ambulance, for the atendant evaluates through the line if you really need care (read on a Mises Brasil Institute article, I'm sure there's articles about that here too. Oh, just find that, is not about health specifically, but talks about it's economic model). Long story short, I wouldn't consider it low cost.

Re: just came across this argument from a left-wing about US healthcare

Cortes — Mon, 25 Jun 2012 02:41:52 GMT

What of the argument that rising costs in healthcare aren't due to the burden of programs like Social Security/Medicare/caid etc since countries like Sweden and Germany have huge safety nets yet pay the lowest costs for their healthcare?

Re: just came across this argument from a left-wing about US healthcare

Phi est aureum — Wed, 20 Jun 2012 21:50:57 GMT

"Another thing that complicates things is that in health the incorporation of technology does not reduce the overall costs of labor or, what it does is increase the required number of specialists in addition to the direct costs of the new procedures."

even if this were so, and I am not convinced that it is, isn't this largely due to the regulation of the practice of medicine and the licensing of medical assistants/technicians? As in, if the AMA didn't have a legal monopoly on the issuance of these licenses (and/or licenses just were not required), there would be more schools that could accept more students to learn these techniques than the current system has capacity for (think of all the capable people turned away from the limited number of nursing schools) which would result in the reduced cost of labor (due to the increase in supply of labor)?

Which is also why I vehemently disagree with the last paragraph, which starts by saying the health industry in the US is capitalism; it is not even close. See FDA, AMA, licensing, insurance mandates, hospital mandates, pharmaceutical mandates, etc. etc.

If you're looking to rebut this person's remarks personally, check out the resources here:

http://mises.org/Community/forums/p/28565/461549.aspx#461549

just came across this argument from a left-wing about US healthcare

nomar — Wed, 20 Jun 2012 20:39:21 GMT

But there is some historical informations, and as i am not from US i do not know if they are right or wrong.

Market mechanisms tend, by adverse selection, to penalize the elderly and those with chronic diseases, health is an attribute that determines the possibility of consumption of all other goods and services, we have information asymmetry between service providers and consumers, the existence of externalities, ie the fact that the use of some services produces benefits not only for those who get them, but to society as a whole, the occurrence of moral hazard; induction by supply and demand nature potentially infinite health needs before the finite resources to meet them.

Another thing that complicates things is that in health the incorporation of technology does not reduce the overall costs of labor or, what it does is increase the required number of specialists in addition to the direct costs of the new procedures. But the most important factor in spending growth has to do with the very model that focuses on medical and hospital care, and that thing that ever I mention with a topic we have a process that converts any medicalization of depression and anxiety disorder. The various settings of the U.S. health care system some ancaps complain because they think it would be nothing more than a means of precluding competition emerged in reality because these costs were exploding. The deal, as I said, is that the preventive approach, which is beyond the logic of the market, is much more efficient, as evidenced when comparing data between countries.

Let's talk about the case of the U.S. then to understand how the system where he came.

In the early twentieth century, the richest people was attended by private doctors and private nonprofit hospitals through payments made by direct disbursement while the poor used hospitals and clinics, where they were met by teams of medical students. Insurers and plans Blue Cross and Blue Shield, developed later in the 1930s, practiced uniform rates for all members and served as the middle option. In the 1960s, with the population aging and already some tensions socais, there was a significant government intervention in the health sector through the creation in 1965 of the Medicare programs (federal) and Medicaid (state governments). These programs are compatible with private insurance and initially preserved the system of payment per service (fee-for-service). The medicare is one that serves the elderly and disabled, and provision of services is primarily through insurance companies contracted by the federal government (ie, well within what you said). The Medicaid for the poor is that it and the provision of services is done basically by community centers, medical schools and hospitals. You mean that greater state intervention did not mean a change in the private logic of the system, she came to cover a hole, complement and not stifle the market.

And by the eighties / ninety had an explosion in health care costs so that there is a large gap between them and the family income, and there came many of the regulations. These high costs have to do with an "over-treating patients," coordination failures and moral hazard and adverse selection here may be the difference between life and death. We know that regulations are sources of costs and could mean a less competition but we can not make the mistake of thinking them evenly to understand how it came that way a new market for capital appreciation, where the financial system and in all "quasi-markets "capitalists, assumed responsibility for financing the supply and demand. The scheme used was the securitization of risk, in which a portion of the population is directly or indirectly, through taxes, financing costs. The goal was to give support to the practices of the medical-industrial complex that had formed and dominated the dynamics of health systems.

In this context, increasingly, the mechanisms of capital accumulation began to be ordered and governed by financial capital. Hence the need to contain medical costs and promote the intensive use of technology. New management practices (managed care), such as budget control, business development and control of pharmaceutical benefits offered were incorporated, with increasing impacts on the evolution of the system. So I insist that the current state of American health care system, despite the post-Obama deserves a separate discussion, represents a new stage of capitalist development in the area of health, the financial capital aims to become hegemonic.

This is capitalism, and irony of ironies, at various times I feel like the biggest supporter of this system. What legitimizes capitalism is largely innovation and a true capitalist therefore try to defend the American health care system (with some criticism of some over-regulation here and there, but not to the system as a whole), as the great debate in health between public and private is not about to turn back there because of an absurd idealization of the past, but between innovation and fairness. This innovation, which naturally has a lot to do with the existence of intellectual property rights (forms of monopoly).