I haven’t talked about health care in awhile. Now the bill, such as it, is through. I just wanted to take another glance. I think everyone is looking at the wrong end of this.
*Is health care cost actually a problem? Yes, in three ways.
(1.) Health care expenses are the number one cause of bankruptcy.
(2.) Poor people are sicker and die sooner than rich people. Many of the reasons for that have to do with things like diet, and lifestyle. Very cheap food is rarely good for you, and occupational exposure to common carcinogens like secondhand smoke and motor oil are far more common at the bottom of the income ladder. You can’t rule out choice, and often, for whether poor decisions are caused by poverty or poverty causes poor decisions, poverty and bad decisions go hand in hand. However, adjusted for all that, the poor still get sick more often, with greater severity, and die sooner. The cause of this is NOT actual health care availability (For the most part, all hospitals have to take you, regardless of ability to pay.) Its the fact they don’t go to the hospital when they should, because they can’t afford the bill.
(3.) Value is utility/cost. If you get 10 units of utility for 1 unit of cost it’s very valuable. If you get one measure of utility for 10 measures of cost, your value is .1, and very poor. By comparing the cost of US health care to the cost of similar quality health care in other countries, the US falls short. France for instance, has comparable health care, and it cost 1/2 of what US health care does. Unless it is 1/2 the quality, French health care is better per dollar. ( I am including in this both what the French pay in private insurance, and the subsidization they pay to provide health care to the poor.) In fact, looking at every industrialized country on earth, the US has the least valuable health care.
*Having accepted that the US has the lowest value health care on earth, lets look at 2 common misconceptions.
The US has some of the finest health care on earth, don’t let anyone tell you otherwise. The US also has the worst HEALTH (not health care) in the industrialized world. The US also has the most expensive health care on earth, bar none. These three facts are often looked at 2 at time as if one caused the other.
Statement 1: US health care is great because it costs so much.(Profit incentive for quality).
Statement 2: US HEALTH is bad because health care costs so much. (Cost disincentive for health).
Price is set by what the market will bear, not quality. Better things cost more because people, perceiving them to be better, will pay more, not because they necessarily cost more to produce. So the first statement is clearly false. That I am aware of, no scientifically rigorous study has ever been made demonstrating a link between health and cost of being healthy. (Scientifically rigorous means 2 large, comparable groups are studied: A test group and a control group, and that neither the group nor the researchers know what the study is testing for. The method and results of the study are then published for review by other researchers.) Common sense says there is a link between how healthy people are and how much it costs them to be so, but common sense says A LOT of things. Once upon a time, common sense said mental illness was caused by demonic possession and tooth decay was caused by dental worms. Common sense is called “common sense” and not “truth” or “scientific law” or “gospel” because it is none of those things. In fact, another name for “common sense” is “prejudice”. (Common sense also says there should be no deaths from smoking, because it says right on the side of the pack that it will kill you. Yet smoking is the number one cause of death, and people still smoke, some of whom are demanding cheaper health care, while they pay $30 a carton for cigarettes.)
*Let’s go over what we’ve learned.
(1.) The US has the lowest value health care because it’s utility to cost ratio is poor.
(2.) The argument that it has to cost a lot or no one would provide it is based on a false premise.
(3.) The argument there is direct link between American’s poor health and the cost of health care is based on a false premise.
*Regardless of quality, why does US care cost so much?
This is startling simply question to answer, which is answered in dazzling complexity and variance because there is a lot money to be made when the problems are complex and very little to be made when the problems are simple. Read up on this and you will find as many theories as there are theorists. Let me look at a single example: the US health care industry spends around 30% of its income on administration alone, the highest medical admin cost in the world. Thailand and France spend around 5%. That means the US medical industry in underperformed best practice by 600%. That doesn’t answer the question though, does it? Because US health care cost 200% more than those countries, not 30%. You will also hear litigation, and the cost of college mentioned. But if you run the percentages those things add into the cost of US health care, it simply won’t add up to 200%.
*US health care is really expensive because the market will bear it.
That’s it; the end. If US hospitals faced the chose of either making admin cost 5% of going broke, they would learn to make admin cost 5%. That’s how a free market works. Because American citizens are willing to pay twice as much as French citizens they are charged twice as much as French citizens. When the price of gas went from $1.80 to $3.60 was it because gas became twice as expensive to produce? Twice as much to transport? Twice as much extract? Was there suddenly half as much? No. The market would bear twice the price, so twice the previous price was charged.
*Free markets are supposed to use competition to increase quality and decrease price. How is possible command economies are beating free market ones on both quality and price? The debate on health care shows an enormous demand for cheaper health care, why isn’t it being met?
It’s called market failure. Looking again at the gas price going up, gas is far less than perfect market. The limited number of providers (about 3) and almost universal need for it make it function very much like a monopoly. However, even then, the price increase was temporary, and caused a reduction in demand which caused an immediate price reduction. Why is the highly imperfect gasoline market working, but the medical services market isn’t? Markets are about free exchange, thus they always take place in the context of government as it is the government which has monopoly on force. Beneath the surface of every market failure is two features:
(1.) The replacement of market forces with government forces
Examples of this include governments decided who gets insurance, how much it will cost them, and what level of assets insurance companies must keep relative to the value of their policies. (All done in the US.)
(2.) The replacement of government forces with market forces.
This happens when policy is drafted in accordance with the desires of the highest bidder rather than the majority. In the US this is called bribery and illegal at every level of government from the lowest cop on the beat to a supreme court justice. Unless the bribe is to an upper level elected official such as a congressman. Then it becomes “lobbying” and for some reason is seen as fair game.
Between the government regulating the medical industry, and the medical industry bribing the government, the medical providers are protected from free market forces, allowing them maintain what the market will bear at an artificially high level.
*Isn’t there anything we can do?
Absolutely. Regardless of political persuasion, call and write your congressman today and demand the total deregulation of the medical and insurance market sectors. Even if you take the view that we need limited or full socialization, the time to do that is after cut-throat competition has weeded out the incompetent and infective, while the lack of ability to buy political protection of any kind has destroyed the bribery infrastructure between the businesses and the policy witters.
April 19, 2010
Categories: Politics, Uncategorized . Tags: care, health, medical, obama, Obamacare, reform, socialism . Author: rageomatic . Comments: Leave a comment
IvanaScream
rageomatic
RAGE-O-MATIC 
