A libertarian case for expanding Medicaid

by on May 29, 2014 at 7:13 am in Law, Medicine, Philosophy, Uncategorized | Permalink

Currently health care is very expensive in the United States, especially if you have to buy hospital care without formal insurance.  Under ideal institutions, it would be much cheaper, maybe a third of the current price or lower yet (not for everything, though).  For instance in Singapore health care expenditures are about four percent of gdp.  A libertarian may think that laissez-faire or near laissez-faire is the way to go, while others might favor single payer with price controls, and so on.  In any case, in the meantime we are stuck with expensive health care, and for reasons related to bad and coercive government policy.

Now, would a libertarian think that we should cut health care services in prisons, simply because tax dollars are in play?  No, the prisoners — many of whom are morally innocent — have nowhere else to go for treatment.  When it comes to health care, many potential Medicaid recipients are in essence prisoners, locked into a policy-deficient environment and so they cannot buy quality care at affordable prices.  So if we favor health care expenditures for prisoners we might also favor Medicaid expansions.

That said, expanding the current version of Medicaid is unlikely to be a first-best solution, no matter what your broader political stance.

Addendum: Jacob Levy offers comment.

J May 29, 2014 at 7:26 am

For this reason I generally favor single-payer as a second best solution. Ideally you’d have a nice blanket with no holes. Single-payer is a mediocre blanket with no holes. Right now we have a nice blanket with holes in it as well as pre-existing holes that have been crudely patched up. When it comes to healthcare I think the non-existence of holes is more important than the quality of the blanket fabric, within reason.

Handle May 29, 2014 at 8:59 am

Maybe, but solve for the equilibrium political strategy. If you purposefully poke enough holes in a blanket that was once adequate and make it unaffordable and unable to function, then the someone from GMU will come along and say expanding eligibility for a welfare program is certifiably Libertarian. What else can we nationalize through preemptive ruination of the private marketplace?

In a way it’s reminiscent of the strange economic argument against the death penalty. “Well, it’s just too expensive to impose capital punishment.” Who tried as hard as they could to make it so expensive so that this ‘argument’ could be made? Anyway, the argument is almost always disingenuous. I’ve never heard anyone say, “I’d support capital punishment if only it were 30% cheaper, but at today’s rates, forget about it.”

Z May 29, 2014 at 9:31 am

Liberal nuts used to make same arguments about food that they are now making about health care. Then Stalin, Mao and Pol Pot murdered tens of millions with government run farming and the Left dropped the idea. We’ll have to let them murder a few million people through state run health care before they get a new hobby. Reading the stories coming from the VA, it looks like they are already started.

Nick Bradley May 29, 2014 at 9:37 am

Please elaborate on the millions dying in single payer systems.

Because we have far more deaths in our system than they do.

(Not That) Bill O'Reilly May 29, 2014 at 11:05 am

Without taking a side, I would be curious to hear you acquiesce to your own demands and elaborate on the “far more deaths in our system” than in single-payer systems.

Norman Pfyster May 29, 2014 at 11:07 am

We have the exact same rate: one per person.

dan1111 May 29, 2014 at 11:53 am

@Nick, a good case can be made that U.S. has a higher life expectancy once controlling for lifestyle and removing accidental deaths. It’s probably a fruitless argument, though, since there is enough ambiguity in the data that we will all just look at it based on our own biases.

oakchair May 29, 2014 at 10:56 pm

@dan1111
Wrong when one includes all lifestyle aspects such as alcohol, cigarettes, illicit drugs and obesity one finds that Americans should actually if all else equal have long life spans. Now given that American spends double on health care and gets lower lifespans anyone with a brain would conclude that the American system is shittier,
@Nick Bradley
Studies show that if the American health care system were as efficient at preventing medical related deaths as other industrialized nations 100,000 less deaths would occur in America. Note that this does not account for the large percent of Americans who do not have access to health care.

dan1111 May 30, 2014 at 1:52 am

Comparing life expectancy between two different populations is no easy task. Anyone saying “anyone with a brain” can see that one side is right can be safely ignored.

Floccina June 2, 2014 at 3:50 pm

Studies show that if the American health care system were as efficient at preventing medical related deaths as other industrialized nations 100,000 less deaths would occur in America. Note that this does not account for the large percent of Americans who do not have access to health care.

Perhaps it is too much access that is killing us. See below for some evidence:

Indeed, the health-income gradient is slightly steeper in Canada than it is in the U.S.

Also see the 8 Americas study, One of the groups with the least access lives longer than average. Also Hispanics with lower than average access to healthcare live longer than average.

It is a delightfully non-intuitive idea that access to high cost healthcare lowers rather raises life expectancy and if you look at the data it seems to be a possibility.

Thomas B May 30, 2014 at 7:21 pm

When you invoke Godwin’s Law, you’re communicating less about the topic, and more about your ability to reason.

So I follow a Bayesian approach. I don’t care which position you take, if you compare your opponents to tyrannical dictators, I’m on whatever other side is available.

dan1111 May 29, 2014 at 9:33 am

To rip off Douglas Adams, the U.S. healthcare system wasn’t so much designed as it was sneezed into existence. It is a huge seething mass of unintended consequences. No evil political mastermind could have planned this.

Nick Bradley May 29, 2014 at 9:40 am

What do you prefer?

Because a laissez faire system with no government involvement isnt possible with.modern care.

dan1111 May 29, 2014 at 9:58 am

I prefer a free market system where most people pay for routine medical costs out of their pocket and have high-deductible insurance (not coupled to an employer) to pay for catastrophic health events.

In addition, there would be higher standards of proof for malpractice lawsuits and caps on damages.

Educational requirements for doctors and nurses would be lower, there would be no artificial limitations on the number of medical students, and barriers to doctors and nurses with qualifications from other Western countries working in the U.S. would be reduce.

The mandate for hospitals to provide emergency care regardless of ability to pay would remain in place.

Basic government-subsidized medical coverage for the very poor would also continue to exist, possibly in the form of a high-deductible insurance plan combined with an account charged with a certain amount each year that can only be spend on approved medical expenses.

Nick Bradley May 29, 2014 at 10:05 am

Dan,

If you want more doctors, just.produce more doctors. France does that.

And how do people pay the large deductibles?

And is the price or quality better than single payer, or is it just more compatible with your ideology?

J May 29, 2014 at 10:25 am

Dan,

I’m curious if you could elaborate in more detail on how the health insurance would work, and here is what I mean.

Does the insurance contract provide a giant list of what kinds of treatments are covered given different diagnoses? I think this would suffer from a severe information problem as 99% of people are just not going to be able to look at that contract and say, “Actually I don’t think I really need to include [obscure, expensive treatment] if I am diagnosed with [obscure, rare form of cancer].”

Or rather, does each disease get lumped into a monetary category, so the insurance company says, “ok you have [form of cancer]? Here is such-and-such amount of money to treat that.” I suspect that simply introduces a new form of risk, that the amount doesn’t cover what is needed to treat the illness, as these things can vary.

I’m concerned that either way we are stuck with wallet risk (damping (dampening?) the efficacy of insurance) or information asymmetries taken up to 11.

Z May 29, 2014 at 10:29 am

@Dan, what you describe is something close to veterinary medicine. We assume expensive insurance is a requirement of health care, but it is a byproduct of over regulated health care. Let supply rise to meet demand and prices will fall, eliminating the need for insurance other than for catastrophic events.

Our pets get better medical care than 90% of the humans on earth. Yet, crackpots like Nick insist on doing everything other than what plainly works best. Sadly, they are in charge so we’ll have to let them smash the system to bits before we can restore rationality to health care.

Boonton May 29, 2014 at 10:34 am

dan111,

the only problem is your vision is rather simplistic in terms of what exactly ‘routine’ medical care is. When an insurance company realizes that having a diabetic patient have a doctors visit twice a year followed up with ‘routine’ bloodwork and medication reduces the chance of a $100K+ complication dramatically, it’s a lot easier for them to decide to pay for that than to strictly stick to a ‘catastrophic only’ policy.

