Saturday, April 7, 2012

Healthcare Debates, Regulation and Stuff

On a somewhat hilarious note, I had been working on a response to some of the questions Luke had posted in a comment, and when I had finished my response, blogger told me I had exceed the number of characters allowed for a comment. So here we are, in the form of a post.

Even though it's not directly related to the Supreme Court ruling or RB's post, I think it's worthwhile to keep these debates going because it raises further questions and clarifies makes the fault lines of disagreement.

The idea that because regulation exists both in the banking and health care sector that the government is somehow incapable of regulating healthcare in a helpful way is kind of talking past the point. Regulations are not inherently good or bad, but the idea that a greater role for government automatically means things get worse is proven wrong by the vast majority of industrialized countries who have a far greater role for the government in their health care programs than the United states. Those countries don't have giant populations of people without access to healthcare, in addition to having much cheaper health care costs than the United States. That's not to say that all regulations are good, just that more regulations (or enforced regulations) definitely aren't inherently bad either.

I know it's not the main point here, but since you brought up regulation of the banking sector, I really think you're mis-characterizing my views. I have put blame on the banks, but I believe I have also pointed out just about endlessly that both deregulation and corrupted officials in positions of regulation are absolutely equally responsible. Government had one of the greatest roles in these failures, but that was because we took away many of the laws that regulated the banks! And we had administrations that didn't believe in enforcing the regulations that were there! To say that because there were some regulations remaining within the banking sector and yet the crash of 2008 happened is about as inverted of a way of seeing that problem as I can think of. In other words, to me this is a case where although there were government failures in preventing this crisis, it should also be pointed out that government successes kept the economy less crappy and without these crashes for a long period of time when the regulations were doing their job. They cheat because we took away the rules that stop them from cheating, and stopped hiring competent people to enforce what few rules to remain.

With that tangent over, there were two main points I wanted to respond to from your last paragraph.

You want everyone to have access to medical care. At what cost? You think our free markets have created losers and winners when it comes to medical care. Losers compared to what?

I mean that winners (people with money, or jobs that provide it) get health care versus losers (people who don't have the means to get health insurance) are either forced to go through life without proper medical care that often leads to death. When you ask "compared to what?" I would say that someone who is poor but gets to live because they have access to medical care vs someone who is poor and dies because of it is the "loser" "compared to what" example I would use. The person who is poor would still not be a winner in economic terms, but they would also be alive because of access to medical care.

You think the government is capable of running the medical care industry and averting the impending collapse of our medical care system. What hard evidence do you have to support that?

My evidence is that just about every other industrialized country manages to provide better healthcare to their citizens for less money. ( and countless other places) And the government plays a much bigger role in the health care system in almost all those countries. Also, while it isn't perfect, medicare is more cost effective than private insurance, and people tend to like it better than private insurance. I haven't read a compelling argument that if medicare were expanded (either lowering the age to put more healthy people into the pool, or for everyone) that it would make the government less capable than it is at running medicare now. People pay for it in their taxes, and people tend to like the services they receive. That's not to say it's perfect, but I do think that's solid evidence that it can be done here. And that's also when you put aside that fact that most of the countries (close to all I think) that have better health care systems than us have far greater government over the health care industry than we do, I think that's good evidence as well.

With that in mind, since we agree that the US system could be made better, is there a particular country that you have in mind? I'd say that statistics show that France, England, Canada and countless others (including some that have extremely regulated private markets) have figured out this problem a lot better than we have, based on the fact that their health care costs are much lower, and they all have many, many less deaths due to a lack of health care (page 13 here: ) . I'm not throwing that out there as some re herring fact, "deaths due to a lack of preventable health care" is one of the better indicators of if a country is doing things well or not. (thank you Dan for pointing me to that graph). I'd be curious to know what your ideal health care system is, or what the closest example is, as exists in the world today? While there are elements I like or don't like about plenty of health care systems, I can list quite a few that I'd trade with our system without many second thoughts. I'd be interested to hear your thoughts on that, and if they don't exist I'd be interested in why that is or what changes you'd like to see that would make it more possible.

