Tuesday, March 3, 2009

Free Market Viagra

The healthcare reform debate is officially enjoined, now that Prez BHO has unveiled the new budget. Actually, the term "debate" is probably inaccurate because "debate" indicates patiently listening to the opposition and then calmly re-butting those points that seem most vulnerable. In debate, the exchange of facts is mixed with thoughtful opinion in order to reach, if not consensus, at least compromise. Our current cultural and media propensity is to ignore the rules of debate and simply yell at each other in what I call the Jerry Springer model of communication. We're due for a whole boatload of this competitive yelling over healthcare reform.

Already, we are hearing from such experts as Rush Limbaugh that BHO wants our healthcare turned over to "nanny state" bureaucrats and that the relationship between physicians and patients will soon be controlled by the government. Rush is on record as wanting Obama to fail. Oh, Momma! The gasbags on FOX relentlessly talk of "socialized medicine", as if they really knew what that meant, and that if BHO gets his way that we will get healthcare from the same slugs who inhabit the postal service and the IRS. Unless one parses and shines a light on all of this scary rhetoric, the warnings from the extreme right--you know, the kooks who insist that Governor Bobby Jindal's "Republican Reply" speech was a lollapalooza, whizbang homerun instead of an eighth-grade level presentation on "Why I Want to be a Politician" that it was--you could get the wrong impression of where the country is likely headed regarding healthcare. I encourage you not to swallow the extreme left's version either. They may believe it perfectible, but a healthcare system serving over 300 million people and run by humans will never be perfect and there will still be plenty to bitch about at the water cooler.

Speaking of Bobby Jindal, one would think, given his south Asian lineage, that when he changed his name to Bobby, which he did some years ago, that he would have opted for the "Bobbi" version with a tip-o-the-political-hat to Ghandi. But I, as I often do, digress.

America has, by very far, the most expensive healthcare system in the world. If you think that it is also the best and most efficient, you have dipped into the magic kool-aide. Our totally free-market system has brought America to a point where, for every man, woman, boy and girl we spend about $7,200 every year for healthcare. When I say "we" I include, patient out-of-pocket, insurance payments, government payments and borrowed payments. Given that the insurance money, government money and borrowed money originally came out of or will come out of the consumer's pocket, the annual $2.4 trillion bill for healthcare is consumer money.

With all of this spending, however, the World Health Organization (WHO) ranks the U.S. well down the list of countries whose healthcare systems provide the best outcomes. America ranks 37th out of 191 countries measured. Our infant mortality rate is the same as Slovakia and Poland and lags behind Cuba. As for "unneccessary deaths", a category for which the WHO (the organization, not the band) measured 19 countries, the U.S. is, pardon the pun, dead last.

Instead of being outraged by these facts, the Republican base insists that the solution is to let the free markets work without government intervention. There is one glaring error to this logic: America has reached our sorry state of expensive and inefficient healthcare solely through the magic of the free-market system. Why in the world, if the free market caused the problem, would the free market fix it, Bruce asks, rhetorically?

Here's the long answer: it won't.

In the book that I have just written,
The Baby Boom Delusion, a book that still needs a literary agent and a publisher lest it become a 251 page doorstop, I have a section that deals with this very problem. I posit the following: healthcare is a right, not a privilege, in much the same way that our national defense is a right or the use of the national highway system is a right and not based on privilege. If you don't agree with my position then you probably have health insurance and haven't experienced too much friction with the various systems that make up the industry.