One of the insights of the Kaiser study was that when coverage pays for *all* routine care people over use it. When it pays for none people cut not only wasteful care but also care that’s somewhat pricey but necessary over the long run. As a result most insurance works off a co-pay model where you pay a co-pay that bites into your discretionary spending budget but hopefully not so much that you’ll end up being penny wise and pound foolish.

dan1111 May 29, 2014 at 10:40 am

@J, and @Nick the high-deductible insurance I describe actually existed before Obamacare outlawed it. This is not some theoretical question. It existed and was workable. I had something close to what I describe. As for how you pay for things: well, that is pretty simple. You budget some money for it, just like you do for food, shelter, and other necessities of life. The amount of risk in this idea is similar to what we routinely bear for other things. The giant list of treatments issue is true of any form of insurance, and it is not the most pleasant thing, but it is well established to be workable. Also, I should note that in a free market system there would be nothing stopping people from purchasing more extensive insurance coverage, if they preferred to do so. I just think that more minimal insurance is what would tend to arise absent the distortions imposed by government.

@Nick:

“If you want more doctors, just.produce more doctors.”

Well, I can’t do this personally. Yes, I would happily support standalone measures to increase the number of doctors. Just as I would support standalone malpractice reform. Neither of those depends on the entire system being implemented.

“is the price or quality better than single payer, or is it just more compatible with your ideology?”

This is an open question, and all of our answers to that are inevitably going to be shaped by ideology. There is no definitive evidence on it. I believe it would be the best value for money, for ideological reasons, of course (believing that market competition will lead to the best outcomes).

dan1111 May 29, 2014 at 10:43 am

@Boonton, what such plans do is set an overall cap on the expenses an individual pays out of pocket per year, rather than defining which things are “routine”. So, in your example, the individual might have to pay the first few thousand dollars of a diabetic patient’s care in a given year, but after that it would be covered.

NPW May 29, 2014 at 11:21 am

@ Nick,
The US limits the number of doctors it produces domestically by limiting the available slots for residency. Getting into med school is just one of the steps towards becoming a doctor.

Boonton May 29, 2014 at 11:26 am

Another problem with the ‘high deductible envy’, it doesn’t seem to align with what I think is the biggest problem in the US, the compartmentalization of healthcare into ‘billable procedures’. A simple issue, like a mysterious lump appearing, is broken up into a set of ‘procedures’ which seem optimized for little other than billing insurance (for example, that easily turns into at least 3 ‘office visits’ each of which is billed beyond the actual biopsy and analysis which actually tells you what is going on).

An accountable care model reverses this odd incentive and instead reimburses simply for maintaining the patient’s health. Yet if you’re paying the doctor for managing the patient, how do you break everything up into billable codes which you can assign as ‘routine’ and ‘non-routine’?

dan1111 May 29, 2014 at 11:47 am

@Boonton, the high-deductible model does mitigate this problem, because when people are paying for more visits out of pocket that will be a counterbalance to doctors’ incentive to increase the amount of care provided simply for billing purposes.

Ultimately, I agree that pay-for-service is not perfect. However, I have a hard time imagining a workable pay-for-health system. This incentivizes doctors to take on only healthy patients; another problem is that so much of health is the individual patient’s responsibility. The doctor can’t control whether I smoke, ride a bike without a helmet, eat nothing but bacon, or take my medication. Yet under pay-for-health the doctor would be responsible for that. Is there any example of a working pay-for-health system in the world? If so, I’d be interested to hear about it. Even government health systems like the NHS end up paying incentives based on services rendered rather than overall health.

oakchair May 29, 2014 at 11:01 pm

@dan111
And so far all the “free-market” systems you prefer have been shown to cost a lot more and provide worse health results.
What will it take for you to accept reality when it is counter to your ideology?

TallDave May 30, 2014 at 12:09 am

the “free-market” systems you prefer have been shown to cost a lot more and provide worse health results

They’ve been shown to provide a lot more healthcare at small marginal benefit. Good news if you’re on the margins. For instance, preemies in the rest of the OECD tend to given up on a lot more often, and often aren’t even counted in IM statistics. C’est la vie.

Look up a comparison of LE in OECD countries to U.S. states sometime, it’s somewhat surprising. The Plains states have some of the highest LE in the civilized world, the Lard Belt some of the worst. They all use the U.S. system.

TallDave May 30, 2014 at 12:16 am

Because a laissez faire system with no government involvement isnt possible with.modern care.

We can have Medicaid for some proportion of the population. The problems tend to stem more from prohibitions on interstate competition, mandated coverage, and the strange idea that we should give a huge tax incentive for healthcare “insurance” for even routine expenses through our employers. Like many well-intended interventions they tend to create a system that’s great for industry and government, bad for consumers.

dan1111 May 30, 2014 at 1:57 am

@Oakchair, can you please point me to the example of where this has been tried and did not have good outcomes?

The American system, while mostly private, is full of distortions introduced by government: too-generous tort law, artificial limitations on the number of doctors, tax law encouraging insurance to be employer-provided, a maze of regulations about what health insurance must cover, etc.

I am arguing that removing these distortions would result in an effective health care system. You are free to disagree, of course, but if you want to claim that this is disproven, you need to provide evidence.

Thomas B May 30, 2014 at 7:32 pm

> In addition, there would be higher standards of proof for malpractice lawsuits and caps on damages. – dan1111

I’d support that only if surgeons at major hospitals could figure out how to stop leaving scalpels and sponges in patients on their own. You can’t incentivise a hospital to improve its processes with a parking ticket.

Also, med mal insurance costs have been plummeting even without legislation, and aren’t very high to begin with. A survey of California hospitals puts premiums at a fraction of a percent of revenue:
http://www.truecostofhealthcare.org/hospital_financial_analysis

Z May 29, 2014 at 9:41 am

Health care in America is a giant bust-out scheme. Real reform will only come when the money runs dry. Until then, wackos like Nick Bradley will be in the pews chanting lines from the catechism while crooks haul the money out the back.

Nick Bradley May 29, 2014 at 9:56 am

Wackos want a system in line with international norms and standards. How bizarre!

The truly sane want a cash based system. That’s where the action is at.

Boonton May 29, 2014 at 11:12 am

dan,

Fair point, except high deductible plans are on the exchanges (in fact, the GOP has tried making an issue of Obamacare plans having *too* high deductibles! see http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/12/obamacare-exposes-republican-hypocrisy-on-health-care/). If Americans generally want a high deductible plan in exchange for lower monthly premiums then we should see clear evidence for that over the next few years. Granted the high-deductible plans on the exchanges may not be your ideal version (perhaps you want to see no coverage for routine preventable care at all…even if it’s just a single covered checkup per year) but such plans have hardly been ‘outlawed’ and we have ample room to see your idea put to the test.

BTW, no plan is ‘outlawed’ under Obamacare. At worst a plan won’t meet the qualifications to meet the mandate and be sold on exchanges. But if such a plan really was that much less expensive then customers would have every reason to buy it and simply pay the mandate penalty and still enjoy the net savings. Likewise companies would have every reason to offer such plans if the premiums were sufficient to cover costs plus a profit.

NPW May 29, 2014 at 11:23 am

Speeding hasn’t been “outlawed” either. You just gotta pay the fine .

dan1111 May 29, 2014 at 11:50 am

@Boonton, sorry, I was mistaken. I got mixed up between high-deductible and the types of coverage mandated. You are right that high-deductible plans are still legal, though I would prefer for mandates as to what must be covered also to be eliminated.

However, as for no plan being outlawed, I was quite sure that plans which didn’t meet a long list of mandatory coverage requirements were, indeed, outlawed. That was the whole basis of the uproar over “if you like your plan, you can keep it”, was it not? Those were not just plans on the exchanges that were discontinued.

Boonton May 29, 2014 at 2:11 pm

dan,

We can bring out the 3 legged stool argument here. If everyone is going to get medical care, then everyone has to be covered somehow. If you ask everyone to get covered, you have to tell the insurance companies they can’t price riskier people out of their markets. If you tell the insurance companies they have to not price the sick out of their markets, the insurance companies will insist that you push the non-sick towards insurance. Hence you have the mandate to push the non-sick to insurance. You have community rating (essentially everyone pays the same premium although actually premiums are allowed to vary for age and smoking). And you have to define what exactly is meant by ‘coverage’.