As I said before, I love having these discussions, and I do think it's been a worth while discussion to have, so thanks to Luke for making that happen.


  1. Hey man, excellent response, and thank you! I will get back to you after this weekend!

  2. Thanks for putting those sources up there JJ, their numbers are quite compelling.

    I found it particularly interesting that the US has fewer consults per year (4.00 per capita) than the average developed country (6.40), but that hospital spending per discharge ($16708) was higher than any other developed country (mean $5949).

    What this suggests to me (and you may or may not think this is a stretch) is that the prohibitively high cost of care and insurance in our country's private healthcare system discourages individuals from seeking out preventative care. As a consequence, our costs in the long run are higher as patients need more drastic and expensive responses to illnesses that could have been prevented.

    If a public health care system leads more individuals to take advantage of preventative care, then I think it will save lives and cost society as a whole less than a private system.

  3. Hey JJ,

    Sorry about the late response! Work got in the way but I finally was able to get back to it this weekend.

    Ok, since we really have ranged around a lot in this debate, I will try and go through point by point with my response. With something like this, we are bound to be talking past one another or making assumptions about the others positions, but I will try to answer as directly as I can, and if you think I am dodging a point let me know!

    Quickly about the housing crisis, I think we can both agree that the lack of prosecution of the people who actively defrauded and broke the law is appalling. I guess where we disagree on is how the government failed in allowing/encouraging the crash to happen. You seem to me to think it should have been more heavily and diligently regulated, whereas I believe that government regulations created the circumstances that caused the housing collapse to begin with. Four major contributions: zoning/environmental/building permit laws that allowed demand for housing to far outstrip supply in many key markets that triggered the collapes, driving prices higher (I am not saying these are all bad, just that they clearly did a lot of harm here and could have been modulated given the demand. however the demand was artificially high, so this all has to be looked at as a whole); banks being forced to lower lending standards and meet quotas, encouraging subprime lending; fannie mae and freddie mac buying up these toxic mortgages wholesale, thereby disconnecting the lenders from the consequences of their actions; and of course the federal reserve setting interest rates EXTREMELY low.

    All these things combined caused many many people to go after houses that they couldn't actually afford, and the result is what you are seeing now. That is not a failure of a free market, that is a failure of a haphazardly regulated market. Your answer seems to be to add more regulations (I don't mean to be oversimplifying your views, JJ, or creating a straw man, so call me out on anything that I am off base on), but I simply don't trust that to work. I will come back to this lack of trust later in my response.

  4. Ok, I have been thinking how to respond to your answer to my first two major questions. I want to make it clear that I don't think someone deserves to die because they are poor. I simply don't think that FEDERAL government control of the medical care industry is going to be what saves more people. And if it does manage to save about 100000 more people a year, which is probably around the number you are envisioning given the research you are siting, it will be at such great cost to people's liberty that it will be a tragedy in and of itself. It is hard to get really specific here because it is clearly just a difference of opinion that we have on how a country goes about fostering the greatest amount of good for the greatest number of people. Never in history has an authoritarian government proven to be good for the people under it, and the degree to which the people of a nation are free from tyrannical or authaurtiarian rule is the degree to which they will prosper. That is my firm belief, and i think that belief bears out if you look over the course of history. Yet, on almost every front the government is seizing more and more control over the economy in the name of the greater good. Compared to most places in the world, we can all be considered winners in the US, even the poorest of the poor here. My belief is that federal government control and subsidies don't really do anything to raise that floor up further, and if they do raise it up, it is at a deep cost to the people receiving the benefits' personal freedom, not to mention the people whose money is taken to pay for it.

    Just as an aside, I often feel that folks, upon hearing my views, think I am more concerned about the freedom and liberty of the relatively well off folks whose money is being taken than the folks who need help. In reality, it is usually the people receiving the subsidies that see the greatest reduction in their freedom.