Imagine, if you can, what our national highway system--roads, bridges, tunnels, et al--would look like if we let it be planned, delivered and maintained solely by the free-market profit motive. The "empty quandrant" of the great plains and mountain west would have very few highways and the ones that were there would be very expensive to use because a for-profit road system would be pay-as-you-go. On the plus side, no federal gasoline tax. Roads between small towns or far-flung tourist destinations would also be quite pricey. On the other hand, along the northeast corridor, the population centers of California, the industrial north and the Sunbelt, the number of roads, bridges and tunnels would spread, toll plazas would increase to capture revenue every few miles. Price competition and poor planning would mean that some infrastructure would fall into disrepair and be abandoned. "I get my kicks on Route 66....oops, big chunks of that are gone. Never mind." Those without much money couldn't use the road system unless those with money stooped to subsidize the poor, unfortunate traveler, all the while grumbling, "They should have made better choices". Finally, the impact on the nation's economy of a road system organized, run and maintained in a strictly for-profit environment would likely be a disaster.

Of course the national highway system still makes many companies bunches of money in a free-market way. The road designers get paid, the road builders get paid, the asphalt, rock and sand suppliers get paid, the equipment manufacturers get paid, etc. etc. There is plenty of free-market competition. The one area where we eliminate the free-market is in the pooling of taxpayer money to pay for and plan where the roads ought to go for the benefit of all. It ain't perfect but it works pretty well.

Back to healthcare. If the biggest things we do to re-design healthcare are to (1) make sure that everyone takes part and (2) to centralize the planning and payment, there is still a ton of free-market activity remaining in the system. It would certainly be a long-long way from the British model of "socialized medicine" where the whole shebang is owned by the government (even so, the Brits are ahead of us in the WHO rating). U.S. docs would still be for-profit, as would the clinics and hospitals, medical equipment would still be produced in the private sector, big pharma would still be for-profit and so on. The nanny state would then be "running" healthcare in much the same way that it passively "runs" the highway system day-to-day. The government does not decide where you go on the highway system, nor when; you do. I contend that this would be a good thing in healthcare as well and for much the same reasons.

I have much more to cover on this topic but you will have to wait with bated breath until subsequent blogs. Until then, suck on a breath mint.

Bruce


Observoid of the day: The "young and ignorant" have a shot at becoming the "old and wise". The "young and stupid" merely become the "old and stupid".

3 comments:

  1. Bruce, I agree that health care needs major reform in this country, but a few counter-points need to be made:

    1. We, in no way whatsoever, have a true free-market health care system. Between Medicare, Medicaid, and discretionary Federal and State spending, the Government doles out 1.25 Trillion/year on Health Care. The government also subsidizes employer provided health care, therefore being a huge determinant in insurance company usage. Doctors are heavily regulated and pharma companies are enormously regulated by the FDA. In other words, the government spends more per citizen than the individual consumer does. That is not a free market. While not all of this is not necessarily a bad thing, to call it a "free-market" and to say "the free market caused the problem" is disingenuous.

    2. In regards to Health Care reform, for Prez HBO to claim that "only the richest 5% of Americans will see increased taxes" is either an outright lie or one of his tax policy wonks has created a new plan entitled "Unicorn Economics". Assuming that you are a fan of the French-style method of Health Care since you called Limabaugh a knee-jerk for insinuating that we would look at Socialized Healthcare (GB, Canada, etc) - it must be noted that the French pay 21% of their paycheck to the gov't for health care/retirement. That's all French people, not just the elite like Gerard Depardiue and Jacque Cousteau. Even with this tax they are now running a serious health care deficit and are looking at ways of de-regulating some of the system.

    I'm interested to hear what your solution is, an interesting factor to me is sheer population size and its effect on the system. I wonder if its a coincidence that the other largest countries in the world - China (144th), India (112th), Indonesia (92nd), Brazil (125th), Pakistan (122nd), Bangladesh (88th), Nigeria (187th), and Russia (187th) all rank behind the US, even using the WHO's skewed rankings (where they are not measuring the quality of health care, but the equality of health care).

    Side note - interesting that you used the countries highways as an example of bureaucratic success since the President is "disgraced" and "ashamed" of the U.S.'s "infrastructure and transits". No fear, there won't be a pothole in sight by 2014 and GDP will have magically doubled because of it! Unicorns!!!

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