That all being the case, no plan is ‘outlawed’ but most people probably aren’t going to want to shell out serious money for a plan that doesn’t qualify. Likewise most insurance companies aren’t going to want to spend money running a plan only a handful of eccentric types will pay for. But since the mandate is not very severe, if the super high deductible plans were so much better for everyone then lots of people would be willing to pay for them and just pay the mandate penalty.

That was the whole basis of the uproar over “if you like your plan, you can keep it”, was it not?

There was a lot more smoke there than fire as evidenced by the need for Republicans to hire actors to play fictional ‘victims’ of Obamacare rather than real life ones. The private-buy your own policy directly health insurance market pre-Obamacare was quite far from a smoothly functioning free market. I’m not saying no one in the whole country may have ended up with a worse plan, but there was a lot less there there than we were lead to believe.

J May 29, 2014 at 10:14 am

True, but I think with health care there is a path dependency that doesn’t exist for other private industries. You can privatize your steel mills, for example, and maybe the price of steel goes up and maybe it goes down, but it’s not a life or death situation for most people. It doesn’t matter how you start or whether you go fast or slow; what matters is just getting it done. You have to be very careful about doing that with health insurance, as you risk throwing a bunch of people out of their risk pool when they already have a pre-existing condition, precisely the thing that insurance is supposed to prevent.

I think financial regulation is similar. True laissez-faire might be best, but failing that you are really best off just beating the darn thing into submission Canada-style instead of settling for this ridiculous hybrid we had in which banks’ liabilities are backed by FDIC and TBTF but their assets have little to no restriction.

Boonton May 29, 2014 at 7:46 am

As you previously noted, something like 20% of Medicaid patients make up 80% of Medicaid’s costs. An interesting implication of that is that probably most poor people who are really sick are already on Medicaid (or some other coverage). Hence the cost of expanding Medicaid would not be the average cost of Medicaid times the number of people it is expanded too. Instead it would be less per person, possibly much less. I believe some preliminary evidence from the Medicaid expansion is proving that point out.

Of course you could argue that Medicaid coverage isn’t as nice as over types of coverage. But then if the cost per person is even less that starts to sound like an economically ignorant argument (like saying McDonald’s dollar menu doesn’t give you great food)

dan1111 May 29, 2014 at 8:03 am

“most poor people who are really sick are already on Medicaid”

But to be more specific, that would be most eligible people. When you expanded eligibility to a new group of people, wouldn’t the most sick in that group also tend to move onto Medicaid? I don’t really see this argument working.

If there is such an effect, it seems to me that it would be for other reasons:

1) The sick people in the group you expand to are more likely to have other coverage, and thus less likely to move to Medicaid (I’m skeptical of how big this effect would be, because there is a lot of pressure to stop paying for something when there is a “free” alternative available).

2) The people in the group you expand to are less sick overall than the original Medicaid group. This seems fairly likely, because there is surely a strong relationship between poverty and poor health.

Boonton May 29, 2014 at 10:29 am

Possibly, except pre-ACA the primary way to get Medicaid was to be ‘poor-plus’…as in ‘poor plus old’ or ‘poor plus disabled’. More often than not the ‘plus’ was something that was very likely to correlate with sick. Expanding it towards ‘simply poor’ basically expands into the working poor who are not as sick. Since the expansion is free to the person getting it I’m not sure there’d be any special reason for only the sick to sign up.

ohwilleke May 29, 2014 at 8:04 am

Medicaid, in principal, is great coverage – pretty much any medically necessary care with minimal or no copays or deductibles. The problem is finding providers willing to accept its below market rates while meeting their expenses as an entity, not the scope of coverage to people who can find someone willing to accept them as a new Medicaid patient.

Z May 29, 2014 at 8:29 am

That problem is a feature, not a bug. The whole point of centrally planned and managed health care is to reduce services to those deemed least useful.

Boonton May 29, 2014 at 10:35 am

If this is the case then you should be able to demonstrate that Medicaid patients have dramtically worse outcomes relative to other types of patients (adjusted for various risk factors, of course).

Peter H May 29, 2014 at 11:54 am

It’s hard to do because Medicaid includes almost 100% of severely disabled people, who almost universally have extremely high costs and awful outcomes. There’s no way to properly adjust for that since we have no baseline. Next to zero extremely disabled people aren’t on Medicaid. And the ones who are have some categorical differences (namely, they’re almost all minor children of wealthy parents)

oakchair May 29, 2014 at 11:07 pm

@peter h
then you simply do a study that compared similar medicaid patients to similar private sector patients. The results wont be perfect because the similar private sector patients will be richer but they will give you something to go on.
Also some states privatized their medicaid expansion meaning in a few years we could be see studies showing the differences in costs and health outcomes between socialized medicaid and privatized medicaid. And if they are similar to the results of medicare we will see privatized medicaid costing more and providing lower quality health outcomes.

Boonton May 29, 2014 at 1:36 pm

100% severely disabled people? Are you sure about that?

ThomasH May 29, 2014 at 7:56 am

Unfortunately, the opportunistic opposition to pieces of ACA — the individual mandate, the Medicaid expansion are not first best solution, either. I like the idea that new devices and drugs reimbursed by Medicaid or Medicare or subsidized policies from the exchanges should publicize the cost benefit studies that show them to be superior to existing devices and treatments. Removing the employer mandate and eliminating subsidies for employer purchased health insurance would also help.

Z May 29, 2014 at 9:02 am

Yeah, it’s the bogeyman’s fault.

ohwilleke May 29, 2014 at 8:01 am

The main problem with expanding Medicaid is that it is a business model that relies on paying below market compensation to providers – even other federal government health care programs, like Medicare, pay much more to providers for precisely the same health care services. Unsurprisingly, few providers accept new Medicaid patients if they can help it, while far more accept new Medicare patients.

When Medicaid provides a small share of the total volume of health care services (for instance in the case of low income non-disabled beneficiaries) the private sector reimbursement haircut can be subsidized by overcharging patients with private health insurance or more generous government program benefits. But, the more market share Medicaid accounts for, the less viable these kind of cross subsidies become.

Nick Bradley May 29, 2014 at 8:45 am

Medicare doesn’t pay that much more.

ohwilleke May 29, 2014 at 3:55 pm

On average, Medicare pays 50% more than Medicaid. http://kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index/ This is pretty significant in my book.

Nick Bradley May 30, 2014 at 6:55 am

Thanks, I hadn’t seen that before, only anecdotal reports from individual states

oakchair May 29, 2014 at 11:09 pm

So your argument is that business will lose money on certain customers and just make up the difference by jacking up the cost to other customers?
Sounds kind of like a businesses are being stupid, or perhaps you’re 100% wrong and medicare/caid are more efficient in their use of money (for example they have 20% less administrative costs to doctors) which results in their lower payouts.

dearieme May 29, 2014 at 8:20 am

I once saw a British medic privately for an urgent problem. He gave me an injection and said: “Come back in a fortnight for a follow-up. Who is your insurer?” I said I had no insurer and he replied, somewhat incredulous “You are paying for this yourself?” So he got me the follow-up appointment on the NHS.

Economists might care to work that one out.

Nick Bradley May 29, 2014 at 8:43 am

Libertarian economist: “single payer works in practice…but does it work in theory??”

Adrian Ratnapala May 29, 2014 at 9:03 am

In my experience, the NHS doesn’t work in practice. I don’t really understand the theoretical arguments about why it should work in theory.

dan1111 May 29, 2014 at 9:15 am

The NHS does provide medical care that is acceptable in terms of Western standards and very good in terms of world standards, at a fairly low cost. So, I am willing to admit that it “works” in a general sense, even though I do not think it is an ideal system and do not want the U.S. to emulate it.

oakchair May 29, 2014 at 11:10 pm

So you do not want toe US to emulate a system that costs half of what the US currently pays but also provides better quality of services…. Are you stupid?

Nick Bradley May 29, 2014 at 9:21 am

Care to share?

Its rated as the most efficient system in the rich world, extremely low wait times, and high quality.

This is based on the 2011 Commonwealth report

Chip May 29, 2014 at 9:35 am

Five year cancer survival rate of 50% compared to 65% in the US.

Thousands of unnecessary deaths at individual hospitals due to negligent care. Billions of pounds spent with no improvements noted.

The evidence is there. Anecdotally, we have had three children in three countries. The UK was the only one that nearly killed my wife through sheer incompetence and neglect.