    OK! Considering your response to my third main question about hard evidence, you mention that there is no reason to believe that the government would be any less capable of running medicare if it were to be expanded/if there were to be a national health care system. I do not disagree with you, I just think that medicare currently is too expensive and is not able to serve its recipients and programs well, so those problems would continue on a larger scale, probably with a lower floor.

    You mention other countries simultaneously having a much larger govt role in health care and at much lower cost per capita than we do. That is true, and I have mentioned before the differences between our countries that drive some of the per capita cost up. Something else that bears mentioning is that, in general, the populations of european and asian countries, even Canada too, are much more homogenous than they are here. The whole problem I have with our federal government is that it is too big to adequately address the different needs of its different regions. For most states, I would not have a problem on a philosophical level if they wanted to socialize medicine. I might have a problem with their execution, but I wouldn't think off hand that it was doomed to fail, as I do with the federal government.

    This brings us to your question as to which systems I admire overseas, and if I don't admire any of them, what sort of system I would envision. I would say that I really appreciate a lot about Finland and Denmark's healthcare systems. There is a huge emphasis on decentralization (even though they are small countries already), and the population in general seems to be well served and well satisfied. I wouldn't want the tax rates that those countries have, but if a decentralized, locally funded and organized system like theirs were to be implemented here I would be extremely happy, given the current course of things. They are not ideal, however, and I have some ideas kicking around my head that I would want to pursue.

  5. One of the biggest problems I have with almost every healthcare system everywhere is centrally negotiated prices. They cause some things to be super expensive forever, they cause other things to be undervalued and therefore under produced (google "drug shortage"), and most of all, they disconnect the consumer's satisfaction or valuation of the product from the equation, which is the main driving force behind quality assurance.

    This is my pie in the sky dream. Everyone would make premium payments to their local governments health insurance policy. Some percentage, lets say half, would go to the general fund, and half would go to a private account. We would have the option of contributing to a private or (locally administered) public account, and the money in this account would earn interest as a savings account (it would have to be a no risk investment and its value would be fully insured). People would pay their health care bills themselves, through this account they have been contributing to. I am about to use arbitrary numbers again to flesh out the idea. Every year you would have a 1000 dollar deductible. From $1000 to 2000$, the percentages that would be drawn from your private fund would be 50% and 50% would come from the public fund. From $2000-3000$, it would be 25% private 75% public. And so on and so forth. People would be able to access the interest of the account, but not the balance. If the account was not full enough to cover the deductibles for a given year, then those amounts would be automatically taken from future contributions. For instance, if you had a $30000 medical bill, and your share came to $7000, but your account only had $5000, over the next years your contributions would first go towards your $2000 debt, then start filling your account again. This debt would be forgiven at death, and there would be no other means of collecting on this debt than with your premium contributions. Any remaining balance upon your death would be a tax free addition to your estate, which you could dispose of in your will as you wish.

    Once the numbers are tweaked sufficiently, this system would provide universal, locally administered care. Prices would be kept down because people would have a vested interest in doing so. Reading through that, you probably thought of a thousand different things that would need to be regulated and changed and researched in order to avoid fraud and abuse and still allow people to freely pursue the health care of their choosing. That is fine, and I agree, as long as the regulation are at as low a level of government as possible. If a county wants to fund acupuncture, fine. If a county wants to distinguish some more basic health care institutions as having a lower deductible than more luxurious care institutions, thats fine, too. Perhaps there will be a minimum personal account balance for more advanced, expensive procedures and that is fine too. But only on a local level can all these things be handled with even a fraction of the reverence and thought they deserve.

    I know my ideas are only half baked, but they have the three most important parts for me: local funding and administration, access for everyone, and an unfettered supply and demand economy. In my opinion, all three of those would be compromised with a national, federally funded and administered health plan, even the second, since our current trajectory is looking so bleak.

    Again, sorry for the late response, JJ! I had to do a lot of thinking, though, and didn't want to rush it!