Nick Bradley May 29, 2014 at 9:52 am

@chip,

Running unnecessary tests is a great American Pastime, and as a result we get extremely high false positive rates for cancer, particularly breast and prostate.

This inflates the survival statistics, pretty much everyone in cancer statistical research is aware of this…you weren’t.

Anecdotally, I have a relative who recently passed from blood chance, he was 65. He did not get chemo or radiation because the insurance company considered him terminal already.

…freedom!

bob May 29, 2014 at 11:52 am

Say Joe and Bill have cancer, and I have no way of curing them, but I can diagnose them. They will die in 6 years. I test Joe today, and realize he has cancer. Bill, on the other hand, doesn’t get diagnosed until next year, because he spent the day at the pub, instead of coming for his appointment. According to survival statistics, Joe got better care than Bill, because he lived a year longer while diagnosed with cancer.

dan1111 May 29, 2014 at 9:12 am

@Nick, very funny, even if I don’t agree.

As for the anecdote, there is no incentive in the NHS to restrict care to people who are actually eligible for care. So, they will happily give care to ineligible people. It is nice to be the beneficiary of that, but it is not a good thing systemically. It is a loophole that is being exploited and possibly costing quite a lot of money.

Nick Bradley May 29, 2014 at 9:23 am

How is it being exploited?? Its the lowest cost system out there

dan1111 May 29, 2014 at 9:42 am

Anyone following British media knows that the NHS is facing enormous cost pressure and struggling to provide services. I work in health research in the UK and interact with many health professionals. Practically everyone is talking about emergency rooms being at the breaking point and not being able to handle demand. Providing free care to people who are ineligible seems a pretty obvious additional strain on the system.

Nick Bradley May 29, 2014 at 9:53 am

Cost pressures? Compared to whom? Certainly not Americans bro.

dearieme May 29, 2014 at 9:55 am

“Practically everyone is talking about emergency rooms being at the breaking point”: that particular problem goes back to the Blair government which exempted GPs from their old responsibility to give 24-hour cover. So people no longer use the GP out-of-hours and pop round to Accident and Emergency instead. Yet another reason to hang Blair – after arrest, charge, trial, conviction, and sentencing, naturally.

I deeply distrust cancer 5 year survival rates as a guide to anything useful. A moment’s reflection should explain why.

“Thousands of unnecessary deaths at individual hospitals due to negligent care.” Yes, those horror stories are true as far as I can tell. Whether the facts are gathered and publicised more easily because it is a centralised service I don’t know. Presumably there must be thousands of unnecessary deaths in the US; how would anyone gather the numbers though?

Nick Bradley May 29, 2014 at 10:03 am

US ERs are perfect

dan1111 May 29, 2014 at 10:47 am

@dearieme, the NHS believes its own cancer survival rates are unacceptable and worse than other countries.

“the UK and Ireland has lower survival rates than the European average for many cancers, particularly of the colon, ovary, kidney, stomach and lung…Researchers say the main reason for low survival rates in the UK seems to be delayed diagnosis, underuse of successful treatments and unequal access to treatment, particularly among elderly people.”

http://www.nhs.uk/news/2013/12December/Pages/UK-cancer-survival-rates-below-European-average.aspx

dearieme May 29, 2014 at 5:39 pm

@dan1111; and they could well be right. But NHS employees are much like medical researchers – always prepared to do a bit of “shroud-waving” i.e. threatening dire consequences if they are not given heaps of money.

I am not a keen supporter of the NHS; people I’ve met who have used other systems almost always seem to prefer them – France, Canada, Iceland, Singapore, …. It’s a pity that the NHS was introduced on a Stalinist model, but there you are. It coincided with the widespread availability of antibiotics, and The People, in their ignorance, assumed that it was the former, not the latter, that was saving lives. Hey ho. (P.S. As far as I know this theory of how the NHS became an Established Church is original – but who knows? There must be many, many people who had the opportunity to think of it before I did.)

But American criticisms of the NHS often verge on the gullible and superstitious. It was only when Obamacare was being debated that I learnt a bit about the mad features of the American “system”: up till then I’d known only that it was humungously expensive, and yet that Americans still died sooner, on average, than many comparable people – if one can ever be assured of comparability, that is. I don’t suppose that Obamacare – “shambolicare”, I call it – will become an Established Church, but a people who are prepared to make a saint of Thomas Jefferson must be assumed to be capable of anything.

The Engineer May 29, 2014 at 8:29 am

Why are we talking about Medicaid anymore? We have health care exchanges. We have Obamacare. Why don’t we allow the poor to buy into these exchanges, with subsidies if necessary?

Medicaid is terrible insurance. Nobody should be on it. Give the poor the same health care options that everyone else has with Obamacare.

Nick Bradley May 29, 2014 at 8:42 am

Um, Medicaid outcomes are no different than similar populations on private insurance. But if you want to spend more money, go ahead.

I don’t like Medicaid because of all the access issues, and the stigma, and the state government incompetence. It should be part of Medicare

The Engineer May 29, 2014 at 1:25 pm

I’m still failing to see why the poor (and the elderly, for that matter with Medicare) should be in a separate system from everyone else. Like you said, there is a stigma to it, if nothing else.

We have the exchanges. Insurance exists on those exchanges. Why would we give the poor (and the elderly) something different than what everyone else is getting?

I know, I know, private employers aren’t on the exchanges. Yet. You wait, it is coming.

I believe that Mike Pence’s “Healthy Indiana 2.0″ is exactly what I am talking about.

ummm May 29, 2014 at 8:35 am

Currently health care is very expensive in the United States, especially if you have to buy hospital care without formal insurance.

IMHO, it’s the opposite. How many ppl in the emergency room will be paying or their healthcare? Certainly not all of them. We have universal healthcare for the uninsured under the tax payer dime. The govt. requires hospitals treat everyone regardless of ability to pay.

F. Lynx Pardinus May 29, 2014 at 8:48 am

“We have universal healthcare for the uninsured under the tax payer dime. The govt. requires hospitals treat everyone regardless of ability to pay.”

I think you have this vision of a hospital as some kind of free clinic. A hospital is only mandated to provide specific, limited types of care for specific, limited types of conditions. And a mandate doesn’t mean it’s free–the hospital is fully able to and will come after you for the full, uninsured cost of that treatment, which is likely to be astronomical.

Nick Bradley May 29, 2014 at 8:40 am

Tyler, explain to me how laissez faire health care can be cheaper, even in theory.

Perhaps the most market friendly thing that could be done is implement all-payer, and force providers to charge one price to all customers, ending price discrimination.

But even that requires a lot of government coercion…how can you justify that?

In my world, we would have open access to Medicare. And the premium would be zero, and Medicaid would be folded into Medicaid.

It would be funded with debt, and whats interesting is that the medical price disinflation from shifting to single payer would counteract any larger accelerating tendencies throughout the economy. Its a free lunch.

Libertarians, tea partiers, and loons can all go on paying 60% more for private insurance if they want to…

Z May 29, 2014 at 9:26 am

What would be the point of trying to explain any of this to you? You will clutch to your totems and prayer books even tighter. You and every other liberal nut are convinced health care is a magic fountain hoarded by a few at the expense of the many. You keep chanting the magic words expecting the spell to be broken and free health care to flow into the cups of the many.

Nick Bradley May 29, 2014 at 9:33 am

Well first I’m not a liberal.

And second, I’m driven by the evidence. Every other industrialized country has single payer, all payer, or government care.

And they all provide higher quality care at a much lower price.

Now, whos clinging to prayer books?

Z May 29, 2014 at 9:44 am

This just means I can add delusional to the indictment. You are here singing word for word from the Book of Common Moonbat.

Nick Bradley May 29, 2014 at 9:54 am

Stellar response. I base my decisions on actual system performance.

Go back to Objectivist summer camp

Z May 29, 2014 at 10:24 am

Bull-oney. Every moonbat makes the same claim. “I’m not an ideologue. I just go where the evidence takes me!” Coincidentally, it always leads to the same extermination camps.

oakchair May 29, 2014 at 11:15 pm

@Z every study on health quality shows that Americans private sector system ranks near dead last; in fact some poor third world countries rank higher this is despite America paying twice that of other countries.
I realize reality is hard for you to accept because you’re to emotional stunted to realize that your ideology is wrong but come back when you’re read to accept reality instead of fairy tales.

Slocum May 29, 2014 at 12:42 pm

“And second, I’m driven by the evidence.”

OK — factor in the evidence that where medical care is generally still paid out of pocket rather than by third-party insurance, the cost has NOT exploded — even in the U.S. These domains include: dentistry, plastic surgery, lasik eye surgery and veterinarian care. Insurance doesn’t cover breast augmentation, so if plastic surgeons want to be in that business, they have to be able to provide the service at a cost patients can afford, and — what do you know? — they do. Plainly the out-of-pocket model CAN provide quality care at manageable prices — as it used to do for all human medicine 50-60 years ago when 3rd party insurance was not universal, and as it still does today in niches where 3rd party insurance is not dominant.

Nick Bradley May 30, 2014 at 6:58 am

Yes. We can all shop for heart surgery like boob jobs.

F. Lynx Pardinus May 29, 2014 at 1:19 pm

Z, dan1111 is doing a great job upthread arguing the free-market/libertarian vision for healthcare. You’re just throwing bombs and name-calling. Who’s going to convince more undecideds: dan1111 or you?

Z May 29, 2014 at 10:41 pm

No doubt, but every once in a while it feels good to punch a hippie.

Sam May 29, 2014 at 8:42 am

When the poor can’t have medicaid they turn to religious organizations. The atheist case for Medicaid is that it seems to undermine religious affiliation ( http://abstractminutiae.tumblr.com/post/83421892530/has-medicaid-made-america-less-religious ). My path-dependent vision as a secular libertarian is to see Medicaid & Medicare expand until virtual single payer; religion’s social capital will be destroyed by secular hospitals and non-profits. Single payer is a good system for maintaining universal coverage while tweaking the efficiency of the private production side. Single payer is also a good starting point for chipping away at eligible costs until you’re left with a Singapore-esk kernel of catastrophic coverage.

Nick Bradley May 29, 2014 at 8:55 am

You going to go with statist forced savings programs for a few decades before the sing model is viable? You going to nationalize all the hospitals too?

As someone who likes markets, I support whatever system delivers the highest quality product for the lowest price.

Since health care is an abnormal good, that ends up being single payer or even a socialized model. All payer paired with the ACA could work too…if every consumer is charged the same by providers, there could be millions of insurance companies…economies of scale wouldn’t matter.

Samuel May 29, 2014 at 12:17 pm

No I believe in my comment I only endorsed the ‘Sing’ model insofar as it focuses on catastrophic insurance, i.e. things that insurance schemes are designed to handle. I don’t want to nationalize anything. In fact single payer is highly conducive to an otherwise 100% private healthcare market.

Nick Bradley May 30, 2014 at 6:59 am

Their catastrophic program only works because pf massive price controls

a Michael May 29, 2014 at 9:08 am

Medicaid =/= Singapore Health Care System

The only reason Medicaid is “cheaper” than private insurance in our current system is because hospitals make up for losses by charging more to private insurance.

I don’t think you can bend the cost-curve by getting more people on Medicaid. More fundamental changes have to occur…

(Plus, who’s to say that given a more market oriented system that health care expenditures would drop so much? Maybe people like to give birth to their kids in giant private rooms, with fancy faux wood floors and jacuzzi tubs and two nurses, a doctor, and a resident present.)

Nick Bradley May 29, 2014 at 9:11 am

There is no evidence of cost shifting.

The lack of knowledge here is astounding

Boonton May 29, 2014 at 10:58 am

Cost != Price

Hospitals IMO love both Medicare and Medicaid because they keep the lights on. Private insurance is charged more because hospitals *can* charge private insurance more. Not because they must shift massive losses onto the privately insured person.

Nick May 29, 2014 at 9:17 am

How about the fact that Medicaid doesn’t improve health outcomes at all according to the best studies?

Nick Bradley May 29, 2014 at 9:31 am

Is that something you heard on talk radio? Because when you adjust for the fact that Medicaid patients come into the system far sicker and in much poorer health, the evidence is pretty clear.

Same access to hospital care, specialists, and GPs as private insurance, once you control for so many variables. Poorer, sicker, more rural, etc

http://kff.org/report-section/what-is-medicaids-impact-on-access-to-care-health-outcomes-and-quality-of-care-setting-the-record-straight-on-the-evidence-issue-brief/
http://kaiserfamilyfoundation.files.wordpress.com/2013/08/8467-figure-2.png?w=600&h=450&crop=1

Nick May 29, 2014 at 10:59 am

Yes, if you call the The New England Journal of Medicine and the most comprehensive, rigorous study to date (the Oregon Medicaid Study) talk radio. But keep relying on blog posts.

Nick Bradley May 30, 2014 at 6:59 am

Um, KFF isnt just some blog post

John Smith May 29, 2014 at 11:26 am

Dear Nick,
You have posted on every comment here… it is telling you have a lot to say on every aspect of this, but mostly you come down on three points:

1.) The rest of the developed world is doing it, so should we.

2.) Our system is expensive, with no better outcomes = broken.

3.) Look at the data.

Addressing these things separately.

1.) You find a developed country REMOTELY similar to the US in terms of demographics and I’m all ears to see how they’re handling healthcare. Until then, give it a rest. We are a union of 50 very different states, all with distinct economies, environments, and demographics. These three variables have more to do with health outcomes than insurance coverage, or even access to healthcare, and are completely discounted in a model where coverage is determined from a central loci.

2.) Our system subsidizes the rest of the world. Just as private payers do provide the margin that allows benevolent GPs to allocate some of their time to break-even (or worse) Medicaid patients. There is cross-subsidy going on at every level in the system, driven ENTIRELY by legislative tinkering. Unlimited EMT access the ER anybody? Yea, that’s the mandated. Charge astronomical prices for ER usage? Yea, that’s the non-profit motive (show community give-back). Medicaid is based almost entirely on cost or cost-plus pricing (with the plus being in the single-digit % points). Any clown can see that that isn’t enough to spur medical innovation. The development and implementation of tools, techniques, drugs, and therapies that are available to Medicaid patients is paid for by US private insurance.

And this brings us back to point 1.) Likewise, non-US “successful” systems get the same subsidy, but on a national scale. The only market that has ever mattered to pharma or medtech has been the US market. Any additional money that can be made in Europe/elsewhere is icing, but the financial case for bringing new tech to market has always been driven by the US market.

And 3.) I suggest you look at the data. You mention rural health just above, suggesting it shortens one’s lifespan. It doesn’t. Living rurally corresponds to a six-year gain in life expectancy. The summary of the Oregon study you link to explicitly says “Medicaid’s impact on physical health remains inconclusive.” Basically, there were improvements in mental-health and (unbelievably) less financial strain on people with coverage. Perhaps those two things are related? Perhaps if we alleviate the financial strain of home-ownership we’d see even more improvements in mental-health? Justification for housing bubble 2.0 anybody? The data is very strong on what improves health: good personal decisions. And vaccines. The rest of healthcare is personal preference i.e.: Do I want cancer-treatment to extend my life another 25 days, or do I want provide grandson Johnny’s college fund another $40k?

You want to improve people’s lives? Free gym memberships for all. Single payer is not the utopia you pretend it to be. Correlation is not causation, and your data is all about correlation. You lobby on false equivalencies rather than arguments of design/logic. That should tell most people what they need to know about your ideas..

The truth of healthcare is that a lot of people have gotten very, very wealthy off the US system. Other people have been heavily, heavily subsidized by the US system. Poor policy and information asymmetry have been key enablers to the perverse system we currently have. Big data, smart devices, cheap sensors, advanced analytics and communications are quickly breaking through the latter issue. Because? “The Market”. But poor policy remains. Why? Because that is what has made people obscenely rich. Do I believe for one second the solution is to grant central-planning powers to a select few in the Washington Metro area (lobbyists excluded)? No. Not in a million years do I think that is an optimized solution. Though it worries me that it seems to be becoming more politically expedient by the day. Clowns will be clowns.

John Smith May 29, 2014 at 11:33 am

My post was in response to Nick Bradley, not Nick… apologies for the confusion.

Z May 29, 2014 at 12:02 pm

This is an excellent post. Health care is a math problem, not a moral problem. The ideologues like Nick have it exactly backwards. They think it is a moral issue that can only be solved by accepting their answer to The Great Question.

Above a posted that the Left thinks health care is a magic fountain. That may sound like hyperbole, but their arguments are shot through with the assertion that everyone can have all the health care they need, if only things are arranged just the right way. We used to burn people at the stake for talking like that. Today, we put them in charge of the government.

Bill May 29, 2014 at 2:12 pm

I disagree. John’s comments are largely incoherent. Point 1: US is not like anyone else, therefore we can’t learn from anyone. (No support, by the way, for the claim that US demographics are radically different than other countries or that the demographics matter. Point 2: Our system does subsidize the world, particularly in drugs, but John would not have the US negotiate with the drug companies, and, moreover, the system of indirect subsidy (before Obamacare via hospital subsidies) is replaced by a system where some poor actually pay rather than rely on charity care: Point 3. Cant disagree about our healthcare system making people obscenely rich, but I can suggest that health exchanges with limited panels will cause hospitals and docs to compete to get into a plan and lower their fees.

John Smith May 29, 2014 at 2:54 pm

Dear Bill,
Point 1.)
There is a difference between “learning from” and “becoming”.
Are you really incapable of looking up demographic data on your own?
Are you seriously suggesting patient demographics are unimportant?

Point 2.)
Firstly, I only point out the world subsidy when clowns like Nick ignore it as they go on to talk about costs. Secondly, I’m not proposing our level of innovation is sustainable or appropriate. Thirdly, there is another option between single payers negotiating or large insurers negotiation prices. I like to call it “the market”. As I alluded to, I think information asymmetry has been a hurdle to this solution, but I think that technology is breaking this down.

Point 3. I’m glad we agree. The health exchanges are a step toward transparency more than anything else, again, addressing the information asymmetry issue. Unfortunately, every other aspect of the ACA seems to more deeply entrench the incumbent system. What difference does having a marketplace make if consumers are not driving the decisions as to what care they want/need and in what quantities. Or whether they want to be insured for for certain, otherwise-affordable services, in the first place?

FUBAR007 May 29, 2014 at 3:12 pm

“Health care is a math problem, not a moral problem.”

You and Smith are both intolerably smug assholes. Also, you calling anyone an ideologue is a howling case of the pot calling the kettle black.

That said, I’ll give you this: with the above sentence, you’ve managed to encapsulate how and why the two sides of the health care debate eternally and fruitlessly talk past each other.

John Smith May 29, 2014 at 3:40 pm

Dear Fubar,
Please don’t conflate Z’s comments with mine.

Nothing I’ve written precludes ethics from entering the discussion. (Morals being what an individual, rather than society, holds to be right or wrong).

I personally feel that preexisting conditions and “safety net concerns” are ethical issues that society should debate, and I would likely fall on the side of heavy state intervention (whether that be federally-funded HSAs or basic-Medicaid-for-all). Forgive me if my response in the comments section of this blog didn’t capture my universal view of how healthcare should work.

I’m uncertain what I’ve written that is particularly ideological, aside from my assertion that the US population is, in fact, very different from all other developed countries. Even then, it’s not a statement of exceptionalism, just the reality within the context of the healthcare needs of the US population.

I also have not called anybody else an ideologue, though that might explain how Mr. Bradley can refer the original Nick to data and generally say the exact opposite of what that data (and it’s authors) suggest.

I’m sorry you feel I’m an asshole or smug. However, I am encouraged that your disagreement doesn’t seem very well-founded.

F. Lynx Pardinus May 29, 2014 at 4:16 pm

“Dear Fubar, Please don’t conflate Z’s comments with mine.”

He’s not–he’s responding to Z. There’s an inherent limitation in the MR comment system that it only allows threads of N depth, leading to comment ordering weirdness.

John Smith May 29, 2014 at 4:42 pm

Thank you Pardinus. I gave Fubar too much credit. I thought he was providing justification for calling me a smug-asshole.

I guess not. Awesome.

FUBAR007 May 29, 2014 at 6:29 pm

Smith (and, yes, I am responding to you now),

To the matter of your smug assholery (there’s no hyphen, by the way): I don’t entirely disagree with your points, just the passive-aggressiveness woven through them. When it comes to the substance, you’ve clearly done your homework.

Beyond that, not so much a criticism as an observation: you, Z, and other right-leaning libertarianish types–as well as your counterparts on the left–keep trying to win what is a fundamentally philosophical debate using empirical arguments. When it comes to health care policy, there are, at bottom, two questions that have to be answered. First, is health care a public good to which everyone in society is entitled to to at least some degree, or not? Second, as there is a finite (though not fixed) supply of health care, what is the most just way to distribute/ration it: by need or by the ability to pay for it? Arguments from both sides tend to proceed as if these questions have already been settled and all that’s left is to hash out the implementation when, in reality, these questions have not been settled at all. But, you can’t settle them with empirical facts; they’re matters of first principle.

Z May 29, 2014 at 10:44 pm

FUBAR, I am a smug asshole. I’m also right. You’ll just have to learn to accept both as neither will be changing anytime soon.

John Smith May 30, 2014 at 1:00 am

Healthcare is not a public good, according to the definition of a public good.

FUBAR007 May 30, 2014 at 10:00 am

Z: “FUBAR, I am a smug asshole.”

Self-awareness is a beautiful thing.

Z: “I’m also right.”

I’m not among those you need to convince.

Smith: “Healthcare is not a public good, according to the definition of a public good.”

By the textbook definition, you are correct. Trouble is, the government and a sizable chunk of the population don’t agree. Hence, the question remains unsettled.

Boonton May 29, 2014 at 1:50 pm

I’m not really clear how the US system is ‘cross subsidizing’ the systems of other developed countries. Perhaps you could elaborate on that a bit?

The rest of healthcare is personal preference i.e.: Do I want cancer-treatment to extend my life another 25 days, or do I want provide grandson Johnny’s college fund another $40k?

What about the recently unemployed single 43 yr old mom who finds a lump in her breast? Should her choice be give Johnny a college education but die before he graduates high school or be homeless but alive? The choice is rarely crushing bankruptcy for ‘only’ 45 days of extra life. It’s more often than not huge expense for dramatic treatments that may give you an extra 45 days rather than lower cost measures that could have stopped it from getting to that point earlier on.

John Smith May 29, 2014 at 2:36 pm

“I’m not really clear how the US system is ‘cross subsidizing’ the systems of other developed countries. Perhaps you could elaborate on that a bit?”

It’s not a cross-subsidy. Just a subsidy. The US healthcare market subsidizes drug and medtech R&D costs for the rest of the world. Single-payer systems don’t provide the margin, and therefore the incentive, for these companies to innovate at their current pace.

That innovation does make a huge difference in outcomes. Without the ROI created by the US market, developed countries (US included) would not have the medical capabilities they currently enjoy. Strategic considerations and low marginal costs are the only reasons other countries capabilities have kept pace with the US.

Concerning “the recently unemployed single 43 yr old mom who finds a lump in her breast…” This is a distraction. From a system perspective, this mom is neither a part of the cost issue, nor the quality issue. She is certainly not justification for a single-payer system.

Our cost problem stems from two sources:
Seniors avoiding the reaper < the Johnny example
Chronically ill people < personal responsibility example

As far as quality goes. She's lucky to be in the United States. Page 13, "Survival".

http://www.cancer.org/acs/groups/content/@epidemiologysurveilance/documents/document/acspc-027766.pdf

Boonton May 30, 2014 at 6:17 am

John,

I think that would fly if you could attribute the entire difference between US spending per person and other countries to either:

1. Outcomes, the US spends more and gets more. Example: A while ago Slate.com had an article on dentistry in the UK. Basically dentists in the UK operate with a mentality of “the sooner all the teeth rot out the sooner we can go with simple dentures”. In the US dentures are a type of defeat. Hence people in the US spend $20,000 on implants while in the UK a comparable person will spend 1/20th on just going for dentures. Without passing any judgement on which is the ‘right’ choice, you can say the difference is simply because the US is opting to get more.

2. Premiums on patent protected drugs, devices, etc. If your ‘innovation’ argument is correct, then the rest of the difference is accountable for the US paying ‘monopoly profits’ to those who hold patents on innovative products. So in this case you should find the terminal cancer patient in the US who is being treated with simple morphine for pain and other generic drugs should be no more costly than they would be in other developed nations. The differnce in costs should be entirely from brand name, innovator drugs which other countries either don’t provide or provide at a cut rate cost due to negotiating power of their single payer status. I don’t think you’ll find this, though. Even when you remove new treatments from the mix you’ll still find the US is paying more than other countries per patient.

Nick Bradley May 30, 2014 at 7:03 am

40% of pharma expenses go into marketing. Are we subsidizing marketing+

John Smith May 30, 2014 at 10:55 am

I’m sorry, but I don’t understand the above comments. Boonton, I appreciate what appears to be a thoughtful response, but I think we may be talking past one another.

To your point one. Americans consume more healthcare, and pay more for it. Both these points are attributable to a single “feature” of our system. Patients don’t see (or pay) prices for the services they’re getting. This is not because healthcare is intrinsically special, as Fubar suggests. It’s because healthcare is funded in a special way… everybody is subsidizing everybody in some way or another.

Even those poor delinquent ER folks that go into bankruptcy, they provide the justification for non-profit hospitals to be designated as such and avoid massive tax liabilities. Unborn Americans are subsidizing the baby-boomers as we speak. We absolutely spend more on a per-unit basis than other countries, and that is a problem. But differences in the cost of morphine are not doubling our cost of healthcare. The US over-consumes healthcare. Perhaps it’s consumer preference, but I think it’s more likely consumer ignorance.

My point about innovative drugs is simply to point out that there is this massive US technology subsidy that benefits all other developed countries. From a system perspective, the US pays a premium for accelerating drug and medtech development, and the rest of the world benefits.

Generally speaking, I don’t think we need to look very far to see the issues in the US system. I was just sick and tired of Nick not acknowledging what a world would look like if every country was single-payer, cost+ pricing and rationing care. Single payer has it’s benefits, but it’s not all rosy.

Boonton May 31, 2014 at 6:21 am

You’ve argued that the US is spending more per person on health for economically justified reasons. The first is simply Americans want more. Hence the teeth example. Americans want implants, Brits go for the dentures. This is quite possible but I don’t think it really accounts for all the difference.

The second is your argument that we ‘cross subsidy’. We buy the new stuff at high prices, everyone else either waits for it to get cheap or gets it cheap because their single payer systems negotiate cut rate prices.

There’s a simple way to test this. Patients who are not using cutting edge treatments in the US should have the same cost profile as in other countries. A diabetic, for example, who is using simple insulin should be about as expensive in the US as other countries. I don’t think that will be the case, though. You’ll probably find such US patients are still more expensive than, say, UK or French or German patients.

oakchair May 29, 2014 at 11:29 pm

1) a) Most first world nations have older populations meaning all else equal they should have more expensive health care then America.
b) So your argument is that because America has more of a mix of blacks, Hispanics, Asians and whites that is the reason America spends double and gets worse results. I wonder do you have any evidence that this would occur or is it just wishful thinking you use to defend your ideology?
2) Per capita America has about the same amount of medical advancement as other nations
http://www.forbes.com/sites/matthewherper/2011/03/23/the-most-innovative-countries-in-biology-and-medicine/
This basically just proves that your whole post is wishful thinking that tries to defend your failed ideology.

John Smith May 30, 2014 at 11:26 am

Dear Oakchair,
1.) When I spoke of demographics, I did not mention quality or cost. I suggested that our extremely diverse population would be much more complicated and difficult to serve with a single-payer system. To the point that one really has to go beyond “single payer because it works over there” as Nick keeps harping. Yes, the healthcare needs of Louisiana are different than those of Southern California or Idaho. Genetics + environment + lifestyle matter. A lot.

2.) You link to data suggesting research and R&D happen all over the world. No shit sherlock.

The real question is for what market is that innovative R&D being commercialized? It’s being commercialized for the US market. The US provides the business case for Roche and Medtronic. Not 28 separate nations with a cumulative market size half that of the US for new drugs and devices.

Without commercialization, all you have is Journal Articles, and frankly, there would be less academic research as well. Again, not ideology, just logic.

John Smith June 2, 2014 at 10:18 am

Boonton,
American’s willingness to spend double on healthcare (nearly every aspect of healthcare) provides the incentive for medtech companies to innovate. That innovation is not held captive by the US, it is disseminated across the world.

Without the US profit-engine, there would be less medical technology in the more frugal single-payer markets.

When those ‘generic drugs’ weren’t generic, they were developed with intent to sell into the US market, more likely than not.

Rich Berger May 29, 2014 at 11:08 am

John Goodman has compiled a number of posts on the excellence of Medicaid -http://healthblog.ncpa.org/category/medicaid/

John Ashman May 29, 2014 at 11:55 am

Never go full retard.

You just went full retard.

GMC May 29, 2014 at 12:08 pm

I don’t think this is a Libertarian case for expanding Medicaid. It is a Utilitarian case for expanding Medicaid, with some argumentation and rhetoric intended to appeal to libertarians.

John Ashman May 29, 2014 at 1:35 pm

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Andao May 29, 2014 at 12:36 pm

The way this post is written, it seems to imply that Singapore has a laissez-faire system

“Singapore’s system uses a combination of compulsory savings from payroll deductions to provide subsidies within a nationalized health insurance plan known as Medisave”

http://en.wikipedia.org/wiki/Healthcare_in_Singapore

Compulsory savings sounds like a tax.

drs May 29, 2014 at 2:06 pm

Even better:

‘let me quote a bit from Singapore’s Health Ministry:

— Singapore has “multiple tiers of protection to ensure that no Singaporean is denied access to basic healthcare because of affordability issues.”

— “The first tier of protection is provided by heavy Government subsidies of up to 80% of the total bill in acute public hospital wards, which all Singaporeans can access.”‘

Public hospitals, massive subsidies, compulsory savings into a government-run investment pool… behold the free market wonder of Singapore!
“Finally, Medifund is a medical endowment fund set up by the Government to act as the ultimate safety net for needy Singaporean patients who cannot afford to pay their medical bills despite heavy subsidies, Medisave and MediShield.”

‘Note that in addition to the above financing mechanisms, the public hospital system also serves as a set of de facto price controls.’

http://www.slate.com/blogs/moneybox/2013/10/23/singapore_health_care_what_do_conservatives_like_about_it.html

oakchair May 29, 2014 at 11:30 pm

One thing about Singapore is that when you compare it to nations (such as Taiwan or Oman) who have similar demographics but also have single-payer you find that the countries with single payer have cheaper better health care

John Ashman May 29, 2014 at 1:11 pm

This isn’t a libertarian solution, but it’s a whole lot smarter, freer and efficient than Medicare or any other single payer system.

http://www.policymic.com/articles/13057/universal-savings-accounts-the-path-to-freedom-in-health-wealth-and-retirement

Boonton May 29, 2014 at 1:39 pm

So on one hand the gov’t taxes you $300 a month and you have to pay $400 for a health plan.

On the other hand, gov’t tells you that you must set aside $400 a month into a special ‘savings account’ and you have to pay only $300 a month for a health plan…but the health plan doesn’t cover lots of things and has deductibles and copays that you can use your ‘savings account’ to pay.

Boonton May 29, 2014 at 1:44 pm

Not that I’m against universal savings accounts. I think it would be very interesting to eliminate, say, unemployment taxes and instead have a rolling 5 year savings account system. People have to deposit what would have been taxes into the account, but after 5 years they could take it out for any reason they wish. That would be a lot easier IMO than having to demonstrate to an unemployment system that you were laid off through no fault of your own and you’re ‘actively looking for work’ etc. Even chronic spenders will have 5 years worth in the bank which they can draw down for a while if they suffer unemployment.

TallDave May 29, 2014 at 4:53 pm

Under ideal institutions, it would be much cheaper, maybe a third of the current price or lower yet (not for everything, though).

Why would living under these ideal institutions change people’s preferences about how much healthcare to consume? Why do you assume this is a superior outcome?

The problem is that in a truly free-market system you would never have to worry about this “problem.” If people spend a trillion dollars on other people singing and throwing balls around, we don’t assume it’s irrational and try to think of ways to make sure Tom Brady and Beyonce earn less money. The government doesn’t stick its big dumb hand in the works and try to guarantee everyone a minimum amount of Metallica and NBA, so we just assume people’s irrational desire to watch sports and entertainment are where they see their best utility.

It’s true the rest of the OECD consumes less healthcare. It’s also true they consider soccer acceptable entertainment, and generally do not understand how to make popular movies. These preferences are perhaps not as different as people like to claim.

Bill May 29, 2014 at 5:57 pm

TallDave, Perhaps you can remind us of how things were before Medicaid. This is only a recent phenomena.

Let me tell you what it was: 1. Each county had what was called a county home and a county hospital. This is the place where indigent persons got medical care, or retired to die. Costs were paid by property tax, or costs were picked up as charitable care by non-profit hospitals. 2. Doctors were paid for indigent care, of their once paying but not now paying client, with chickens and rhubarb.

If you dispute this, please be a libertarian historian and tell us all about the good old days before Medicaid.

Boonton May 29, 2014 at 9:51 pm

To what degree is medical care from, say, pre-1970 comparable to medical care today? This comment is about as relevant as pulling out an ‘all about computers’ book from the library published in 1965.

TallDave May 29, 2014 at 11:51 pm

The rest of the OECD gets care that is generally somewhat worse than Medicaid, except for Britain.

Even if you think Medicaid is a great idea, the fact remains that U.S. preferences are to consume more healthcare, and there’s no reason to assume that’s irrational.

FUBAR007 May 29, 2014 at 6:04 pm

In other words, you’re deeply annoyed that the government and a statistically significant portion of the electorate views health care, either tacitly or explicitly, as a positive right and a public good whose distribution entails normative considerations of fairness and justice.

To play devil’s advocate: why? Why is the government and the aforementioned element of the public wrong? Why doesn’t health care provision have moral implications? How is it not a public good? What makes it no different than iPods, cheeseburgers, and Metallica’s music?

Z May 29, 2014 at 10:48 pm

You guys could view flying carpets as a right. That does not alter the reality of flying carpets. Similarly, health care is a no different than any other good or service. That means it is rationed. The best way of doing that is the market. That’s reality and it will not yield to wishful thinking or the roar of the crowd.

oakchair May 29, 2014 at 11:35 pm

@Z when flying carpets are the requirement to life then you can come back and compared them to health care. Until then your just making stupid arguments and looking like a clueless partisan hack.

Z May 29, 2014 at 11:46 pm

You mean like food? Clothing? Shelter? The market handles those necessities just fine. In fact, when government has tried to manage those areas of life, the body counts were in the millions.

Your magical thinking on health care is exactly that, magical thinking. You imbue certain words, phrases and activities with mystical qualities so you can pretend they are different from the mundane. You may as well be lecturing me about the efficacy of prayer in the heeling of the blind.

TallDave May 29, 2014 at 11:54 pm

We also spend more on food and shelter than other countries, and yet it has no effect on life expectancy! Clearly this spending is irrationally high.

Boonton May 30, 2014 at 5:58 am

The answer is these goods are viewed both as a positive right and as a consumption good. We are not going to let anyone actually starve to death in front of us on the streets. Our food resources are simply too great for us to allow that to happen. Hence in a sense you can say we also have ‘universal food coverage’. Beyond that min. allocation, though, food is viewed as a consumption good. If you have no money in your pocket, Red Lobster won’t feed you. If you have lots of money you are free to spend just about any amount from $10 to $1,000 on dinner in any particular night.

Unlike food and shelter though, health care is different in that:

1. It is subject to cost disease because it’s production requires a lot of direct human labor and productivity growth has been small.
2. It’s also been subject to a lot of innovations and innovations increase costs. Giving someone morphine to ease the pain of cancer is cheap. Giving them a drug that targets specific mutations to shut down cancer cell reproduction is expensive.

FUBAR007 May 30, 2014 at 10:30 am

Z: “You guys could view flying carpets as a right.”

Not quite. Rightly or wrongly, the liberal-progressive rationale for health care as a right is that, like education, it’s an essential precursor for sustainable social mobility and equality of opportunity.

And, I’m not one of “you guys.” I’ve articulated the liberal view as I see it, but it isn’t mine.

Z: “Similarly, health care is a no different than any other good or service…That’s reality and it will not yield to wishful thinking or the roar of the crowd.”

…and yet, the roar of the crowd keeps winning.

If the laissez-faire right wants to win the health care debate, it has to convince the majority of the public of what you’ve just said. That means conclusively demonstrating that health care, or at least the distribution of it, is of no moral or normative consequence, that no one has a right to it, and that that’s okay because no one needs to have a right to it. But, the right continually fails to do this. Instead, it merely asserts, as you just have, and tacitly expects everyone to just agree. And so, it keeps losing.

Z: “That means it is rationed. The best way of doing that is the market.”

What constitutes “best” is subjective. If “best” means most economically efficient, you’re absolutely right. If “best” means the most optimal way to provide a minimum level of health care to everyone, probably not.

TallDave May 30, 2014 at 12:02 am

Apparently people are confused about the thrust of my argument, which isn’t so much against government intervention but rather in support of the notion that government intervention makes us view consumption in a harsher light than we otherwise would.

Megan had a great point the other day: single-payer won’t save the United States a dime. All it will do is take the already-revealed preferences of Americans to consume more healthcare and move them further into the domain of the public — and if you know what “VA” stands for you know how that’s going to work out. One might reasonably argue single-payer is a wonderful and morally superior policy, but the idea it will be cheaper too is simply wrong.

oakchair May 29, 2014 at 11:33 pm

@talldave It’s true the rest of the OECD consumes less healthcare.
This statement is false. The rest of the OECD pays LESS for health care. But studies for Canada show that Canadians use 30% more health care services then their American counterparts

TallDave May 29, 2014 at 11:48 pm

Canadians about get 1/3 as many MRIs and half as many organ transplants, for starters.

Then we can talk about all those Canadians coming to the U.S. to consume specialized healthcare in order to avoid rationing…

B cole May 30, 2014 at 2:33 am

For instance in Singapore health care expenditures are about four percent of gdp – Tyler Cowen.

For me, game over.

Do what they do in Singapore. Even if we are crappy at copying them then we are at 8 percent of GDP. Now we are at 16 percent and rising, maybe more already.

And national security takes another 7 percent of GDP off the top (remember the VA, DHS and the NSA black budget, and debt).

So go to Singapore care, and cut defense in half, and suddenly we have a 15 percent boost in material living standards.

Nick Bradley May 30, 2014 at 7:06 am

Cool. So massive price controls, government run hospitals, and a first tier of care that’s 80% government funded

The Anti-Gnostic May 30, 2014 at 9:31 am

If we are headed to a single-payer or subsidized system, then we need tort reform. No country with publicly subsidized health care allows open-ended “pain and suffering.”

IOW, we can afford a tort system or we can afford a comp system, but we can’t afford both.

Ross June 1, 2014 at 10:16 pm

I would disagree with your main argument for this article….that most libertarians would say NO to this question:
“Now, would a libertarian think that we should cut health care services in prisons, simply because tax dollars are in play?”

I think libertarians would say Yes….also to give prisoners the opportunity of providing their labor for medical services, ultimately giving them the choice to work for health care or not work for no health care.

Floccina June 2, 2014 at 3:32 pm

It seems to me like a Medicaid option for all with current medicaid pricing might be a good thing. Those unhappy with medicaid could pay out of pocket or buy insurance.

Floccina June 2, 2014 at 4:17 pm

I forgot to mention Medicaid needs to be modified so that that their is no sharp cut off at some level of income. Here is my suggestion to avoid that:

The state would provide insurance to all Americans but the annual deductible would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected.
It is not a perfect plan but it might help. Some deregulation of health-care would also help the poor gain access. The gauntlet that Doctors have to run these days to get to practice seems like an anachronism in today’s world. Let smart people get to practice medicine after on the job training. Let the medical businesses decide who is qualified to practice medicine. 12 years of training to tell if my child has an ear infection is overkill and reduces access to health-care for the poor.
Another benefit of my plan is that it would encourage capable Americans (the rich and middle class) to be a counter weight politically against the providers.

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